POVERTY, LAND DEGRADATION AND CLIMATIC UNCERTAINTY

This paper studies farmers who operate in a risky environment at a minimum level of subsistence. In particular we investigate how poverty influences the soil conservation decision in the absence of formal insurance markets. It is shown that the consequences for the optimal soil conservation decision from poverty differ across the three agricultural activities considered in the model. Output-induced soil depletion increases with poverty, while soil conservation incentives improve for the same reason when conservation inputs and win-win technologies are considered. Consequently it remains unclear whether poverty in general induces farmers to manage their resources poorly in the long run.