Working Papers in Economics,
University of Gothenburg, Department of Economics

Abstract: Improvement in soil carbon through conservation agriculture in developing countries may generate some private benefits to farmers as well as sequester carbon emissions, which is a positive externality to society. Leaving crop residue on the farm has become an important option in conservation agriculture practice. However, in developing countries, using crop residue for conservation agriculture has the opportunity cost of say feed for livestock. In this paper, we model and develop an expression for an optimum economic incentive that is necessary to internalize the positive externality. A crude value of the tax is calculated using data from Kenya. We also empirically investigated the determinants of the crop residue left on the farm and found that it depends on cation exchange capacity (CEC) of the soil, the prices of maize, whether extension officers visit the plot or not, household size, the level of education of the household head and alternative cost of soil conservation.

Keywords: conservation agriculture; soil carbon; climate change; bioeconomics; Kenya

JEL-codes: C61; Q18; Q24; Q54; Q56

21 pages, February 15, 2010

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