Microplastic pollution from plastic fragments accumulating in agricultural fields threatens the world’s most productive soils and environmental sustainability. This is the first paper to address the challenge of developing a dynamic economic model to analyze the adoption of soil-biodegradable plastic mulches (BDMs) as a sustainable alternative to conventional polyethylene mulches. The model considers the trade-off between BDM degradation rates and agricultural production, seeking to balance the cost of BDMs and the cost of waste disposal. We consider both private and social perspectives under deterministic and stochastic environments. Our findings suggest that BDMs can significantly decrease long-term plastic pollution from single-use plastics in agriculture. For example, increasing landfill tipping fees incentivizes Washington State tomato growers to optimally adopt BDMs with a 61% degradation rate and to till used BDMs into the soil, reducing plastic waste accumulation in landfills. The study highlights the role of economic incentives, such as landfill fees, corrective taxes and the role of risk aversion, in promoting BDM adoption and curbing plastic pollution. The framework presented here offers valuable insights for policymakers and stakeholders seeking to foster sustainable agricultural practices and mitigate global plastic pollution.