Soil resource and the profitability and sustainability of farms: A soil quality investment model
Pierre Dupraz and
No 18-01, Working Papers SMART from INRAE UMR SMART
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.
Keywords: optimal control; soil quality; endogenous production factor (search for similar items in EconPapers)
JEL-codes: D90 Q10 Q24 (search for similar items in EconPapers)
Pages: 35 pages
New Economics Papers: this item is included in nep-agr, nep-eff and nep-env
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Working Paper: Soil resource and the profitability and sustainability of farms: A soil quality investment model (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:rae:wpaper:201801
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