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This paper analyses a local innovation in response to intense soil degradation in olive orchards of north‐west Syria. Farmers developed a practice consisting of quarrying red clayey soil in valley bottoms and applying this soil to hillslope olive orchards with heavily degraded calcareous soils. A biophysical, economic and social analysis of the practice of soil application identified the opportunities and risks of this innovative soil management technique. On the basis of a pairwise comparison of nine adjacent treated and nontreated orchard plots, soil applications were found to increase soil depth by 36%, soil water availability by 28% and total available soil nutrients: potassium (+45%), nitrogen (+12%) and phosphorus (+6%). Olive yield increased by about 40%. A cost–benefit analysis found this practice to be economically viable within a large geographical area, and farmers scored the practice higher than alternative methods. A socio‐economic analysis revealed its widespread adoption among different farmer types. The positive results of soil applications at the farm level explain its fast adoption. However, potential risks – including the further depletion of soil resources and the transfer of soil‐borne diseases – limit the long‐term sustainability of this locally developed practice. Copyright © 2013 John Wiley & Sons, Ltd.