The System of Incentive for Degraded Soils Recuperation is one of the Ministry of Agriculture’s most important programs. The program has existed for eight years and annually benefits nearly 40,000 farms, totaling US$ 30 million per year. This study evaluates two specific sub-programs of incentives using a year 2001 survey of 402 small farm households participating in INDAP (small-farm subsidized credit program) and living in the VII to X Regions. Based on a microeconomic decision model, participation in Phosphate Fertilization and Pasture Recuperation were estimated, along with impact functions. Results show that farmers with larger animal herds and better-linked to markets have a higher probability of program participation. Treatment-effects econometric models were applied and selection-effects bias was tested and rejected. The results show direct statistically-significant positive impacts of the two programs on income. There is only partial evidence that the programs act on income through yield increases for potatoes and milk. These yield increases do not necessarily lead to higher incomes. Participation in the programs does not appear to improve value of farm sales.