Soil Degradation in Macro CGE Models

Abstract

Soil degradation is a widespread and serious threat to poor developing countries. The large contribution of agriculture to the national economies of these countries makes partial analysis of soil degradation insufficient. Soil productivity loss affects the urban economy through food prices, demand for farm inputs and consumer goods. Also, general economic policies create incentives that influence farm practices and the pressure on soil resources. To focus these interactions, soil degradation has been incorporated in macro CGE models. Two approaches are presented in this paper. One incorporates soil productivity with nitrogen as limiting factor in a CGE model for Tanzania, forecasting inputs of fertiliser, land and output by eleven crops. The use of fertiliser and amount of recycled crop residues determine the rate of soil productivity loss. Deforestation for subsistence agriculture has been modelled in a CGE for Nicaragua. Migration to the agricultural frontier is encouraged by the imputed income from producing their own diet, and serves as an alternative to rural/urban employment or urban unemployment. Policy simulations show that economic reforms like devaluation have significant impacts on land use and nutrient mining. Deforestation for subsistence agriculture is sensitive to income distribution and changes in food prices. High economic growth does not guarantee forest conservation.