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 effects 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. Physical evidence, while necessary, is not sufficient to predict conservation actions by farmers in response to the threat of degradation. This paper provides a partial explanation for why farmers may adopt differing conservation strategies, even though they share similar preferences. A model is constructed that divides soil degradation into reversible and irreversible components. We portray nutrient depletion as a reversible facet of soil degradation and soil profile depth depletion as an irreversible facet of soil degradation. Predictions of optimal management response to soil degradation are accomplished using a closed‐loop model of fertilizer applications and residue management to control future stocks of soil nutrients and soil profile depth. Our model is applied to degradation data from nine soils in the north central United States. Three principal findings result: First, due to differences in initial soil properties, susceptibility to degradation, sensitivity of yield to soil depth, and yield response to alternative management practices, dynamically optimal economic strategies cannot be inferred directly from physical results but are inferred from the associated economic implications. 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 compelling motivator for adopting residue management than soil profile depth depletion. This implies that motivating residue management requires programs that pay even greater attention to reversible degradation, and therefore the overall farm management implications, rather than strictly to protect topsoil from irreversible degradation. Copyright © 2001 John Wiley & Sons, Ltd.