Diversification in Agricultural Production - a Dynamic Model of Optimal Cropping to Manage Soil Erosion

A dynamic economic model of soil erosion is presented where the intensity of use of inputs and the choice of crops, each one associated with distinct erosion rates, allow the farmer to control soil losses. The results show that it is predominately optimal to approach the singular path/steady state equilibrium most rapidly by the cultivation of a single crop. At the steady state, however, a mix of crops is cultivated, supporting the argument that diversification, as a prerequisite for sustainable agricultural production, is a necessary condition for long run profit maximizing behavior of the farmer. Myopic behavior by the farmer favors the cultivation of a single crop throughout the planning horizon. Policies affecting the prices of the crops have an uncertain effect on the long run resource development. The promotion of erosion control practices on only high erosion crops may reduce the long run soil stock, whereas a tax on the land cultivated with a particular crop is shown to be effective in increasing the long run soil stock and promises to be efficient since site specific responses can be induced