Trees Or Trotters?
A real options model is used to explain why Irish farmers have been slow to switch from traditional farming to forestry despite numerous government incentives. In the theoretical model our results depend on profits from traditional farming relative to forestry. Under reasonable parameterisations of this profit ratio we show that it is optimal for farmers to stay in farming for six years before switching to forestry. In a subsequent empirical dynamic panel data model, the error correction model also predicts that it would take about six years for a change in the profit ratio to fully affect the number of hectares planted
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| Length: | |
| Date of creation: | 2003 |
| Date of revision: | |
| Handle: | RePEc:may:mayecw:n1301003 |
| Contact details of provider: | Postal: Maynooth, Co. Kildare Phone: 353-1-7083728 Fax: 353-1-7083934 Web page: http://www.maynoothuniversity.ie/economics-finance-and-accounting More information through EDIRC
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References listed on IDEAS
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- Behan, Jasmine & McQuinn, Kieran, 2003. "Projecting Net Greenhouse Gas Emissions from Irish Agriculture and Forestry," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2003(1-Spring), pages 1-11.
- Siobhan McCarthy & Alan Matthews & Brendan Riordan, 2002. "Determinants of Private Afforestation in the Republic of Ireland," Trinity Economics Papers 20023, Trinity College Dublin, Department of Economics.
- Whitney K. Newey & Kenneth D. West, 1986.
"A Simple, Positive Semi-Definite, Heteroskedasticity and AutocorrelationConsistent Covariance Matrix,"
NBER Technical Working Papers
0055, National Bureau of Economic Research, Inc.
- Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 33(1), pages 125-132.
- Newey, Whitney K & West, Kenneth D, 1987. "A Simple, Positive Semi-definite, Heteroskedasticity and Autocorrelation Consistent Covariance Matrix," Econometrica, Econometric Society, vol. 55(3), pages 703-08, May.
- Alig, Ralph J. & Adams, Darius M. & McCarl, Bruce A., 1998. "Impacts Of Incorporating Land Exchanges Between Forestry And Agriculture In Sector Models," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 30(02), December.
- Peter Pedroni, 2000.
"Fully Modified OLS for Heterogeneous Cointegrated Panels,"
Department of Economics Working Papers
2000-03, Department of Economics, Williams College.
- Tom Doan, . "PANELFM: RATS procedure to perform panel data group mean FMOLS," Statistical Software Components RTS00151, Boston College Department of Economics.
- Abebayehu Tegene & Keith Wiebe & Betsey Kuhn, 1999. "Irreversible Investment Under Uncertainty: Conservation Easements and the Option to Develop Agricultural Land," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(2), pages 203-219.
- Brent Sohngen & Robert Mendelsohn, 2003. "An Optimal Control Model of Forest Carbon Sequestration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 448-457.
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