Estimating the Environmental Impact of Land and Production Decisions with Multivariate Selection Rules and Panel Data
AbstractWe propose an estimation procedure dealing with multivariate selection and dynamics in land choice and unobserved heterogeneity in structural and crop selection equations. The method is applied to a multi-output profit function with multiple corner solutions and farm-level panel data. Estimation results reveal that the single selection rule associated with the Tobit procedure is rejected in favor of our multivariate selection treatment. Inconsistent estimates are expected with the Tobit procedure, or if farmer fixed effects are omitted, which can have important consequences for policy recommendations, as illustrated in an evaluation of nitrogen runoff elasticities with respect to economic variables. Copyright 2011, Oxford University Press.
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Bibliographic InfoArticle provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.
Volume (Year): 93 (2011)
Issue (Month): 3 ()
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- Marita Laukkanen & Céline Nauges, 2012. "Evaluating greening farm policies: A structural model for assessing agri-environmental subsidies," Working Papers 40, Government Institute for Economic Research Finland (VATT).
- Laukkanen, Marita & Nauges, Celine, 2012. "Impact of agri‐environmental policies on farming practices and nutrient loading," 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia 124347, Australian Agricultural and Resource Economics Society.
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