The Economics of Soil Health: Current Knowledge, Open Questions, and Policy Implications⇤

Soil health plays an important role in agricultural productivity, environmental resiliency, and ecosystem sustainability. However, this hard-to-quantify holistic concept has proven di cult to incorporate into existing economic and policy frameworks. This report summarizes existing knowledge about the economics of soil health, suggests a methodology for studying the economics of soil health, identifies areas with a need for further research, and discusses current and potential policies that address the economics of soil health. Important components of optimal soil health management include search costs for information, private vs. public benefits, land ownership, carbon policy, and the natural dynamics of soil health characteristics. A case study (Berazneva et al., 2014) is highlighted as an application of an economic framework to soil health in Kenya, suggesting the need for similar studies focused on American agricultural systems. The framework developed in this report suggests that soil health policies focus on increasing access to information and internalizing the positive externalities of healthy soils. However, the magnitude of how far the status quo is from an economic optimum is unclear. ⇤This report is funded by a generous grant from the Berkeley Food Institute. I am grateful to Ann Thrupp and Nina Ichikawa for helpful feedback. Any remaining errors are my own. †Department of Agricultural & Resource Economics, University of California – Berkeley, 207 Giannini Hall #3310, Berkeley, CA 94720-3310. E-mail: [email protected].