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

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  • Carlo Fezzi
  • Ian J. Bateman

Abstract

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.

Suggested Citation

  • Carlo Fezzi & Ian J. Bateman, 2011. "Structural Agricultural Land Use Modeling for Spatial Agro-Environmental Policy Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(4), pages 1168-1188.
  • Handle: RePEc:oup:ajagec:v:93:y:2011:i:4:p:1168-1188
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    File URL: http://hdl.handle.net/10.1093/ajae/aar037
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