A review of the South African agricultural policy is already well underway. One item that is gathering considerable attention is managing of natural agricultural resources. The main concern is soil conservation subsidies, and regulation of land use. Despite, heavy financial investment by the government over the past years in this area, land degradation continues to pose a threat to the agricultural and other sectors of the economy. This paper seeks to address two questions raised by these concerns. First, to what extent are subsidies and regulation consistent with meeting national policy objectives such as increased growth, environmental protection and equity? And second, if and where policies are not meeting those goals, what policy actions and or changes are appropriate? A qualitative analytical approach is used to examine the current policy instruments. The paper concludes that the current policies with regard to land resources are not socially desirable. There are no positive externalities that justify the continuation with the subsidy policy. Subsidies are countering the national objectives. In addition, high administration costs of regulation have made it not a viable policy instrument to achieve a surplus- increasing outcome. Taxing the negative externalities and investment on research and technological development are critical to achieving the best possible standard of living.
