The economics of land tenure and soil health

Farmers who own their land face different incentives than those who rent. Economically rational owner-operators consider their soil's future productive capacity when making current-year management decisions. Year-to-year tenant farmers, however, are incentivized to prioritize current production at the expense of future production. This insight has implications for the development of soil health policy. In this article, I present a model of agricultural production that combines profit maximization, soil health dynamics, and three different forms of land tenure. I use the results of the model to inform a discussion of relevant academic research on soil health dynamics, land tenure, and the capitalization of soil characteristics into land prices. I argue policies that increase the share of owner operated acres or increase the prevalence of long-term formal lease agreements will have the additional benefit of improving soil health.