This paper evaluates the farmers' perception of the soil erosion problem, and identifies and analyses social capital elements that motivate households to actively participate in soil conservation in agricultural production process. The data used in the study was generated using a structured questionnaire in a survey that covered 321 households in Kenya's semi arid districts of Machakos and Taita-Taveta Districts. Two modelling strategies were used: A Probit model was used to estimate the likelihoods of factors that may influence farmers' perception of soil erosion problem, and a Tobit to estimate parameters of factors that influence terracing intensity. The results indicate that although perception of the soil erosion problem is relatively high in the study sites, its effect on soil conservation investments is not significant. In Machakos, the significant determinants of terracing intensity include land tenure, crop area, household size, and membership diversity whereas in Taita-Taveta they include age of household head and consumer-worker ratio. Results from the aggregated data show that lagged crop output, group membership density and diversity, cognitive social capital and location significantly influence the terracing intensity on farm household fields. The policy challenge is to establish and strengthen social capital elements that have a strong influence on communities undertaking soil erosion control measures for sustainable agriculture and rural development.