Land-sparing vs land-sharing with incomplete policies

Abstract

This article analyzes the trade-off between yield and farmed area when a valuable species is affected by agricultural practices. Itrevisits, from an economic perspective, the ``land-sparing versus land-sharing'' debate elaborated in conservation biology using themethodology of the density-yield curve: The density of the species on farmland is a decreasing function of the yield. It is shown thatthe optimal yield is either increasing or decreasing with respect to the value of the species depending on the shape of the density-yieldcurve. Land-sparing and land-sharing are not necessarily antagonistic; for sufficiently elastic demand function, both the optimal yield andthe farmed area decrease with the value of the species. A general assessment of a second-best policy is performed, and several particularpolicies are considered, including a subsidy on biodiversity in farms, a tax or subsidy on farmland, and a tax or subsidy on a dirty input.In several cases, the first-best strategy and the second-best one induce contrasting effects on the yield.