Soil conservation and consumption risk in a model of low-income agriculture

This paper investigates the influence of consumption risk on incentives for soil conservation. A dynamic model is developed to show how investments in soil conservation affect consumption risk on small farms and how these ris ks influence incentives for soil conservation. Model predictions are compar ed with observed patterns of soil conservation adoption in the Philippines. Results show that on small farms the risk of consumption shortfall generat es inefficient patterns of soil conservation adoption. Observed adoption pa tterns reflect risk characteristics of the soil conservation method, differ ences in risk exposure among farms, and differences in farm size.