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Agricultural Productivity and Soil Carbon Dynamics: A Bioeconomic Model

Julia Berazneva, Jon M Conrad, David T Güereña, Johannes Lehmann, Dominic Woolf
American journal of agricultural economics 2019 v.101 no.4 pp. 1021-1046
agricultural productivity, bioeconomic models, carbon sinks, corn, crop yield, data collection, developing countries, discount rate, farmers, highlands, imperfect competition, livelihood, magnesium, market surveys, opportunity costs, prices, renewable resources, soil, soil carbon
We examine the dynamic management of a soil resource—the issue at the core of both environmental and development challenges in developing countries. Our theoretical framework extends the traditional bioeconomic model of renewable resources to soil carbon management and investigates the effects of changes in agricultural practices on farmers' natural resource base and livelihoods. We parameterize the model using an eight‐year panel data set from an agronomic experiment and data from household and market surveys in the western Kenyan highlands. The optimal maize yields and soil carbon stocks are higher than those observed in the region. This divergence is partly explained by farmers' heterogeneous time preferences (with the implied discount rates of 5% to 25%), information barriers, and market imperfections. The steady‐state shadow price for soil carbon ranges from $95/Mg to $168/Mg, indicating a significant opportunity cost for soil mismanagement.