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Determinants of Motives for Land Use Decisions at the Margins of the Corn Belt

Tong Wang, Moses Luri, Larry Janssen, David Hennessy, Hongli Feng, Michael C. Wimberly and Gaurav Arora

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: The extent of United States Great Plains grass agriculture has ebbed and flowed over decades in response to market incentives, government policies, technological innovations and weather patterns. Our thesis is that the land most responsive to these drivers is at the economic margin between grass-based production and cropping. Much of the eastern Dakotas is such an area, primarily under crop-based agriculture although grass remains an important land use. We surveyed land operators in the area on their views about motivators for land use choices. Their views are largely consistent with the economic margin viewpoint. The importance of crop output prices, crop input prices, innovations in cropping equipment and weather patterns on land use decisions grow as one moves north toward the economic margin. Land in more highly sloped areas is more sensitive to crop prices and crop insurance policies. Consistent with human capital theory, older operators are generally less responsive to factors that affect land use. Those renting more land, being more exposed to market forces, are more responsive. As farm size increases, respondents declared higher land use sensitivity to policy issues and technological innovations, suggesting that scale effects render land units more sensitive to land use change drivers.

Date: 2017-04-01
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