INTRODUCTION
Problem Statement
Throughout history, the relationship between humanity and the environment has evolved significantly, influenced by diverse natural, social, political, technological, and economic factors This dynamic interplay has shaped how we interact with natural resources over time.
Historically, the world's population was modest, resulting in minimal consumption pressure on resources Limited technological advancements in resource management helped sustain this balance, allowing ecosystems and human populations to coexist harmoniously across the globe.
Different sources indicate that world population was about 190 million by 200AD, about
By 1300 AD, the global population reached 360 million, escalating to 813 million by 1800 AD, 2.07 billion by 1930 AD, and 4.456 billion by 1980 AD, ultimately hitting approximately 6.08 billion by 2000 AD This significant population growth has intensified pressure on natural resources, highlighting the urgent need for effective allocation of the world's limited resources.
The rapid growth of the population and evolving economic activities have raised significant concerns about our relationship with the natural environment This has sparked intense debates surrounding land use, environmental degradation, pollution, energy sustainability, wildlife extinction, and dwindling natural resources These discussions highlight the urgent need for a reassessment of land use planning, environmental management, renewable energy strategies, wildlife conservation, and policies for natural resource management.
Human dependence on natural systems is crucial for the provision of food and fiber, highlighting the need for cautious approaches in the relationship between economic agents and natural resources For more detailed information, refer to the source at http://futuresedge.org/World_Population_Issues/Historical_World_Population.html.
Agricultural land, a vital natural resource, is increasingly under pressure from demographic, economic, and technological changes, leading to heightened concerns about land use and preservation Historically, land has played a crucial role in shaping economic and social structures globally, influencing community identity, political boundaries, and providing essential livelihoods for agrarian societies while driving economic transformation.
This study examines the conversion of agricultural land for urban development, highlighting the pressures from population growth and competing economic activities While advancements in agricultural technologies and agro-genetics have addressed the increasing global demand for food and fiber, conflicts over land use have emerged These conflicts often lead to government intervention through land use policies and various incentive schemes to balance competing interests.
The global conversion of agricultural land for urban development is a significant concern, as highlighted by the World Resource Institute's 1996-97 assessment While the overall amount of land being converted to urban uses may seem small, a growing trend is evident in both developed and developing nations Cities like Los Angeles and Jakarta are expanding rapidly, leading to urban sprawl characterized by low-density development and abandoned land This phenomenon results in inefficient land use, increased infrastructure costs, and heightened energy consumption and air pollution due to greater reliance on motorized transport.
The United Nations is increasingly focused on the trend of land conversion and its impact on global food security and sustainable development During the Millennium Summit, titled "New Century, New Challenges," the UN established key policy priorities for the century The organization's apprehension regarding land conversion is highlighted in its statement, "Defending the soil," which suggests that while biotechnology may offer solutions for feeding a growing population with limited agricultural land, its safety and environmental implications remain contentious.
Population growth and a shift in the U.S economy from agriculture and manufacturing to services and technology have increased pressure on agricultural land due to development demands and competition for land use As cities and towns expand, there is a rising concern regarding the conversion of agricultural lands for other purposes.
Estimates of population growth in the US indicate that starting with WWII, population pressure has intensified and may continue to grow at a steady pace
Fig 1 US Population Growth (in millions): 1900-2050
Source: U.S Bureau of the Census, Current Population Reports, adopted in Diamond, Henry L & Patrick F Noonan, (forwarded by Laurance S Rockefeller), Land Use in America, 1996 p 86
3 Refer UN millennium challenges and policies at http://www.un.org/millennium/sg/report/summ.htm
Recent data indicates that the US population is experiencing significant growth, leading to increased demand for housing and urban development This surge in income and purchasing power has resulted in the conversion of substantial farmland into urban, residential, and recreational areas According to the World Resource Institute, although urban population growth in the US has slowed to 1.3 percent annually, urban development continues to expand into surrounding lands as people leave inner cities for suburban living Consequently, the total land allocated for urban uses has risen from 21 million hectares.
1982 to 26 million hectares in 1992 In one decade, 2,085,945 hectares of forestland, 1,525,314 hectares of cultivated cropland, 943,598 hectares of pastureland, and 774,029 hectares of rangeland were converted to urban uses.” 4
Rapid urban population growth significantly impacts agriculture by encroaching on farmland and increasing the demand for food and fiber While advancements in agricultural technology may boost production, the United States could still face challenges in maintaining sufficient output of major crops The ongoing loss of agricultural land to urban development, combined with rising food prices and global shortages, raises concerns about the long-term ability of the U.S to sustainably produce food for its growing population and the global market.
Farmland has been continually declining because of complex economic interactions and demographic factors Figure 2 shows the trend in farmland in the US, which indicates the state of the problem
Fig 2 Farm Land in US: 1940-1992
Source: U.S Bureau of the Census, Census of Agriculture, adopted in Diamond, Henry L & Patrick F
Noonan, (forwarded by Laurance S Rockefeller), Land Use in America, 1996 p 86
Population and economic well being in the US has dramatically changed since WWII This created pressures on farmland starting in the mid-1950s as indicated by figure 2
According to a 1990 USDA report, over 60% of agricultural land converted for urban expansion in the United States comes from cropland, with an alarming prediction that 90% of croplands likely to be repurposed in the next 50 years will be prime farmland Additionally, the Natural Resource Conservation Service highlights that between 1982 and 1997, approximately 30% of newly developed land during five-year intervals was prime farmland.
