The causal effect of agritourism on farm survival

We use three waves of census data containing detailed characteristics of the entire population of Austrian farms to examine the causal effect of agritourism on farm survival. To control for self-selection into agritourism, we exploit regional variation in tourism intensity that is exogenous to individual farms. On average, agritourism causally increases survival probabilities by 10.9 percentage points per decade, which is economically and statistically significant. Marginal effects differ by farm characteristics, reaching up to 15.3 percentage points for certain sub-populations. Consequently, policies that support entry into agritourism can be effective in keeping farms in the market and thus in preserving the tourist appeal of many rural regions. Our analysis indicates that the magnitude of the estimated coefficients is severely biased unless endogenous self-selection into agritourism is properly addressed. This underscores that even with large microdata sets, an appropriate identification strategy is critical to derive causal and thus policy-relevant conclusions.