Structural Agricultural Land Use Modeling for Spatial Agro-Environmental Policy Analysis

Carlo Fezzi and Ian Bateman

American Journal of Agricultural Economics, 2011, vol. 93, issue 4, 1168-1188

Abstract: This paper develops a spatially disaggregated, structural econometric model of agricultural land use and production based on the joint multi-output technology representation introduced by Chambers and Just (1989) . Starting from a flexible specification of the farm profit function, we derive land use allocation, input application, crop yield, and livestock intensity equations in a joint and theoretically consistent framework. To account for the presence of censored observations in micro-level data, the model is estimated as a system of two-limit Tobit equations via quasi-maximum likelihood. We present an empirical application using fine-scale spatial data covering the entirety of England and Wales and including the main economic, policy, and environmental drivers of land use change in the past forty years. A simulation of the effects of diffuse pollution reduction measures illustrates how our approach can be applied for agro-environmental policy appraisal. Copyright 2011, Oxford University Press.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:93:y:2011:i:4:p:1168-1188

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