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Abstract
This paper assesses the tradeoff between non-farm income and on-farm soil and water
conservation investment by smallholder farmers in the semi-arid tropics of India using a
dynamic bioeconomic model. This modeling approach allows understanding the complex
interaction and feedback between household economic decision making and sustainability
of natural resource base. A dynamic crop-livestock integrated bio-economic has been
developed and calibrated for a Semi-Arid Tropics (SAT) watershed village in India where
integrated watershed development program was implemented. The village level model is
used to assess the impact of improved access to off-farm employment created by watershed
development program on household welfare, land degradation and Soil and Water
Conservation (SWC) labour used on-farm to reduce run-off and soil erosion. The
simulation results revealed that improved non-farm employment opportunities in the
village increases household welfare but reduces the households’ incentive to use labour for
conservation leading to higher levels of soil erosion and rapid land degradation in the
watershed. This indicates that returns to labour are higher in non-farm than on-farm
employment opportunities in the village. This appears to be no win-win benefits from
improving the access to non-farm income in SAT rainfed farming villages. Complementary
policies are required to protect the natural resource base.