OPTIMAL SOIL CONSERVATION AND THE REFORM OF AGRICULTURAL PRICING POLICIES

Soil degradation is often blamed for the poor performance of agriculture in developing economies; so too are policies which keep the prices of both outputs and inputs artificially low. Some economists have argued that pricing reforms will encourage soil depletion; others say that such reforms will encourage soil conservation. To evaluate these claims, this paper develops models of the optimal control of soil erosion and soil fertility. It is shown that the effect could go either way but that there are strong reasons for suspecting that pricing reforms will not affect soil conservation dramatically.