Effects of Economic Policies on Farmers, Consumers and Soil Degradation: a Recursively Dynamic Sector Model with an Application for Burkina Faso

Abstract

In this paper, a bio-economic model is described to support the process of policy formulation. The model incorporates the results of crop growth simulation models (with detailed information on the process of soil erosion) within the framework of an economic model designed to represent farmers’, herders’ and consumers’ behaviour at the agricultural sector level. It consists of three interacting and recursive modules: production, a regional optimisation model that simulates the individual decisions about crop allocation based on expected prices; marketing/consumption, a partial equilibrium model where ‘real’ prices are estimated as a result of the confrontation between marketed production and urban demand; and macro-economic context, in which the general economic variables affecting farmers and consumers are defined. The production choices and their effects on soil degradation influence the future choices of farmers within the model, allowing to take into account explicitly the dynamic recursive impact. The model gives indications on the way different actors might probably respond to the simulated policies and the influence of these responses on production, income, and consumption. Also, part of the positive and negative effects on soil quality is estimated. The use of these variables allows to compare the results of the simulation of different policies and facilitates the choice for the policy maker.