Title
A structural model of agricultural land use for predicting the impact of policy change
Description
This paper develops a structural econometric model of land use in the United Kingdom to investigate the impact of policy changes upon agriculture. The model starts from a general farm profit function and derives accordingly the land use allocation equations. The empirical specification is based on a normalized quadratic profit function and it is estimated on a large panel database covering the entirety of England and Wales for 12 years between 1976 and 2004, integrated with the economic and physical environment determinants of all major agricultural land use types. Our model performs well in out of sample prediction of current land use and we apply it to assess a proposed implementation of the Water Framework Directive via a tax on fertilizer. Results indicate that such policy change would generate substantial switching from arable to grassland systems, reducing significantly the amount of nitrate leaching into UK water-bodies.
URL
http://eaere2008.org/uploads/files/EAERE_Abstractbook_WEB.pdf
URL Description
Abstract
Language
English
Author
Carlo Fezzi
Author
Paulette Posen
Author
Ian Bateman
Author
Dan Rigby

land use; water framework directive; econometrics; simultaneous equation tobit; diffused pollution

Is this item peer reviewed?
No
Conference event title
European Association of Environmental and Resource Economists annual conference
ConferenceLocation
Gothenburg, Sweden
Conference number
16th