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Sustainable agricultural growth in developing countries is jeopardized by soil degradation consequent upon intensive cultivation and use of increasing doses of chemical inputs. To pave the way to sustainable agricultural growth we develop a model that incorporates organic fertilizer into the production technology as an input having a double role of enhancement of soil fertility and conservation of the ecosystem. The results show that public intervention can make equilibrium agricultural growth sustainable by maintaining conservation of soil fertility in a setting with non-convex resource regeneration. The equilibrium is found to be dynamically stable. On the basis of our comparative static results we argue for soil preserving and productivityenhancing technological innovations and suggest a combined tax and direct payment scheme to encourage the use of soil conserving inputs.


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