The trend of converting agricultural land to development has garnered significant research interest, particularly regarding its effects on farmers at the urban fringe While suburbanization has notably influenced the social and political dynamics of these farmers, its economic implications for agriculture remain underexplored (Lopez, Adelaja, and Andrews, 1988) This concern is amplified by the irreversible nature of land use changes, highlighting the urgency of addressing the long-term impacts of current land use decisions (The North East Regional Center for Rural Development, 2002).
The ongoing and concerning shifts in land use, particularly the transition away from agriculture, pose significant economic challenges that warrant policy attention Increasing urban demand for rural land is gradually reducing the availability of prime agricultural areas Consequently, the land that is cultivated to offset these agricultural losses tends to be of inferior quality and has limited productivity (Ramsey and Corty, 1982).
Fig 3 Land Use Changes in United States: 1982 - 1992
Source: U.S Soil Conservation Service, National Resource Inventory, 1992., adopted in Diamond, Henry L & Patrick F Noonan,
(forwarded by Laurance S Rockefeller), Land Use in America, 1996 p 86
General Review of Previous Works
The conversion of agricultural land to urban uses is increasingly prevalent due to population growth, changing agricultural practices, and economic shifts In the post-war United States, suburbanization has intensified, driven by federal tax policies that favor single-family housing and support state and local highway construction Consequently, housing developments and infrastructure have expanded into areas that were primarily agricultural.
Between 1970 and 1980, urban land in the U.S expanded by 2.4 million acres, with defined metropolitan areas growing by 60 percent from 1970 to 1985, now representing 16 percent of the nation's land (Heimlich and Reining, 1989) A 1988 survey by Barkley and Wunderlich revealed that 3.5 percent of rural land is transferred annually, predominantly agricultural land at 88.4 percent Additionally, the Census of Agriculture (1992) indicated a significant increase in U.S agricultural areas, rising from 25.5 million acres in 1960 to 55.9 million acres in 1990 However, Pimentel and Giampietro (1994) project that urbanization will significantly reduce the U.S arable land base of 470 million acres over the next 60 years.
The expansion of public facilities due to a rising population has significantly impacted agricultural land, consuming approximately 260 million acres over the past 200 years, with around half of this area being arable land.
Various theories explain the forces driving land conversion, notably Von Thünen's location theory, which highlights the differences in land return rates based on use and location R.F Muth's conversion process suggests that land use patterns and market prices are determined by relative rental gradients for urban and agricultural purposes, with urban land conversion occurring in concentric circles around a central city At the equilibrium boundary between urban and agricultural uses, the relative rents of competing uses are equal Policy changes promoting suburbanization and increased housing demand due to population growth can shift the urban-rural rent gradient, moving the equilibrium boundary away from the city center Additionally, land speculation may elevate the market value of agricultural land above its use value before conversion if anticipated urban rents surpass current agricultural rents over the planning horizon (Lopez et al., 1988).
The theory of land conversion has led to varied analyses among scholars and policy analysts, with Krupa and Vesterby (2001) highlighting that urbanization does not necessarily end agriculture in rapidly growing counties While farmland may decrease in areas experiencing sustained population growth, the shift towards high-value crops such as fruits, nuts, vegetables, and greenhouse products often offsets these losses in market value This adaptability of agriculture plays a significant role in these changes.
Many experts argue that the conversion of agricultural land to urban use often overlooks significant direct and indirect implications Vesterby et al (1994) highlight that the true value of land may not be fully captured in the valuation process Furthermore, the urbanization of rural areas presents challenges at both state and local levels, including the need to protect watersheds, maintain air quality, provide open spaces, preserve rural lifestyles, prevent urban sprawl, and support local economies Unfortunately, these essential values are typically not reflected in the market price of farmland.
Numerous studies highlight the direct consequences of urbanization on farmland, resulting in decreased agricultural output and income losses for farmers Additionally, indirect effects may arise from regulatory restrictions on farming practices, technical challenges, and speculative pressures As uncertainty about the future of agriculture grows, farmers may reduce production, leading to a decline in farming income Ultimately, this decline can jeopardize the critical mass of agricultural production necessary to sustain the local farming economy.
Farmers often experience uncertainty regarding their future operations, which can result in decreased investments in agriculture This uncertainty may stem from the potential conversion of their land for non-agricultural purposes, a phenomenon known as impermanence syndrome Consequently, land use policies must effectively address the implications of impermanence on the agricultural sector, particularly in relation to land management strategies.
Hence, understanding the full impacts of alternative land management policies and the existing relationships between urban and rural agricultural land allocations is key to addressing the land use challenge
The general objective of this study is to measure the direct and indirect effects of migration on farmland conversion in West Virginia Specifically, the objectives are to:
1 Model the effect of population changes on agricultural land conversion
2 Model the effect of employment changes on agricultural land conversion
3 Model other factors associated with population and employment changes and agricultural land conversion
This study employs comprehensive descriptive and qualitative analysis, utilizing extensive secondary data to enhance the understanding of land use processes This approach aims to establish a foundational insight into the scope of the issues facing West Virginia and identify potential trends.
Secondary data is collected from different sources including the US Census of Agriculture, County and City Data Books, REIS, and on-line sources
The database will serve as a foundation for econometric analysis to assess the impact of suburbanization on agricultural lands Key factors such as population changes, income levels, employment rates, land use for farming versus competing purposes, and geographical location along with accessibility data will be crucial for evaluating this issue.
This study will utilize an econometric model based on the Carlino-Mills Growth Model, with necessary modifications to align with its objectives Originally designed to analyze the factors influencing inter-regional population and employment densities, the model assesses county growth by examining changes in employment and population alongside other relevant exogenous variables, employing a two-stage least-squares (TSLS) method (Carlino & Mills, 1987) The Carlino-Mills model has been adapted for various research purposes; for example, Deller et al (2001) applied it to investigate the impact of amenities and quality of life on rural economic growth, while Duffy-Deno (1997) used it to evaluate the economic implications of endangered species preservation in non-metropolitan areas.
