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Estimating the Environmental Impact of Land and Production Decisions with Multivariate Selection Rules and Panel Data

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  • Anne Lacroix
  • Alban Thomas

Abstract

We 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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  • Anne Lacroix & Alban Thomas, 2011. "Estimating the Environmental Impact of Land and Production Decisions with Multivariate Selection Rules and Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(3), pages 780-798.
  • Handle: RePEc:oup:ajagec:v:93:y:2011:i:3:p:780-798
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    Cited by:

    1. Sung, Jae-hoon & Miranowski, John A., 2015. "Adaptive Behavior of U.S. Farms to Climate and Risk," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205787, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    2. Viaggi, Davide & Raggi, Meri & Gomez y Paloma, Sergio, 2011. "Farm-household investment behaviour and the CAP decoupling: Methodological issues in assessing policy impacts," Journal of Policy Modeling, Elsevier, vol. 33(1), pages 127-145, January.
    3. McFadden, Jonathan & Miranowski, John, "undated". "Climate Change Impacts on the Intensive and Extensive Margins of US Agricultural Land," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170512, Agricultural and Applied Economics Association.
    4. F. G. Santeramo & B. K. Goodwin & F. Adinolfi & F. Capitanio, 2016. "Farmer Participation, Entry and Exit Decisions in the Italian Crop Insurance Programme," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(3), pages 639-657, September.
    5. Marita Laukkanen & Céline Nauges, 2014. "Evaluating Greening Farm Policies: A Structural Model for Assessing Agri-environmental Subsidies," Land Economics, University of Wisconsin Press, vol. 90(3), pages 458-481.
    6. Carpentier, Alain & Gohin, Alexandre & Sckokai, Paolo & Thomas, Alban, 2015. "Economic modelling of agricultural production: past advances and new challenges," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 96(01), pages 131-165, March.
    7. 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.
    8. Hendricks, Nathan P. & Sinnathamby, Sumathy & Douglas-Mankin, Kyle & Smith, Aaron & Sumner, Daniel A. & Earnhart, Dietrich H., 2014. "The environmental effects of crop price increases: Nitrogen losses in the U.S. Corn Belt," Journal of Environmental Economics and Management, Elsevier, vol. 68(3), pages 507-526.
    9. Bareille, François & Dupraz, Pierre, 2016. "Biodiversity productive effects in milk farms of western France: a multi-output primal system," 149th Seminar, October 27-28, 2016, Rennes, France 244774, European Association of Agricultural Economists.
    10. Koutchade, Obafèmi Philippe & Carpentier, Alain & Femenia, Fabienne, 2015. "Corner solutions in empirical acreage choice models: an andogeneous switching regime approach with regime fixed cost," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 206060, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    11. Demirdöğen, Alper & Olhan, Emine & Chavas, Jean-Paul, 2016. "Food vs. fiber: An analysis of agricultural support policy in Turkey," Food Policy, Elsevier, vol. 61(C), pages 1-8.
    12. Hala Abou-Ali & Alban Thomas, 2011. "Regulating Traffic to Reduce Air Pollution in Greater Cairo, Egypt," Working Papers 664, Economic Research Forum, revised 12 Jan 2011.

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