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The Dynamics of Farm Land Allocation – Short and Long Run Reactions in a Long Micro Panel

Author

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  • Søren Arnberg

    (Danish Economic Counsils)

  • Lars Gårn Hansen

    (Institute of Food and Resource Economics, University of Copenhagen)

Abstract

This study develops a dynamic multi-output model of farmers’ crop allocation decisions that allows estimation of both short-run and long-run adjustments to a wide array of economic incentives. The method can be used to inform decision-makers about a number of issues including agricultural policy reform and environmental regulation. The model allows estimation of dynamic effects relating to price expectations adjustment, investment lags and crop rotation constraints. Estimation is based on micro-panel data from Danish farmers that includes acreage, output and variable input utilisation at the crop level. Results indicate that there are substantial differences between the shortrun and long-run land allocation behaviour of Danish farmers and that there are substantial differences in the time lags associated with different crops. Since similar farming conditions are found in northern Europe and parts of the USA and Canada, this result may have more general interest.

Suggested Citation

  • Søren Arnberg & Lars Gårn Hansen, 2010. "The Dynamics of Farm Land Allocation – Short and Long Run Reactions in a Long Micro Panel," IFRO Working Paper 2010/3, University of Copenhagen, Department of Food and Resource Economics.
    • Handle: RePEc:foi:wpaper:2010_03
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    References listed on IDEAS

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    1. Moro, Daniele & Sckokai, Paolo, 1999. "Modelling the CAP Arable Crop Regime in Italy : Degree of Decoupling and Impact of Agenda 2000," Cahiers d'Economie et de Sociologie Rurales (CESR), Institut National de la Recherche Agronomique (INRA), vol. 53.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    land allocation; crop rotation; system of dynamic equations; micro panel data; GMM;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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