ABSTRACT
Policies aimed at making agriculture more sustainable, either economically or environmentally, should be sensitive to inter-generational decision making, including nuances in preferences across generations, and complex interactions and tradeoffs among natural, social and human capital stocks. In particular, policies aimed at augmenting groundwater may turn out to be less effective in absence of complementary support programs that subsidize farmers’ human capital accumulation cost, as, when left to their own means, farmers may overdraw groundwater to pay for human capital accumulation. Finally, provision of better farm technology that makes farming more productive can also reduce investments in social capital, which is targeted at augmenting crop output, thereby freeing up resources for other productive ventures by farmers. This is especially true when social capital is adversely impacted by a reduction in the natural capital base of a region.
