The economics of soil nutrient stocks and cattle ranching in the tropics: optimal pasture degradation in humid Costa Rica

We present a model that can be used to analyse economically optimal nutrien t (nitrogen) stocks in agricultural lands. The model is applied to study ca ttle ranching in humid Costa Rica. The numerical results indicate that, for current meat prices and discount rate, it is privately optimal to 'mine' s oil nitrogen. In the long run, efficiency is consistent with degraded and a bandoned pastures, as observed in the study region. Sustainable pasture man agement is economically efficient only for a discount rate close to zero or for meat prices at about twice the highest recorded value in 1985-1997. Th e results highlight the potential conflict between sustainability and econo mic efficiency. Caveats and externalities that are not included in our mode l are discussed.