D.P. van Soest

A note on soil depth, failing markets and agricultural pricing

Abstract Due to implementation of Structural Adjustment Programs, prices of agricultural products have increased in many developing countries. From an environmental point of view, it is an open question whether these price increases stimulate sustainable agriculture. In the context of a simple model that includes (labour intensive) investments in soil conservation, it is demonstrated that rising prices for agricultural outputs unambiguously increase soil conservation in the steady state. With imperfect labour markets, the reverse effect may occur, giving rise to a conflict between agricultural reform programs and soil conservation.

Technological change and tropical deforestation : A perspective at the household level

We analyse the effects of technological change in agriculture on forest clearing by households in developing countries. The possible effects are found to be many and diverse, depending on the type of change and the institutional context. We conclude that agricultural intensification is certainly not the panacea that some believe it to be.

Threshold effects of energy price changes

This paper presents a theoretical model emphasising energy investments’characteristics of uncertainty and irreversibility. The theoretical modelsuggests threshold effects. Firms are induced to substitute away from energyonly if prices of energy exceed a certain threshold level and they reverse thetechnology only if energy prices are low enough. Estimating a simpleinvestment relation using panel data for the Dutch economy, we findevidence for threshold effects.

International transfers, price uncertainty and tropical deforestation

International transfers to developing countries are sometimes advocated on the ground that they contribute to tropical forest conservation. Here we demonstrate that the effectiveness (and attractiveness) of this instrument is reduced if the restrictive assumption of deterministic prices is relaxed. With stochastic prices, the steady-state forest stock in the absence of transfers is greater, implying that the marginal benefit of additional hectares conserved is less. In addition, the ‘wealth effect’ of transfers counteracts the ‘freeing-up effect’, which implies that per unit of subsidy fewer hectares of tropical forest are protected. Both effects reduce the attractiveness of transfers as a policy instrument for Western governments to combat tropical deforestation.