Landowner response to policies regulating land improvements: lease or search for other options?

Land improvements with long pay-back periods are often delayed on leased agricultural land, resulting in social costs through land degradation, decreased land productivity and environmental problems. An important question is thus how landowners would respond to regulations and mandates concerning land improvements. Based on a landowner survey, we analyse landowner choices under certain land improvement regulations, using the currently dominant choice of leasing land for agricultural use as the benchmark. The results indicated that land leasing will continue to increase in the future, but if the landowner mandate to co-finance costly land improvements is increased, landowners are predicted to respond significantly to these mandates and search for other land management options. Three heterogeneous landowner groups were identified based on their land use choices. Current leasers and amenity owners, in particular, were sensitive to land improvement mandates, and would avoid compulsory investment expenses by selling or afforesting their land.