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Mining the soil: Agricultural production system on peatland

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  • Renan Goetz
  • David Zilberman

Abstract

Soil is usually considered as a renewable resource for dynamic crop and production management decision problems. For peatland, however, soil should be regarded as an exhaustible resource. This paper determines the optimal utilization of peatland for agricultural production within a dynamic context and it also presents an empirical study where the quasirent function is convex in the input and not concave as assumed in many economic studies. As a result of this convexity a corner solution is obtained. Moreover, the study demonstrates that there is only a slight difference between short- and farsighted behavior, and that both lead ultimately to an accelerated exhaustion of the resource. Private optimization leads to intensive use of the peat in the production of high value crops, which depletes the peat in a relatively short period of time. However, peatland also possesses a value as an environmental asset. The study provides a benchmark for the decision as to whether to convert peatland into productive agricultural land or to conserve it. Copyright Kluwer Academic Publishers 1995

Suggested Citation

  • Renan Goetz & David Zilberman, 1995. "Mining the soil: Agricultural production system on peatland," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 6(2), pages 119-138, September.
    • Handle: RePEc:kap:enreec:v:6:y:1995:i:2:p:119-138
    DOI: 10.1007/BF00691680
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    References listed on IDEAS

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    1. John A. Miranowski, 1984. "Impacts of Productivity Loss on Crop Production and Management in a Dynamic Economic Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(1), pages 61-71.
    2. Caputo, Michael R., 1990. "How to do comparative dynamics on the back of an envelope in optimal control theory," Journal of Economic Dynamics and Control, Elsevier, vol. 14(3-4), pages 655-683, October.
    3. Carlson, Gerald A. & Zilberman, David & Miranowski, John, 1993. "Agricultural and Resource Economics," Staff General Research Papers Archive 11104, Iowa State University, Department of Economics.
    4. Oscar R. Burt, 1981. "Farm Level Economics of Soil Conservation in the Palouse Area of the Northwest," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(1), pages 83-92.
    5. Miranowski, John, 1984. "Impacts of Productivity Loss on Crop Production and Management in a Dynamic Economic Model," Staff General Research Papers Archive 10708, Iowa State University, Department of Economics.
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