Magazine article Amber Waves

An Economic Perspective on Soil Health

Magazine article Amber Waves

An Economic Perspective on Soil Health

Article excerpt

Highlights:

Soil health builds upon soil conservation by encouraging farmers to manage soil as a living ecosystem, in addition to reducing soil erosion.

Healthy soils can have benefits to society (public benefits) and to farmers (private benefits)-but the private benefits may not always be large enough to incentivize farmers to use practices that improve or sustain soil health.

USDA incentivizes farmers to adopt soil health practices through programs such as the Environmental Quality Incentives Program and the Conservation Stewardship Program.

USDA has championed soil conservation, a suite of efforts to mitigate soil loss due to erosion, since 1935. In that year, Congress created the Soil Conservation Service, predecessor to today's Natural Resources Conservation Service (NRCS). Given this long history, a large literature base exists on the costs and benefits of soil conservation and incentives for farmers to adopt soil conservation practices.

Today, NRCS and a multitude of partners are encouraging farmers to think more broadly about "soil health"-a concept that soil scientists have refined over the past two decades. This article discusses some of the economic issues associated with managing for soil health.

Economics of Soil Health: The Basics

NRCS defines soil health as "the continued capacity of soil to function as a vital living ecosystem that sustains plants, animals, and humans." Healthy soils have high levels of microbial activity, higher levels of organic matter, and good soil structure. Because soil properties differ according to climate, geology, topography, and land use and management history on a field or farm, "healthy soil" can look very different in different places.

To sustain and improve the health of their soil and reduce erosion, farmers can implement various management practices that have both costs and benefits to the farmer. When farmers make decisions about soil health practices, they are often concerned with whether a practice will improve crop yields and/or reduce agricultural input costs. Other private benefits that might be relevant to the farmer include greater resilience of crops to extreme weather (droughts and floods) and an opportunity to engage in environmental stewardship. Soil health practices can also have benefits for society, including reduced greenhouse gas emissions from agriculture, increased carbon storage, and improved water quality through reduced nutrient and sediment pollution. These public benefits have the potential to affect present and future generations, but farmers may not be considering them when they make decisions about adopting soil health practices.

Another factor that may influence a farmer's decision to implement soil health practices is the time lag required to achieve improvements in soil health. Often, the costs of adopting a practice happen in early years (for example, buying cover crop seed), whereas improvements in soil health build slowly over time. Even if the benefits to farmers may outweigh the costs over time, financial constraints or uncertainty about the long-term benefits can affect their decisions. A variety of purchased inputs, such as fertilizer, irrigation water, and pesticides, are substitutes for soil health, and some farmers may decide that increased use of these inputs is a better option than making a long-term investment in soil health.

USDA conservation programs are designed to help overcome situations in which only a small portion of farmers might be willing to adopt conservation practices on their own. Through a number of conservation programs, the U.S. Government provides financial incentives to farmers to adopt soil-health-related practices. As conservation policies and programs evolve, economists are actively researching the costs and benefits of soil health practices, which can provide an economic rationale for paying farmers to adopt soil health practices.

Practices Farmers and Ranchers Can Use To Build Soil Health

Farmers and ranchers use a number of practices and combinations of practices to build or restore soil health. …

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