Optimal Soil Management and Environmental Policy

Abstract

This paper studies the effects of environmental policy on the farmer's soil optimal management. We consider a dynamic economic model of soil erosion where the intensity use of inputs allows the farmer to control soil losses. Therefore, inputs use induces a pollution which is accentuated by the soil fragility. We show, at the steady state, that the environmental tax induces a more conservative farmer behavior for soil, but in some cases it can exacerbate pollution. These effects can be moderated when farmers introduce abatement activity.

Keywords: Soil erosion, Pollution, Environmental policy, Optimal soil conservation, Abatement activities

JEL Classification: Q12, Q24, Q28, Q52, H23