Dynamic economic management of soil erosion, nutrient depletion, and productivity in the north central USA

Physical scientists have presented a wealth of evidence regarding the effec ts of cropland soil degradation. Because soil degradation has both on-site and off-site effects, public policies have often tried to increase rates of conservation over privately optimal rates. Where private incentives leave off and public incentives start up is somewhat controversial, however. Phys ical evidence, while necessary, is not sufficient to predict conservation a ctions by farmers in response to the threat of degradation. This paper prov ides a partial explanation for why farmers may adopt differing conservation strategies, even though they share similar preferences. A model is constru cted that divides soil degradation into reversible and irreversible compone nts. We portray nutrient depletion as a reversible facet of soil degradatio n and soil profile depth depletion as an irreversible facet of soil degrada tion. Predictions of optimal management response to soil degradation are ac complished using a closed-loop model of fertilizer applications and residue management to control future stocks of soil nutrients and soil profile dep th. Our model is applied to degradation data from nine soils in the north c entral United States. Three principal findings result: First, due to differ ences in initial soil properties, susceptibility to degradation, sensitivit y of yield to soil depth, and yield response to alternative management prac tices, dynamically optimal economic strategies cannot be inferred directly from physical results but are inferred from the associated economic implica tions. Second, optimal residue management is more variable with respect to soil type than to the erosion phase of the soil, implying that substantial gains to targeting are possible. Third, nutrient depletion is a more compel ling motivator for adopting residue management than soil profile depth depl etion. This implies that motivating residue management requires programs th at pay even greater attention to reversible degradation, and therefore the overall farm management implications, rather than strictly to protect topso il from irreversible degradation. Copyright (C) 2001 John Wiley & Sons, Ltd .