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Dynamic Discrete Choice Estimation of Agricultural Land Use

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  • Scott, Paul

Abstract

I develop a new framework for analyzing land use change with dynamically optimizing landowners. My empirical approach allows for unobservable heterogeneity and avoids the burden of explicitly modeling the evolution of market-level state variables like input and output prices. Using a rich new data set on land use in the United States, I estimate a relatively large long-run cropland-price elasticity of 0.3. Compared to static estimates using the same data, my dynamic estimates suggest that biofuels production leads to dramatically more land use change and substantially smaller price increases in the long run.

Suggested Citation

  • Scott, Paul, 2014. "Dynamic Discrete Choice Estimation of Agricultural Land Use," TSE Working Papers 14-526, Toulouse School of Economics (TSE).
  • Handle: RePEc:tse:wpaper:27568
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    References listed on IDEAS

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    1. Rust, John, 1987. "Optimal Replacement of GMC Bus Engines: An Empirical Model of Harold Zurcher," Econometrica, Econometric Society, vol. 55(5), pages 999-1033, September.
    2. Igal Hendel & Aviv Nevo, 2006. "Measuring the Implications of Sales and Consumer Inventory Behavior," Econometrica, Econometric Society, vol. 74(6), pages 1637-1673, November.
    3. V. Joseph Hotz & Robert A. Miller & Seth Sanders & Jeffrey Smith, 1994. "A Simulation Estimator for Dynamic Models of Discrete Choice," Review of Economic Studies, Oxford University Press, vol. 61(2), pages 265-289.
    4. Marc Nerlove, 1956. "Estimates of the Elasticities of Supply of Selected Agricultural Commodities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 38(2), pages 496-509.
    5. V. Joseph Hotz & Robert A. Miller, 1993. "Conditional Choice Probabilities and the Estimation of Dynamic Models," Review of Economic Studies, Oxford University Press, vol. 60(3), pages 497-529.
    6. Chomitz, Kenneth M & Gray, David A, 1996. "Roads, Land Use, and Deforestation: A Spatial Model Applied to Belize," World Bank Economic Review, World Bank Group, vol. 10(3), pages 487-512, September.
    7. Vance, Colin & Geoghegan, Jacqueline, 2002. "Temporal and spatial modelling of tropical deforestation: a survival analysis linking satellite and household survey data," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 27(3), November.
    8. Lubowski, Ruben N. & Plantinga, Andrew J. & Stavins, Robert N., 2006. "Land-use change and carbon sinks: Econometric estimation of the carbon sequestration supply function," Journal of Environmental Economics and Management, Elsevier, vol. 51(2), pages 135-152, March.
    9. 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.
    10. Victor Aguirregabiria & Pedro Mira, 2002. "Swapping the Nested Fixed Point Algorithm: A Class of Estimators for Discrete Markov Decision Models," Econometrica, Econometric Society, vol. 70(4), pages 1519-1543, July.
    11. Andriy Norets & Satoru Takahashi, 2013. "On the surjectivity of the mapping between utilities and choice probabilities," Quantitative Economics, Econometric Society, vol. 4(1), pages 149-155, March.
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    Cited by:

    1. Dave Donaldson & Adam Storeygard, 2016. "The View from Above: Applications of Satellite Data in Economics," Journal of Economic Perspectives, American Economic Association, vol. 30(4), pages 171-198, Fall.

    More about this item

    Keywords

    agricultural supply estimation; dynamic discrete choice; land use change; biofuels policy;

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