The paper analyses the processes of soil degradation which are caused by deforestation and agricultural expantion in Tavushskaya oblast' of Armenia. This includes soil compaction, plant formation loss, intense water and wind erosion on grazelands caused by increase of sheep herd; and soil nutrition losses as a result of drawbacks of land cultivation on hillside cropland. Following the reasons of soil erosion we suggest three scenarios of agricultural and forest land application. The first scenario depicts the current growth rates of deforestation and transforming these areas into cropland, but with time limits of land use because of continuous soil nutrition loss. The second scenario shows the consequences of stopping deforestation and saving current forest area. Finally the third scenario keeps the current forest areas and transforms the degraded grazelands into forestland with a 10% growth rate per decade. Using TEEB methodology for each scenario we calculate the economic value of local ecosystem services, which could be provided from 1 ha in this region for the bext thirty years. The results show that the first scenario gives $ 16 202, the second $32 776 – 1 312 561, and the third $33 904 – 1 359 678 diapason value of potential ecosystem services per 1 hectare. This all means that it is reasonable to save and regenarate forest land, which help to resist soil erosion and thus have positive effect on food security in the region.