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Exploring long-term land improvements under land tenure insecurity

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  • Myyra, Sami
  • Pietola, Kyosti

Abstract

This article explores long-term land improvement (lime application) under land tenure insecurity on leased land. The dynamic optimisation problem is solved by a stochastic dynamic programming routine with known parameters for one-period returns and transition equations. The model parameters represent Finnish soil quality and production conditions. The farmer's decision rules are solved for alternative likelihood scenarios over the continuation of the fixed term lease contract. The results suggest that, as the probability for non-renewal of the lease contract increases, farmers quickly decrease investments in irreversible land improvement and, thereafter, yields decline gradually. The estimated decision rules are a part of larger set of farmer's decision rules to be taken care when land leasing and environmental legislation is renewed.

Suggested Citation

  • Myyra, Sami & Pietola, Kyosti, 2006. "Exploring long-term land improvements under land tenure insecurity," 2006 Conference, August 24-25, 2006, Nelson, New Zealand 31954, New Zealand Agricultural and Resource Economics Society.
  • Handle: RePEc:ags:nzar06:31954
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    File URL: http://purl.umn.edu/31954
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    1. Abhijit Banerjee & Lakshmi Iyer, 2005. "History, Institutions, and Economic Performance: The Legacy of Colonial Land Tenure Systems in India," American Economic Review, American Economic Association, vol. 95(4), pages 1190-1213, September.
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    3. Klaus Deininger, 2003. "Land Policies for Growth and Poverty Reduction," World Bank Publications, The World Bank, number 15125.
    4. Sami Myyrä & Elise Ketoja & Markku Yli-Halla & Kyöisti Pietola, 2005. "Land Improvements under Land Tenure Insecurity: The Case of pH and Phosphate in Finland," Land Economics, University of Wisconsin Press, vol. 81(4).
    5. Li, Guo & Rozelle, Scott & Brandt, Loren, 1998. "Tenure, land rights, and farmer investment incentives in China," Agricultural Economics, Blackwell, vol. 19(1-2), pages 63-71, September.
    6. Richard Bellman, 1957. "On a Dynamic Programming Approach to the Caterer Problem--I," Management Science, INFORMS, vol. 3(3), pages 270-278, April.
    7. Stein Holden & Hailu Yohannes, 2002. "Land Redistribution, Tenure Insecurity, and Intensity of Production: A Study of Farm Households in Southern Ethiopia," Land Economics, University of Wisconsin Press, vol. 78(4), pages 573-590.
    8. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
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    Citations

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    Cited by:

    1. Iho, Antti & Laukkanen, Marita, 2012. "Precision phosphorus management and agricultural phosphorus loading," Ecological Economics, Elsevier, vol. 77(C), pages 91-102.
    2. Choumert, Johanna & Phélinas, Pascale, 2015. "Determinants of agricultural land values in Argentina," Ecological Economics, Elsevier, vol. 110(C), pages 134-140.
    3. Pietola, Kyosti & Myyra, Sami & Niemi, Jarkko K. & Van Asseldonk, Marcel A.P.M., 2011. "Insure or Invest in Green Technologies to Protect Against Adverse Weather Events?," Discussion Papers 100738, MTT Agrifood Research Finland.
    4. Marlène GUILLON & Jacky MATHONNAT, 2017. "Is there a strategy in China’s health official development assistance to African countries?," Working Papers 201720, CERDI.
    5. Iho, Antti & Laukkanen, Marita, 2009. "Dynamically Optimal Phosphorus Management and Agricultural Water Protection," Discussion Papers 54285, MTT Agrifood Research Finland.
    6. Pascale Phelinas & Sonia Schwartz, 2017. "Regulating transgenic soybean production in Argentina," Working Papers halshs-01656924, HAL.
    7. Anonymous & Phélinas, Pascale, 2014. "A Hedonic Analysis Of Agricultural Land Values In A Gm Soybean Area Of Argentina," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182750, European Association of Agricultural Economists.
    8. Johanna CHOUMERT & Pascale PHELINAS, 2015. "Farmland Rental Values in GM Soybean Areas of Argentina: Do Contractual Arrangements Matter?," Working Papers 201532, CERDI.
    9. Myyra, Sami & Pietola, Kyosti & Heikkila, Anna-Maija, 2011. "Farm Level Capital: Capital positions, structures, the dynamics of farm level investments, capital accumulation and leverage positions," Working Papers 117488, Factor Markets, Centre for European Policy Studies.
    10. Satish Chand & Charles Yala, 2009. "Land Tenure and Productivity: Farm-Level Evidence from Papua New Guinea," Land Economics, University of Wisconsin Press, vol. 85(3), pages 442-453.
    11. Czyżewski, Bazyli & Trojanek, Radosław, 0. "Drivers of agricultural land prices in terms of different functions of rural areas in Poland," Problems of Agricultural Economics, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    12. Kyösti Pietola & Sami Myyrä & Eija Pouta, 2011. "The Effects of Changes in Capital Gains Taxes on Land Sales: Empirical Evidence from Finland," Land Economics, University of Wisconsin Press, vol. 87(4), pages 582-594.

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