This thesis is structured into five chapters, beginning with an introduction that outlines the research problem, objectives, analysis methods, and a review of land use literature The second chapter delves into the development of land use theories and presents a microeconomic framework for understanding land use decisions, optimal locations, and land sizes Chapter Three details the empirical model, specifying the variables and establishing a growth model to assess the impact of economic and demographic factors on agricultural land Chapter Four presents and analyzes the empirical results derived from the model, while Chapter Five concludes with a summary of the research findings.
Methods of Analysis
This study employs comprehensive descriptive and qualitative analysis, utilizing extensive secondary data to elucidate the relationships in land use processes This approach aims to provide an initial insight into the scope of the issues faced in West Virginia and identify potential trends.
Secondary data is collected from different sources including the US Census of Agriculture, County and City Data Books, REIS, and on-line sources
The database will serve as a foundation for econometric analysis aimed at assessing the impact of suburbanization on agricultural lands Key factors such as population changes, income levels, employment rates, land dedicated to farming versus competing uses, as well as geographical location and accessibility, will be essential for evaluating this issue.
This study utilizes an econometric model based on the Carlino-Mills Growth Model, with necessary modifications to align with its objectives Originally designed to analyze inter-regional determinants of population and employment densities, this model employs changes in employment and population alongside other exogenous variables to assess county growth through a two-stage least-squares (TSLS) estimation method (Carlino & Mills, 1987) The versatility of this growth model has led to its application in various studies, such as Deller et al (2001), which examined the impact of amenities and quality of life on rural economic growth, and Duffy-Deno (1997), which focused on the economic implications of endangered species preservation in non-metropolitan areas.
Organization of the Study
This thesis comprises five chapters, beginning with an introduction to the research problem, objectives, analysis methods, and a review of land use literature Chapter Two explores the development of land use theories and presents a microeconomic framework for decision-making regarding optimal location and land size Chapter Three details the empirical model, specifying the variables and a growth model to assess the impact of economic and demographic factors on agricultural lands Chapter Four analyzes the empirical results derived from the model, while Chapter Five concludes with a summary of the research findings.
ECONOMIC THEORY OF LAND RESOURCE ALLOCATION, USE, AND CONVERSION
Background
Since the era of Adam Smith, economics has evolved into a structured and scientific discipline, addressing fundamental societal questions about production—what to produce, how to produce, and for whom to produce Over the past few centuries, a more concise and scientific approach has emerged to tackle these essential and diverse inquiries that have persisted throughout history.
Economics focuses on the challenges of resource use and allocation, addressing the tension between limited economic resources constrained by natural, physical, and technical growth factors and the ever-expanding human needs This dynamic creates significant pressure on the management of scarce resources.
Throughout history, our understanding and management of natural environments and resources have evolved significantly Yet, rising global populations, unsustainable resource use, misguided allocation policies, and increasing human needs—coupled with the desire to sustain economic growth—have intensified pressure on limited economic resources.
Economic resources possess unique characteristics that necessitate varied management and distribution strategies Their value and allocation in the market are primarily influenced by the economic forces of demand and supply Additionally, the specific behavior of these resources and their relative abundance significantly impact their valuation and distribution.
The land resource, as one of the four factors of production, exhibits zero price elasticity in physical supply and a high opportunity cost in economic supply This unique characteristic, along with its physical immobility, leads to distinct challenges in determining its value and distribution compared to other production factors.
Labor and capital mobility, along with entrepreneurial freedom to operate in high-incentive areas, contribute to price adjustments and value convergence of economic resources However, land's physical immobility restricts its ability to adjust value across different locations, making it a unique focus for economists since the pre-Classical period.
In Neo-classical microeconomics, land can be analyzed through a marginalist lens; however, its unique physical characteristics and significant opportunity costs associated with alternative uses necessitate a careful approach This caution underscores the importance of land reform policies, reallocations, and free market distribution, which facilitate the coordination and redirection of land use trends through regulations and various incentive schemes.
The sustainable management of land amidst competing economic activities is gaining increasing importance, particularly in light of its long-term implications for future generations Recognizing that changes in land use impact not only the land itself but also the environment and various natural resources, it is essential to analyze these factors within a comprehensive sustainable economic framework.
Markets can efficiently distribute resources under specific conditions, but they often fail to tackle essential issues like externalities and sustainability in natural resource management, leading to negative long-term effects As Theodore Roosevelt, the 26th President of the United States, aptly stated, this failure must be addressed to ensure a balanced approach to resource allocation.
Wasting and depleting our natural resources threatens the prosperity we should pass on to future generations Instead of exhausting the land, we must focus on sustainable practices that enhance its usefulness for the benefit of our children.
This chapter explores the evolution of economic theories related to land value and allocation, tracing developments from the pre-Classical era to the Neo-Classical marginalist perspective It examines the foundational concepts of land use economics and applies a Neo-Classical framework to analyze goal-maximizing location preferences, establishing a robust theoretical basis for the econometric analysis presented in this thesis.
Over time, land has undergone various conversions for economic, technological, institutional, legal, and policy reasons, significantly impacting environmental quality, income growth, and welfare This study focuses on the conversion of agricultural lands to nonagricultural uses, which can affect quality of life, the preservation of natural amenities, farm income, and sustainable agricultural practices Additionally, these changes raise concerns regarding public interests in open spaces, farming traditions, and landscape preservation standards.
