There aren’t really many drawbacks. It’s good for the soil, good for saving water, good for mountainous regions. It’d be hard to use in very cold areas, as the water wouldn’t flow well, and flat areas would be impossible to terrace farm, but that’s about it.
Terracing is overall a good practice, though paper by SCAPE (Soil Conservation and Protection for Europe) argues that “terracing has to be combined with additional soil conservation practices, of which the most important one is the maintenance of a permanent soil cover.” See the link below for more information.
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