Subsidy Removal: Environmental and Social Impact
Some have argued that removing government controls that keep food prices down is a necessary step to ensure food security.28 In addition, some maintain, the subsequent increase in price will reduce soil erosion by giving farmers stronger incentives (and access to capital) to invest in long-term erosion control measures.
1. It seems counterintuitive to argue that increasing the price that consumers face for food will, in many cases, actually improve access to food. How can you explain this line of reasoning?
2. In the short run, who would suffer most from lifting price controls on food? How can this problem be addressed?
3. Can you think of a reason why rising food prices might actually increase soil erosion?