5 Quotation adopted from http://www.stthomas.edu/recycle/land.htm
General Review of Early Land Rent, Use, and Allocation Theories
Land rent and usage have been central themes in economic theory from the pre-classical to the neoclassical periods While the specifics of land issues evolve over time, core characteristics of land value and utilization have been thoroughly examined Early studies, beginning in the 17th century, primarily concentrated on agricultural land use However, as societies have shifted towards industrial and service economies, there is now increased focus on differential land rents and competing land uses.
Pre-classical analysts, despite their limited depth of analysis, dedicated efforts to exploring the value and utilization of land Notably, the concept of land-rent gained significant theoretical attention during the works of seventeenth-century mercantilists (Keiper et al., 1961).
During this period, there was a significant theoretical interest in the concept of value, particularly regarding the early development of rent related to land and labor The theories of land use from this era can be understood through the contributions of key figures in the field.
William Petty, one such contributor, states that the extrinsic value of land may be derived by taking the average of all bargains undertaken at a definite given time period (Wilson,
In 1894, Petty defined value as derived from the net return on land's use value, influenced by market conditions and average bargaining power He noted that land rents near densely populated areas rise due to the prestige and satisfaction associated with owning property in such locations (Keiper et al., 1961).
Cantillon highlights that the value and utilization of land are influenced by the expected returns from various activities associated with it In a similar vein, Turgot emphasizes that competition plays a crucial role in determining land lease prices.
Economists of the Classical Period primarily assessed value through labor costs, which played a significant role in international trade analysis by emphasizing comparative labor cost advantages as well as production and distribution challenges Additionally, there has been substantial literature focused on theories of land rent and its allocation.
Adam Smith, a key figure in classical land rent theory, significantly influenced economic thought and laid the groundwork for future economic development He viewed land rent as a monopoly price, emphasizing that it depends more on what farmers can pay than on landlords' investments or needs Smith's theory highlights the impact of competition among various economic activities on land use and allocation, as well as the importance of distance and transportation costs in determining land rent Specifically, land closer to urban areas commands higher rents due to its advantageous location, despite having similar fertility levels to more remote land This is because the costs associated with transporting goods to distant markets can increase overall production expenses.
Smith highlights that improved transportation infrastructure, such as roads and navigable waterways, reduces transportation costs and enhances access to remote areas, thereby promoting the development of these regions He emphasizes that land use conversion is influenced by the productivity of different crops, noting that if one type of land yields less food, its lower output must be offset by higher prices This dynamic leads to a balance where land is shifted between uses, depending on economic incentives.
David Ricardo significantly contributed to the classical theory of land rent, highlighting how increasing human population and competition for resources lead to rising rents His concentric circle analysis categorizes land into three types based on fertility, with the most fertile land designated as the first quality As competition for marginal lands intensifies, the rent for more fertile lands escalates When lower-quality land is utilized, the rent for second-quality land increases due to the productivity difference, which also causes the rent for first-quality land to rise Consequently, as population growth compels reliance on less fertile land, rents for all fertile lands increase (Ricardo, 1817).
John Stuart Mill expanded Classical land theory by incorporating the concept of opportunity costs, defining land rent as the surplus yield of land beyond what would be produced on the least productive land This perspective emphasizes the opportunity cost of capital, as the rent of a specific land is assessed against the potential returns from investing in inferior land Mill asserts that the value of scarce goods is fundamentally dictated by the forces of demand and supply.
Classical economists' rent theories evolved from Smith's and Ricardian interpretations based on labor value to a more intricate concept introduced by Mill, which incorporated the idea of opportunity cost.
The neo-classical period marks a shift from traditional economic theories by incorporating utilitarian philosophical ideas into economic analysis This new approach focuses on consumer behavior through the lens of utility and examines business motives centered on profit maximization, leading to a comprehensive framework for microeconomic behavioral analysis.
In 1866, William Javons, a key figure in neo-classical economics, emphasized that a genuine economic theory must be rooted in the fundamental drivers of human behavior—specifically, the emotions of pleasure and pain.
According to Javons (1866), within a micro-economic framework, the exchange of goods and services continues until utility is maximized, at which point diminishing marginal utility eliminates all incentive for further utility at a specific price.
Carl Menger, a key figure in neo-classical economics, challenges the classical theory of labor value by asserting that value is derived from the satisfaction of human needs rather than being inherent in goods (Menger, 1871) In this framework, land is viewed as a commodity influenced by supply and demand dynamics Menger contends that the valuation of land follows the same principles as other goods, indicating that its value is determined by the general laws of value determination (Ibid, 1871).
Development of Early Bid-Rent Functions and Land Allocation
The early development of bid rent functions and their mathematical treatment can be traced back to the work of von Thunen Economic historians often view his contributions as a significant shift from classical to neo-classical thought, particularly in the realms of distribution theory and marginalist analysis.
Von Thunen’s land allocation theory enhances our understanding of land use by incorporating competition and transportation costs into a mathematical bid-rent function While the theory is based on specific assumptions, these can be adjusted to better reflect real-world scenarios.
In a large town situated in the heart of a fertile plain, the absence of navigable rivers or canals limits external trade The uniformly fertile soil supports widespread agriculture, but the town is isolated by an uncultivated wilderness, severing its connection to the outside world This central town is the sole urban center in the region, relying entirely on the surrounding countryside for agricultural supplies, while all manufacturing activities occur within its boundaries Additionally, mineral deposits and mines are conveniently located adjacent to the town, enhancing its economic potential.
