Exploring long-term land improvements under land tenure insecurity
AbstractThis article explores long-term land improvement (lime application) under land tenure insecurity on leased land. The dynamic optimisation problem is solved by a stochastic dynamic programming routine with known parameters for one-period returns and transition equations. The model parameters represent Finnish soil quality and production conditions. The farmer's decision rules are solved for alternative likelihood scenarios over the continuation of the fixed term lease contract. The results suggest that, as the probability for non-renewal of the lease contract increases, farmers quickly decrease investments in irreversible land improvement and, thereafter, yields decline gradually. The estimated decision rules are a part of larger set of farmer's decision rules to be taken care when land leasing and environmental legislation is renewed.
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Bibliographic InfoPaper provided by New Zealand Agricultural and Resource Economics Society in its series 2006 Conference, August 24-25, 2006, Nelson, New Zealand with number 31954.
Date of creation: 2006
Date of revision:
Dynamic programming; land tenure; land improvements; Land Economics/Use;
Other versions of this item:
- Myyra, Sami & Pietola, Kyosti & Yli-Halla, Markku, 2007. "Exploring long-term land improvements under land tenure insecurity," Agricultural Systems, Elsevier, vol. 92(1-3), pages 63-75, January.
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