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Price and Subsidy Policy on Soil Conservation: Application to Smallholder Tea Growers


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  • Ananda, Jayanath

    (La Trobe University, Victoria 3689)

  • Herath, Gamini

    (La Trobe University, Victoria 3689)

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    The role of commodity prices and subsidies on the adoption of soil conservation has been widely debated yet is poorly understood. One reason for this is the complex nature of the relationship between soil loss and yield damage. This paper examines the effects of price and subsidy policy on adoption of soil conservation measures in tea lands in Sri Lanka. The soil conservation technologies considered are lateral drains, stone terraces and Sloping Agricultural Land Technique (SALT). The study uses a nonlinear yield damage function to estimate tea yield loss due to soil erosion. The yield function is then used in conjunction with a simple analytical model to examine the effects of changes in price and subsidies on the incentives to adopt various soil conservation technologies. When there is a yield increment with soil conservation, increases in both prices and subsidies are found to make soil conservation economically attractive.

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    Bibliographic Info

    Article provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).

    Volume (Year): 31 (2001)
    Issue (Month): 2 (September)
    Pages: 99-110

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    Handle: RePEc:eap:articl:v:31:y:2001:i:2:p:99-110

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    Related research

    Keywords: Conservation; Land; Prices; Soils; Subsidies;

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    1. Coxhead, Ian A. & Jayasuriya, Sisira, 1994. "Trade and Tax Policy Reform and the Environment: The Economics of Soil Erosion in Developing Countries," 1994 Conference (38th), February 8-10, 1994, Wellington, New Zealand 148111, Australian Agricultural and Resource Economics Society.
    2. Shiferaw, Bekele & Holden, Stein T., 2000. "Policy instruments for sustainable land management: the case of highland smallholders in Ethiopia," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 22(3), April.
    3. LaFrance, Jeffrey T., 1992. "Do Increased Commodity Prices Lead To More Or Less Soil Degradation?," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 36(01), April.
    4. Lutz, Ernst & Pagiola, Stefano & Reiche, Carlos, 1994. "The Costs and Benefits of Soil Conservation: The Farmers' Viewpoint," World Bank Research Observer, World Bank Group, vol. 9(2), pages 273-95, July.
    5. Repetto, Robert, 1987. "Economic Incentives for Sustainable Production," The Annals of Regional Science, Springer, vol. 21(3), pages 44-59, November.
    6. 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.
    7. David J. Walker & Douglas L. You, 1986. "The Effect of Technical Progress on Erosion Damage and Economic Incentives for Soil Conservation," Land Economics, University of Wisconsin Press, vol. 62(1), pages 83-93.
    8. Chisholm, Anthony H., 1992. "Australian Agriculture: A Sustainability Story," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 36(01), April.
    9. G. C. Kooten & Ward P. Weisensel & E. Jong, 1989. "Estimating the Costs of Soil Erosion in Saskatchewan," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 37(1), pages 63-75, 03.
    10. Segarra, Eduardo & Taylor, Daniel B., 1987. "Farm Level Dynamic Analysis Of Soil Conservation: An Application To The Piedmont Area Of Virginia," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 19(02), December.
    11. Ananda, Jayanath & Herath, Gamini & Chisholm, Anthony H., 2001. "Determination of yield and erosion damage functions using subjectively elicited data: application to smallholder tea in Sri Lanka," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 45(2), June.
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    Cited by:
    1. World Bank, 2010. "Sri Lanka - Valuation of Environmental Services in Sri Lanka : A Case Study of Soil and Watershed Benefits in the Southern Province," World Bank Other Operational Studies 12488, The World Bank.


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