The primary focus of this analysis is to explore how distance from urban centers influences the optimal allocation of land for various economic activities In this model, each agricultural activity can propose a rent for land based on the value of its product minus production and transportation costs Competitive dynamics among producers lead to the highest possible rent bid Additionally, the potential profit for any agricultural product decreases with distance, directly correlating to transportation expenses (Ibid, 1987).
According to Von Thunen's theory, the bid rent function can be expressed mathematically as Rn = pQ - wiXi - Dt, where Rn represents the net revenue per unit of land at a distance t from the central market In this equation, Q denotes the output, Xi includes all inputs required to produce Q, p and w are the prices of inputs and outputs per unit, and Dt indicates the transportation cost of moving Q over a unit distance Rn signifies the maximum bid a buyer can make, as offering more than the land's economic value is illogical Consequently, any fluctuations in input and output prices or advancements in transportation technology will influence land allocation and the spatial distribution of land uses (Brooks, 1987).
To graphically represent a bid-rent function derived from the equation Rn = pQ – wiXi – Dt, we plot net revenue (the maximum bid) on the vertical axis and distance on the horizontal axis By identifying the intercepts, we can effectively illustrate the bid-rent function, as shown in figure 4.
Fig 4 Bid Rent Function for Land situated at a certain distance
Changes in input and output prices, along with advancements in transportation technology, can significantly impact net revenue, leading to varying bid rent functions for different economic activities Consequently, this variation results in distinct spatial land use distributions.
Based on Von Thunen's concentric circle analysis, the competition among multiple agricultural activities on a single parcel of land reveals distinct allocation patterns In a scenario involving three crops—A, B, and C—where net revenue decreases with distance from the market, crop A, with the highest net revenue, will dominate the central locations, followed by crops B and C This allocation reflects the diminishing returns due to rising transportation costs as distance increases However, if we relax the assumptions of constant technology and stable input and output prices, the land use patterns become more dynamic and variable across different locations, although the fundamental competitive behavior remains consistent.
Fig 5 Bid Rent functions of Three Agricultural Activities and Land Distributional Pattern
Source: Adopted from http://faculty.washington.edu/~krumme/450/exercises/landuse.gif
Differential rents resulting from spatial competition among various sectors highlight the tendency for certain sectors to concentrate in specific areas due to higher returns and agglomeration economies As illustrated in Fig 6, retail activities dominate within a radius of d1, while manufacturing is concentrated between distances d1 and d2 from the central market, and residential areas are found within the range of d2 to d3 The overall rent gradient is defined by the upper margins of the bid rent functions across the entire distance of 0 to d3.
The dynamic allocation process determines the market price of each product based on its supply and demand, as well as the prices of related goods and services Consequently, the supply and geographical distribution of the agricultural industry are influenced by its own pricing and that of other products.
Fig 6 Bid Rent Functions of Three Sectors and Resulting Land Distribution Pattern ource: http://www.uncc.edu/~hscampbe/landuse/b-models/C-bidrent.html
Economics of Land Use, Allocation, and Conversion
The study of land rent, use, and allocation has long been a theoretical focus, yet understanding the complexities of land use in response to evolving individual and societal economic needs remains a challenge for economic modeling and policy development This area features a mix of land-use elements, including rural, commercial, educational, recreational, and public service aspects, and is only partially integrated into the expanding urban landscape.
This study deals with the conversion of agricultural lands to non-agricultural uses, especially at the urban fringe Urban fringe is meant as the:
Urban expansion is encroaching upon underdeveloped areas, leading to a retreat of traditional lifestyles and activities This phenomenon is characterized by the intrusion of various land uses, including residential developments, into these spaces The dynamics of land use are evolving rapidly, highlighting the need for careful planning and management.
New construction activities in urban areas raise important questions about architectural preservation, while changes on the city’s outskirts are linked to unplanned rural development and land use conflicts The deterioration of environmental quality is a significant concern, as highlighted by Rueckner and Fansler (1983) Often, the positive externalities of the rural sector, such as open spaces and environmental benefits that mitigate urban sprawl, are overlooked Over time, the transformation of spatial features in cities has gained attention, particularly as inner city redevelopment seeks to tackle complex social issues.
O to urban uses This could involve basically a greater alteration than other forms of land use changes taking place in urban areas (Johnson, ed., 1974)
The introduction of new spatial features intensifies competition for land among economic sectors, leading to increased societal costs, such as higher amenity quality expenses, disruption of local production and farming practices, and the transformation of rural areas into urban developments Suburban growth negatively impacts agricultural land values, while competing land uses undermine the agricultural sector's effectiveness Additionally, many land conversion processes overlook the externalities involved, necessitating a thorough understanding of their long-term implications for societal welfare.
The transformation of pastoral farmland into unattractive suburbs disrupts the natural balance between urban and non-urban land uses, resulting in significant landscape degradation Irwin and Bockstael (2001) highlight that the positive amenity value of open spaces may often go unrecognized in residential property sales, indicating a potential underestimation of the benefits associated with preserved open areas.
The conversion of agricultural lands to non-agricultural uses has emerged as a significant public concern Recent discussions highlight the importance of preserving local public characteristics, which often leads to insufficient supply from private producers (Plantinga and Miller, 2001, p 56).
Understanding the forces driving land conversion to non-agricultural uses is essential for accurately modeling and predicting land use changes This pressure on agricultural land can be analyzed from both rural agricultural and urban perspectives, highlighting the origins and effects of conversion factors Throughout time, various theories have emerged to identify the sources of urbanization factors Notably, in the 1960s, the development of the interstate highway system and racial tensions significantly influenced land use, catering to direct consumption needs such as housing and manufacturing.
