Assessing the Implications of Tax-Trade Policies on Soil Erosion; Application of Multi-Sector General Equilibrium Model

Economic policies with an impact on farmers’ choice of cropping pattern has key role on soil erosion changes. The purpose of this study is to provide a multi-sector general equilibrium model to examine the tax-trade policies on soil erosion and to assess their economic implications. Results simulated with using data from 2011 for Iran’s economy and policies prioritized with using numerical taxonomy method. Based on results, policies such upland food production tax (-7.54%) and lowland food production subsidy (-7.20%) that directly target crop farmers are more effective in comparison with policies such export subsidy on tree crops (-3.65%) and tariff reduction is manufacturing (-0.33%) in order to reduce soil erosion. Among the four policies, lowland food production subsidy improves economic indices in addition to substantial reduction of soil erosion and based on ranking results, lowland food production subsidy policy is the best policy in more than 70% scenarios. As a result, lowland food production subsidy policy suggested for solving the soil erosion problem in Iran.