Financial Assessment of Soil Conservation Incentives
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Abstract
It's a complicated question whether and how governments should step in to promote the adoption of conservation measures. Effective policies to promote conservation cannot be developed without a thorough understanding of the motivations behind farmers' adoption of specific land use practises. This study examines the factors that lead farmers to choose a particular land use practise over another and considers the potential influence of government policies on farmers' adoption of more environmentally friendly practises. It does this by using a straightforward graphical model and data from semi-arid Kenya. Farmers are typically highly motivated to implement conservation measures when on-site productivity is the main priority. When farmers are prevented from adopting otherwise profitable conservation practises, or when there are discrepancies in the valuation of inputs and outputs, there is typically a divergence between privately optimal and socially optimal conservation behaviour. Incentive programmes are unlikely to work unless these issues are addressed head-on. There is no obvious motivation for farmers to take the necessary corrective measures when off-site repercussions are the main issue. In these circumstances, a subsidy programme might be necessary. Even in these situations, pricing distortions and any barriers to the implementation of conservation measures need to be closely monitored.
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