As urban populations grow and residents increasingly prefer suburban areas for both living and employment, the conversion of urban spaces into suburban developments becomes inevitable without effective policy interventions The suburbanization process is driven by various factors, including fiscal and social challenges faced by central cities, such as high taxes, inadequate public services, crime, and poor environmental conditions These issues prompt wealthier residents to leave central urban areas for the suburbs, which in turn leads to additional out-migration.
In the United States, suburbanization pressures have been attributed to various factors over the decades In the 1950s, federal home mortgage insurance was often cited as a key driver of decentralization More recently, concerns about crime and the quality of education have emerged as significant reasons for urban decentralization.
Land development pressures can be understood through a microeconomic lens, focusing on utility and profit maximization Key decision factors include location and land size, which significantly influence commercial land use.
Private housing demand for land is significantly influenced by open space, which attracts urban and suburban residents to exurban areas just beyond metropolitan fringes The rural amenities provided by open space, including scenic views and recreational opportunities, contribute to a higher quality of life, free from urban disamenities This demand can be understood through households' compensated demand functions, reflecting the utility achieved at varying price levels In a two-industry model, zoning and industry placement are organized at increasing distances from urban centers, necessitating that each industry meets a minimum bid rent to establish itself in its designated zone Factors such as population growth and employment opportunities, along with challenges like traffic congestion and air pollution, further shape land demand dynamics.
Mills argues that that households endowed with “perfect knowledge of P(t), the vector of residential service prices at time t, select the residential service that maximizes their utility This be
(d provision of residential services is taken up by some unspecified alternative use.” (Mills,
In the case of industrial and other commercial demand for land, generally locations that minimize costs and help maximize profits are desired Miyao provides a general approach of the location p a
(i = 1, …, m) In the long-run competitive equilibrium, satisfying the long-run zero profit condition, the i th industry bid rent at distance x can be expressed as ri(x),
The equation Ci[ri(x), w] = pi – qi(x) (i = 1, … , m) represents the per unit production cost (Ci), output price (pi), and per unit transport cost (qi) of the i-th industry, alongside the wage rate (w) It is assumed that the wage rate is among the highest in the region, ensuring competitive bidding across industries, where the condition ri(x) ≥ rj(x) holds for all j = 1, … , m (Miyao, 1977).
Several key factors significantly influence the land conversion process, particularly in the shift from rural to urban uses These factors interact with each other and affect the demand for land across various uses, including population density at the edge of the Central Business District (CBD) The gradient indicates the percentage change in population density relative to the distance from the CBD This trend of decentralization, where residential areas move away from the central city, is often accompanied by the decentralization of employment opportunities, raising concerns among many stakeholders (Muth, 1961; Fisher, 1956).
Brueckner demonstrates that, based on specific assumptions regarding preferences and technology, population density can be represented in an exponential form This relationship is expressed as D(θ) = D0e -g θ, where θ signifies the distance from the Central Business District (CBD) and D0 represents the initial population density.
(Brueckner, in Mieszkowski and Mills, 1993, p 138) However, with expanding population, greater distances from the city edge are brought under settlement consideration
Barlowe emphasizes that regardless of differing views on the complex issue of population control, it is crucial to recognize that population growth significantly influences the demand for land and its resources This demand leads to various consequential challenges related to land use and management.
Mathematical Analysis of Land Use Decisions and Allocation in a Microeconomics Framework
The guiding economic principles of land use and allocation are influenced by various factors, including prices, transportation technology, location preferences, and the degree of accessibility These elements play a crucial role in determining the optimal decision for locating a specific site.
For a comprehensive mathematical and graphical analysis, refer to Alonso (1964) This study examines the interplay of competition, legal systems, population pressures, and regulatory policies on land demand In this analysis, we focus on land usage for commercial, residential, and agricultural purposes, factoring in transportation costs To streamline our assessment of agricultural businesses, we will assume constant fertility levels and consistent transportation from the market.
Land allocation serves various purposes, ranging from government institutional needs to commercial activities The placement of government institutions and public facilities is influenced by numerous social and economic factors Often, this allocation reflects the pressures of population growth and business expansion, which significantly impact the agricultural sector and land designated for agriculture.
2.5.1 Mathematical Consideration of Land-Use and Location Decisions by
To maximize profit, firms must consider the impact of location on their profitability, particularly by evaluating transportation costs to the nearest market By strategically selecting a location that minimizes these costs, businesses can enhance their overall efficiency and financial performance.
Then, following the theoretical microeconomic framework of Alonso, (1964), it is possible to characterize the behavior of a profit maximizing firm mathematically as:
All of e righth t hand side variables are also some function of distance and land size ubstit ing w e relationship as:
Where t = distance to location of market q = land size in use profit-maximizing operator will achieve a maximum when the first derivative of the
– (∂C/∂R)dR –( ∂C/∂t)dt – (∂C/∂q)dq – q(∂L/∂t)dt – ubstituting again for dR with its proper partial derivatives from equation (2) we can dπ = ∂R/∂t dt + ∂R/∂q dq - ∂C/∂R (∂R/∂t dt + ∂R/∂q dq) - ∂C/∂t dt - ∂C/∂q dq – dπ = ∂R/∂t dt + ∂R/∂q dq - ∂C/∂R ∂R/∂t dt - ∂C/∂R ∂R/∂q dq - ∂C/∂t dt - ∂C/∂q
) 0 = dt(∂R/∂t - ∂C/∂R ∂R/∂t - ∂C/∂t – q(∂L/∂t) +dq(∂R/∂q - ∂C/∂R ∂R/∂q - ∂C/∂q – L(t)) remaining at some constant level) we can get two xpressions that can be simultaneously solved Holding dt constant (dt=0), the right hand side of
S rewrite equation (3) as: q(∂L/∂t) dt – L(t) dq = 0 dq – q(∂L/∂t) dt – L(t) dq = 0
Now holding dt and dq equal to zero ( e equation 4 can be rewritten as: dq(∂R/∂q - ∂C/∂R ∂R/∂q - ∂C/∂q – L(t)) = 0
Setting dq constant (dq=0), imultaneously solving equations 5 and 6, the values for t (distance to location of market) nd q (land size in use) can be determined
To optimize location and land size decisions, the optimal values of q and t must be inserted into the relevant mathematical equations According to equation 6, the marginal revenue lost from relocating a unit of distance (dt) from a central point is significantly negative, highlighting the economic impact of distance on revenue This relationship underscores the importance of strategic positioning in maximizing returns.
