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Do Increased Commodity Prices Lead To More Or Less Soil Degradation?

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  • Jeffrey T. LaFrance

Abstract

In this paper, a dynamic economic model is used to analyze the conflicting impacts of crop increasing/land degrading inputs with those of soil conserving/crop reducing inputs in problems of soil degradation in agriculture. Soil is a renewable resource that is generated naturally at a slow, essentially autonomous rate. Cultivation enhances crop production and degrades the soil, while conservation is unproductive for the crop but improves the soil resource. If the effects of cultivation dominate the effects of conservation in the soil dynamics, an increase in the price of the crop accelerates the rate of soil degradation In the short-run and decreases the long-run stock of the soil resource. On the other hand, if the effects of conservation dominate the effects of cultivation, an increase in the price of the crop decelerates the rate of soil degradation in the short run and increases the long-run stock of the soil resource. It is shown that subsidies on conservation activities or taxes on cultivation intensity may well decrease the long-run soil stock, although strong conditions must be satisfied for either of these results to hold. It also is shown that a reduction in the real discount rate or a direct per unit tax on soil losses is certain to increase the long-run soil stock and reduce the short-run rate of soil degradation.

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File URL: http://hdl.handle.net/10.1111/j.1467-8489.1992.tb00712.x
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Bibliographic Info

Article provided by Australian Agricultural and Resource Economics Society in its journal Australian Journal of Agricultural and Resource Economics.

Volume (Year): 36 (1992)
Issue (Month): 1 (04)
Pages: 57-82

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Handle: RePEc:bla:ajarec:v:36:y:1992:i:1:p:57-82

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References

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  1. Hartl, Richard F., 1987. "A simple proof of the monotonicity of the state trajectories in autonomous control problems," Journal of Economic Theory, Elsevier, vol. 41(1), pages 211-215, February.
  2. Kamien, Morton I. & Schwartz, Nancy L., 1971. "Sufficient conditions in optimal control theory," Journal of Economic Theory, Elsevier, vol. 3(2), pages 207-214, June.
  3. Caputo, Michael R., 1990. "How to do comparative dynamics on the back of an envelope in optimal control theory," Journal of Economic Dynamics and Control, Elsevier, vol. 14(3-4), pages 655-683, October.
  4. Oniki, Hajime, 1973. "Comparative dynamics (sensitivity analysis) in optimal control theory," Journal of Economic Theory, Elsevier, vol. 6(3), pages 265-283, June.
  5. McLaren, Keith R & Cooper, Russel J, 1980. "Intertemporal Duality: Application to the Theory of the Firm," Econometrica, Econometric Society, vol. 48(7), pages 1755-62, November.
  6. Askari, Hossein & Cummings, John Thomas, 1977. "Estimating Agricultural Supply Response with the Nerlove Model: A Survey," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 257-92, June.
  7. LaFrance, Jeffrey T. & Barney, L. Dwayne, 1991. "The envelope theorem in dynamic optimization," Journal of Economic Dynamics and Control, Elsevier, vol. 15(2), pages 355-385, April.
  8. Caputo, Michael R, 1990. "Comparative Dynamics via Envelope Methods in Variational Calculus," Review of Economic Studies, Wiley Blackwell, vol. 57(4), pages 689-97, October.
  9. Araujo, A & Scheinkman, Jose A, 1977. "Smoothness, Comparative Dynamics, and the Turnpike Property," Econometrica, Econometric Society, vol. 45(3), pages 601-20, April.
  10. Moore, Walter B. & McCarl, Bruce A., 1987. "Off-Site Costs Of Soil Erosion: A Case Study In The Willamette Valley," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 12(01), July.
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