Harmonizing Agricultural and Environmental Policies

I discuss three general lessons drawn from economic theory and historical experience for improving the performance of agriculture with respect to environmental protection and resource conservation. First, government development of environment­friendly, resource-conserving technologies and government investment in improvements in human capital are critical for making it feasible to reconcile agricultural productivity with environmental quality. Second, because new technologies evoke responses that are difficult to anticipate, it is essential to maintain proper incentives for environmental protection and resource conservation (e.g., taxes on the use of polluting inputs, setting prices of resources at their social oppatunity costs, establishing clear property rights). Third, agriculture sector policies like price supports, input subsidies, limitations on imports, and settlement promotion policies are important causes of environmental and resource degradation in many countries; thus, agriculture sector policy reform is necessary to improve environmental protection and resource conservation in agriculture.