On the output side, prices of major crops continue to be distorted through trade policy and price supports. Domestic sugar prices, for example, have regularly been set above import prices, encouraging the domestic production of sugar, a crop with high water requirements. Factor price distortions that artificially encourage capital intensive techniques lead to the adoption of production methods that do not reflect factor endowments (Noman 1994). Subsidies or targeted credit for tractors and threshers have displaced labor, for example. The resulting environmental stress can be alleviated by providing more rural employment by removing the policy induced distortions in favor of highly capital intensive methods. Employment creation may also be the most effective strategy for reducing pressure on fragile soils in the mountain areas of northern Pakistan.

Resolution of the environmental problems facing Pakistan's water resources requires the implementation of fundamental changes in water pricing and in institutional structures to improve the efficiency of allocating water and maintenance. Radical new institutional structures have been proposed, including the devolution of water management to farmers organizations, and the establishment of public utilities to operate and price water further up the system (Ahmad and Faruqee 1995). In the longer run, Pakistan must recognize full property rights for irrigation water, and allocate water through markets by volumetric measuring. Many issues-especially the initial allocation of the rights in an equitable manner-will need to be resolved before such a system can be implemented.

# _Other Soil Productivity Problems_

The mining of soil nutrients associated with a decline in organic matter and the extraction of other nutrients at a rate greater than their replacement through additions of inorganic and organic sources of nutrients threaten the sustainability of irrigated areas in Pakistan. In much of the irrigated area, farmers plant a single rotation, such as rice-wheat, without introducing a rotation crop or using organic manures. Indeed, there is evidence that cropping patterns have become less diverse as the area of fodder crops and pulses has fallen. Declining organic matter and declining yields for the same input level have been found in on-farm trials of the Soil Fertility Institute in the Punjab. Intensive monocropped agriculture may also be causing other as yet unrecognized soil problems.

Part of the problem stems from the lack of research (until recently) on integrated soil nutrient management. This lack of research is in part a legacy of the green revolution, which emphasized the application of higher doses of chemical fertilizers, encouraged by fertilizer subsidies, and paid almost no attention to complementary ways of maintaining soil fertility.

With the removal of fertilizer subsidies, the need to promote organic sources of nutrients through farmyard and green manures, to diversify rotations to include legumes, and to employ other environment-friendly practices, such as conservation tillage, has grown. The Pakistan Agricultural Research Council has only very recently initiated a bio-organic approach to agriculture that emphasizes organic sources of nutrients, including green manures, farmyard manure, composting, and microbiological approaches. Although these technologies are being extended, little research has been done on back up, especially on the fine tuning of these technologies needed to take account of the socioeconomic situations of small farmers. More research, especially participatory research with farmers, must be undertaken to develop appropriate methods for integrated nutrient management.

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