UC Merced

This study proposes the use of marginal abatement cost curves to calculate environmental damages of agricultural systems in China's Loess Plateau. Total system costs and revenues, management characteristics and pollution attributes are imputed into a directional output distance function, which is then used to determine shadow prices and abatement cost curves for soil and nitrogen loss. Marginal abatement costs curves are an effective way to compare economic and conservation tradeoffs when field-specific data are scarce. The results show that sustainable agricultural practices can balance soil conservation and agricultural production; land need not be retired, as is current policy.