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Optimal Soil Management and Environmental Policy

This paper studies the effects of environmental policy on the farmer's soil optimal management. We consider a dynamic economic model of soil erosion where the intensity use of inputs allows the farmer to control soil losses. Therefore, inputs use induces a pollution which is accentuated by the soil fragility. We show, at the steady state, that environmental tax induces a more conservative farmer behavior for soil, but in some cases it can exacerbates pollution. These effects can be moderated when farmer introduces abatement activity.