A Farm Household Analysis of Land Use and Soil Conservation Decisions of Smallholder Farmers in the Ethiopian Highlands

Peasant households ' land use and conservation decisions are likely to be influenced by their dual economic engagement in production (and labour demand) and consumption (and labour supply) decisions. Home production of subsistence consumption, credit and liquidity constraints, etc. within imperfect rural markets are some of the factors that cause nonseparability in production and consumption decisions. This paper develops a non-separable farm household model based on linear programming to study peasants ' conservation decisions. Peasants ' short and long-term responses to alternative scenarios that incorporate the user costs of soil erosion at varying levels of average anticipated effects of conservation on production, discount rates, and planning horizons were analysed. Results reaffirm the strong need to introduce dual-purpose conservation technologies that conserve the soil while also enhancing crop yields in the short-term to make conservation attractive to the smallholder. Under plausible assumptions and constraints faced by peasant households, conservation fails to be a preferred option when average expected yields with conservation are lower or similar to that without conservation