n Ghanaian Journal of Economics - Muddy waters : economic analysis of soil erosion and downstream externalities - research

Volume 6 Number 1
  • ISSN : 2309-8945


Soil erosion and fertilizer leakage cause serious externalities in downstream environments throughout the world. Social costs are estimated to be very large and include, e.g., loss of health, reduced productivity due to pollution and eutrophication of freshwater resources, and degradation of aquatic and marine resources. The key optimal control models on soil capital management omit downstream externalities. Based on comparative statics analysis of our model, which includes downstream externalities, combined with an extended discussion on policy instruments, we conclude that governments should try to provide incentives to farmers, not primarily to stop soil and nutrient loss per se (since the farmers will look after their own soil capital) but to prevent negative externalities on downstream users, who have few opportunities to negotiate with the upstream farmers, who may even be unaware of the problems they cause.

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