Economic incentives and agricultural outcomes in upland settings.

Abstract

This chapter presents a framework for measuring the changes in economic and environmental outcomes that occur in watersheds subject to land degradation, both in partial and in general equilibrium. This framework is used to calculate changes in upland land degradation due to changes in economic conditions. The chapter presents and discusses simulation results for an applied general equilibrium experiment that examines the likely economic and soil erosion implications of technical progress in maize production in the Philippines, The value of changes in soil degradation resulting from exogenous changes occurring both within upland agriculture and in other sectors of the economy, is estimated. To do this, nutrient replacement cost estimates are combined with data on annual soil erosion rates for different upland crops in the Philippines. This information, together with data on upland crop area, is used to calculate the aggregate value of changes in land degradation due to changes in production technologies and land area planted to upland crops. The results of this work indicate that not all forms of agricultural growth necessarily increase land degradation. In the Philippines, investment in technical progress in maize (a relatively erosive crop characterized by inelastic demand) results in reduced maize area and thus less degradation, so long as the gains from productivity growth result in lower producer prices.