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

  • Carlo Fezzi
  • Ian J. Bateman

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.

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Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 93 (2011)
Issue (Month): 4 ()
Pages: 1168-1188

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Handle: RePEc:oup:ajagec:v:93:y:2011:i:4:p:1168-1188
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