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Soil resource and the profitability and sustainability of farms: A soil quality investment model

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  • Issanchou, Alice
  • Daniel, Karine
  • Dupraz, Pierre
  • Ropars-Collet, Carole

Abstract

There is a growing public concern for soils and the maintenance or enhancement of soil quality. Actually, soil resource plays a central role in issues regarding food security and climate change mitigation. Through their practices, farmers impact the physical, biological and chemical quality of their soils. However, in a strained economic environment, farmers face a trade-off between short term objectives of production and profitability, and a long term objective of soil resource conservation. In this article, we investigate the conditions under which farmers have a private interest to preserve the quality of their soil. We also characterize the optimal management strategies of soil quality dynamics. We use a simplified theoretical soil quality investment model, where farmers maximise their revenues under a soil quality dynamics constraint. In our production function, soil quality and productive inputs are cooperating production factors. In addition, productive inputs have a detrimental impact on soil quality dynamics. It appears that in some cases, farmers have a private and financial interest in preserving the quality of their soil at a certain level, since it is an endogenous production factor cooperating with productive inputs. However, situations can occur wherein the cooperative production benefits of soil quality and productive inputs are smaller than the marginal deterioration of soil quality due to productive inputs. In this case, one cannot draw conclusions about the existence of an equilibrium.

Suggested Citation

  • Issanchou, Alice & Daniel, Karine & Dupraz, Pierre & Ropars-Collet, Carole, 2018. "Soil resource and the profitability and sustainability of farms: A soil quality investment model," Working Papers 273053, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
  • Handle: RePEc:ags:inrasl:273053
    DOI: 10.22004/ag.econ.273053
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    References listed on IDEAS

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    1. Léonard,Daniel & Long,Ngo van, 1992. "Optimal Control Theory and Static Optimization in Economics," Cambridge Books, Cambridge University Press, number 9780521331586, September.
    2. Quang, Dang Viet & Schreinemachers, Pepijn & Berger, Thomas, 2014. "Ex-ante assessment of soil conservation methods in the uplands of Vietnam: An agent-based modeling approach," Agricultural Systems, Elsevier, vol. 123(C), pages 108-119.
    3. Edward B. Barbier, 1990. "The Farm-Level Economics of Soil Conservation: The Uplands of Java," Land Economics, University of Wisconsin Press, vol. 66(2), pages 199-211.
    4. Hediger, Werner, 2003. "Sustainable farm income in the presence of soil erosion: an agricultural Hartwick rule," Ecological Economics, Elsevier, vol. 45(2), pages 221-236, June.
    5. 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(2), pages 1-13, December.
    6. Smith, Elwin G. & Lerohl, Mel L. & Messele, Teklay & Janzen, H. Henry, 2000. "Soil Quality Attribute Time Paths: Optimal Levels And Values," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(1), pages 1-18, July.
    7. Saliba, B. Colby, 1985. "Soil Productivity And Farmers' Erosion Control Incentives--A Dynamic Modeling Approach," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 10(2), pages 1-11, December.
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    More about this item

    Keywords

    Environmental Economics and Policy; Farm Management;

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land

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