C/∂t: measures the rise in marginal operating costs resulting from a change in d rwise, the location is not dt(∂R/∂t - ∂C/∂R ∂R/∂t - ∂C/∂t – q(∂L/∂t) = 0
Once he solution for q and t is determined from the s
∂C/∂R ∂R/∂t: indicates the marginal operating cost incurred due to a change in revenue which is indirectly affected by d indirect effect of distance on operating cost
Distance from a specific location significantly impacts operating costs and influences land rents The equation q(∂L/∂t) illustrates the general decrease in land rents as the distance from a central market location increases.
Equation 6 illustrates the optimal economic condition where the net revenue gain from choosing a specific land location must equal the marginal cost associated with that site If this balance is not achieved, the selected location will fail to meet profit-maximizing goals.
The plot size decision significantly impacts both revenue and production costs, as indicated by the findings from equation 5 Understanding the relationship between land size and these financial factors is crucial for optimizing agricultural efficiency and profitability.
C/∂q Captures the change in cost caused by a unit change in the size of land s generally positive It is the direct effect of from omparative Statics Considerations
Regulatory and institutional factors significantly influence the cost, revenue structures, and overall value of land These elements create a dynamic environment that impacts various activities related to land use and management Understanding these dynamics is crucial for effective decision-making in the real estate sector.
It directly and indirectly This can explicitly be noted from each expression in equation 5 From equation 5 we have,
∂R/∂q Captures the change in revenue due to a unit change in plot size
∂C/∂R ∂R/∂q Measures the effect of a change in revenue from a change in the size of operation which is cause by the increase in land size In a sense this measures the indirect e
∂ put under operation which i land size decision on cost
L(t) Measures the marginal cost of land
Equation 5 emphasizes that the benefits derived from determining the appropriate land size for use must equal the associated marginal costs If this balance is not achieved, the chosen land size will be suboptimal and fail to meet profit maximization objectives.
In the previous mathematical framework, distance and land size variables were analyzed based on fixed levels of revenue, cost, and land price, providing a snapshot of equilibrium under those conditions However, technology and market dynamics significantly influence the spatial aspects of economics This research develops and discusses specific mathematical comparative statics to illuminate how exogenous variables impact location decisions and land use.
Restating the profit maximization mathematical expression and solving for first order conditions gives:
(∂π/∂q)/∂q]dq = 0 ifferentiations can be restated for convenience as: qtdt + πqqdq = 0
Sep cision variables from the others) sults in:
Hence, ∂π/∂t = ∂π differentiating 3 and 4 gives: d(∂π/∂t) = [∂(∂π/∂t)/∂R]dR + [∂(∂π/∂t)/∂C]dC + [∂(∂π
With alternative notations the above d dπt = πtRdR + πtCdC + πtLdL + πttdt + πtqdq = 0 dπq = πqRdR + πqCdC + πqLdL + π arating endogenous and exogenous variables (or de re
(10) πttdt + πtqdq = - πtRdR - πtCdC - πtLdL
(11) πqtdt + πqqdq = - πqRdR - πqCdC - πqLdL
Restating in a matrix form: πtt πtq πqt πqq dt - dq - πtRdR - πtCdC - πtLdL πqRdR - πqCdC – πqLdL
- πqq (πtRdR + πtCdC + πtLdL) + πtq (πqRdR - πqCdC – πqLdL) πtt πqq – (πtq) 2
Under the assumption that the conditions for an unconstrained optimum are met, where πtt < 0, the comparative statics regarding dt/dR, dt/dC, and dC/dL can be examined by sequentially setting any two exogenous variables to zero.
Relaxing the analysis of location and use decisions within specific cost, revenue, and land cost environments reveals the importance of certain variables that must remain constant The comparative static results demonstrate how an exogenous variable influences the location decision of a firm.
- πtRdR - πtCdC – πtLdL πtq dL πqq dt = - πqRdR - πqCdC – πqL πtt πtq qt qq π π
(12) dt ing that the second ord and πtt πqq – (πtq) 2 > 0 7 , b dt/dR (letting dC=dL=0) equals: dt/dR π π – (π ) 2
The relationship between location and revenue is reciprocal; while location influences revenue generation, revenue also impacts the desirability of a location This dynamic interplay is a crucial aspect of comparative statistics analysis.
Similarly, πtt - πtRdR - πtCdC – πtLdL πqt - πqRdR - πqCdC – πqLdL dq π π π π tt tq qt qq
7 From Young’s Theorem πtq = πqt Since the order of differentiation does not matter, (πtq)(πqt) can be written as (πtq) 2
The analysis of optimal land size decisions incorporates comparative static results derived from the equations πtt (πqRdR + πqCdC + πqLdL) and πqt (πtRdR + πtCdC + πtLdL), focusing on the derivatives dq/dR, dq/dC, and dq/dL Specifically, the expression e dq/dL (πtt)(πqq) – (πtq)² highlights the impact of exogenous variable changes on land-use and location decisions for personal use These decisions regarding location and plot size can be effectively characterized through this framework.
