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Agricultural Land Conversion, Land Economic Value, and Sustainable Agriculture: A Case Study in East Java, Indonesia

Mohammad Rondhi (), Pravitasari Anjar Pratiwi (), Vivi Trisna Handini (), Aryo Fajar Sunartomo () and Subhan Arif Budiman ()
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Mohammad Rondhi: Department of Agribusiness, University of Jember, Jember 68121, Indonesia
Pravitasari Anjar Pratiwi: Department of Agribusiness, University of Jember, Jember 68121, Indonesia
Vivi Trisna Handini: Department of Agribusiness, University of Jember, Jember 68121, Indonesia
Aryo Fajar Sunartomo: Department of Agricultural Extension, University of Jember, Jember 68121, Indonesia
Subhan Arif Budiman: Department of Soil Science, University of Jember, Jember 68121, Indonesia

Land, 2018, vol. 7, issue 4, 1-19

Abstract: Agricultural land conversion (ALC) is an incentive-driven process. In this paper, we further investigate the inter-relationship between land economic value (LEV) and ALC. To achieve this goal, we calculated the LEV for agricultural and non-agricultural (housing) uses in two areas of East Java, Indonesia. The first area represents peri-urban agriculture, which is facing rapid urbanization and experiencing a high rate of ALC. The second area represents rural agriculture, with zero ALC. Furthermore, we identified factors affecting LEV in both areas for both uses. The results of this study show that agricultural land yielded a higher economic benefit in rural areas. Conversely, compared to agricultural land, housing in urban areas yields a value that is seven times higher. Moreover, agricultural land was shown to yield a higher profit after conversion. Ironically, a similar comparison does not exist in rural areas. Agricultural land yielded a value that was only 19% higher, indicating that agricultural land can easily be converted. This is also proven by the growing number of new urban cores in the periphery area. There are several factors affecting land economic value, such as agricultural use, soil fertility, accessibility, and cropping pattern, which are important variables. Meanwhile, the accessibility and location of peri-urban areas increase the land value for housing.

Keywords: agricultural land conversion; land economic value; urbanization; land rent; sustainable agriculture (search for similar items in EconPapers)
JEL-codes: Q15 Q2 Q24 Q28 Q5 R14 R52 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:gam:jlands:v:7:y:2018:i:4:p:148-:d:186697