Bio-economic modelling of soil erosion externalities and policy options: a Tunisian case study

Soil erosion is one of the most important of today’s environmental externalities and a major threat to sustainability of agricultural system. It constitutes the most widespread forms of land degradation throughout the world. The aim of this paper is to estimate the amount of soil erosion generated by the current cropping systems in Tunisia and to assess the economic and ecological impacts of policy instruments designed to handle this problem. The analysed policy options are based on soil conservation practices and direct incentive farming anti-erosive measures. The selected measures are the reduction of tillage, the avoidance of bare fallow and the use of legume-based crop rotation. A bio-economic modelling framework coupling the biophysical model EPIC to a non-linear dynamic programming farm model was used for this impact analysis. It was performed in a set of representative farms belonging to a region in North-Eastern Tunisia (Zaghouan) strongly affected by this phenomenon. The main finding of this research is the non-convexity of the crop yield—soil erosion space. That is, the use of more intensive techniques to increase productivity (i.e. crop yield) may be accompanied by rough changes in soil erosion (damage) curves, manifested either by non-monotony or non-convexity. In term of policy options and because of giving up convexity assumptions, incentive anti-erosive measures appear more efficient than conventional environmental policies such as Pigouvian taxes or quota systems. The implementation of soil conservation practices would leads to a net decrease in soil erosion and an increase in farm income. However, with the current interest rate of 7% the possible rise in income is not enough to stimulate farmers to invest on these practices. A maximum rate of 4% would be necessary to make this policy option more effective.