Fezzi, C. & Bateman, I.J. (2011). Fezzi, C. & Bateman, I.J. (2011). Structural Agricultural Land Use Modeling for Spatial Agro-Environmental Policy Analysis. American Journal of Agricultural Economics, 93(4), 1168-1188.
Permanent Research Commons link: http://hdl.handle.net/10289/5881
This paper develops a spatially disaggregated, structural econometric model of agricultural land use and production based on the joint multi-output technology representation introduced by Chambers and Just (1989). Starting from a flexible specification of the farm profit function, we derive land use allocation, input application, crop yield, and livestock intensity equations in a joint and theoretically consistent framework. To account for the presence of censored observations in micro-level data, the model is estimated as a system of two-limit Tobit equations via quasi-maximum likelihood. We present an empirical application using fine-scale spatial data covering the entirety of England and Wales and including the main economic, policy, and environmental drivers of land use change in the past forty years. A simulation of the effects of diffuse pollution reduction measures illustrates how our approach can be applied for agro-environmental policy appraisal.
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