In Nigeria 90% of the agricultural primary produce is in the hands of small holders cultivating between 0.8-4 hectares. Farm size expansion is limited by population pressure, land fragmentation, poor market opportunities and lack of finance. This article presents estimates of soil erosion control(SEC) and soil erosion damage costs (SEDC) in small farmers' fields in Nigeria and examines the contents and direction of the country’s agriculture and environment policies vis-à-vis the SEC among small farmers. It was found that 24% of the farmers’ spending on tillage/cultural practices was directed at the institution of SEC measures, and that SEC-related defensive expenditures was 3.7 times more than the estimated SEDCs. The capacity of small farmers to respond to soil degradation is severely limited. Most SEC measures deployed derive from non-tradable inputs blurred by incomplete/missing markets for environmental assets. Yet farm development and environmental policies in Nigeria have dwelt on supply-side interventions based on marketable inputs, and have been largely ineffective. Policy and institutional reforms are needed to increase and focus support to farmers to increase defensive expenditures for SEC.