(14) t = the location/distance from a given population center
The co maximize the level of attainable utility arising from a decision a t generates its own utility, including scenic values and safe
Comparative static results can be dq/dL (by letting dR0) provid s:
T exogenous variable of interest can provide relevant information on the sensitivity of optimal land size considerations with re
General Modeling Overview
The competition among various economic agents has drawn attention from multiple disciplines, leading to diverse analyses of this complex issue A key focus is land, a consumable resource that serves various purposes such as housing, recreation, and open space, providing significant utility to consumers Additionally, producers utilize land for different applications, highlighting the importance of analyzing and modeling land use across various sectors of the economy.
Economic agents aim to maximize their interests, with consumers seeking to optimize utility from various goods and services within their income constraints Similarly, businesses strive to maximize profits by effectively utilizing resources to supply these goods and services Land plays a crucial role in shaping both cost and revenue structures for enterprises, making efficient location and land size decisions vital for profit maximization Consequently, competition for land leads to spatial frictions that manifest across landscapes over time.
Understanding the economic motives of agents and the behavioral frictions they encounter is essential for effective land use modeling Analyzing shifts in economic activity across different regions and the gradual transformation of land use patterns is a complex yet vital task.
Generally, the competing demands for a fixed physical supply of land for different uses can be treated as a special case of the overall determination of the flow of resources
(factors), products and services in an economy Broadly viewed, this process can be represented by the circular flow chart in figure 7
Fig 7 Interdependent Circular Flow Chart
In the traditional economic model, households act as suppliers of labor and capital to producers in the factor market, earning compensation and income in return Producers utilize these factors to create goods and services, which they offer to consumers in the product market to generate profits The government plays a crucial role by providing the necessary market infrastructure, legal frameworks, and policies to facilitate the interaction between producers and consumers, highlighting a unidirectional flow of resources and products throughout the economy.
The flow of resources in the market is multidirectional, involving friction, as both consumers and producers engage with the factor market Households supply factors like land for sale or rent, generating financial returns, while also demanding land to enhance their utility from its services Agricultural land, in particular, can be repurposed at lower reclamation costs, influencing resource efficiency and distribution Businesses, both farm and non-farm, require land as a production input to maximize profits and maintain locational advantages However, as factors such as industry costs, technology, consumer preferences, and government policies evolve, firms may choose to relocate, returning their land holdings to the factor market to achieve spatial equilibrium.
While land can transition between sectors due to economic conditions and spatial feasibility, the likelihood of reverting non-agricultural land back to agricultural use is low The costs associated with reclaiming non-agricultural land for farming are often prohibitive, making such transitions less feasible Consequently, the mobility of capital across sectors varies significantly.
The circular flow chart illustrates the significant interdependence among various sectors, where the simultaneous choices of consumers and producers in both product and factor markets influence the value and distribution of products and resources Any alterations in the factor or product market, whether due to external events or internal decision-making, can impact the decisions made by different economic agents.
By narrowing the focus to two specific sectors of the economy and limiting resource consideration to land, we can establish a clear analogous representation This deliberate simplification lays the groundwork for a more focused analysis.
The demand for suburban and rural land is driven by various factors, primarily influenced by increasing population pressure and urban congestion, which enhance the appeal of these areas for consumers seeking improved quality of life and natural amenities As households prioritize housing and recreational opportunities, they are increasingly drawn to suburban regions Additionally, the rise of small business enterprises and emerging rural economies offers attractive employment prospects, further incentivizing households to relocate to these areas.
The demand for rural and suburban land for agricultural purposes is driven by factors such as soil fertility, location, and the longstanding farming traditions in these areas However, increased competition for suburban land, combined with lower returns per acre from agricultural enterprises, has resulted in the conversion of agricultural land to non-agricultural uses This indicates that the agricultural sector not only seeks land for its activities but also contributes to the supply of rural land for competing developments.
Fig 8 Reduced Form Specialized Two Sectors Circular Flow Chart
Land fertility Closeness to markets Farm agglomeration Locational cost saving Farming tradition etc
Urban Congestion Sub-urban natural amenities Location convenience Residential preferences Employment
Demand Sub-Urban and Rural
Transport cost savings Population growth & market centers
Agglomeration economies Land cost saving Locational labor cost savings etc
Natural amenity endowment Positive surrounding externalities Fertility
Locational endowment Physical characteristics etc
Relative gravity and use conversion
Relative gravity and use conversion Relative gravity and use conversion
Non-agricultural producers prioritize locational convenience to enhance profitability, influenced by transportation costs and agglomeration economies that offer better returns These firms evaluate regional labor cost savings and market size when deciding on a location The rising suburban population, along with transport savings and labor benefits, encourages firms to move to areas where these advantages are prominent Consequently, this trend places pressure on suburban land markets, leading to an increase in land prices.
In suburban areas, land is often sought after for various purposes due to its desirable qualities, such as convenient location and proximity to major markets These factors not only attract developers but also create positive environmental benefits As demand for land increases, its value rises, allowing certain sectors to outbid others, which can lead to the conversion of agricultural land into urban developments and further urbanization While firms may appear mobile across different densities, the movement of resources back to specific sectors remains unclear Ultimately, the bidding power of various sectors influences land resource distribution, but once agricultural land is repurposed, this transition is typically irreversible.
Regional growth modeling can be enhanced by identifying specific relationships within a general framework Changes in land use patterns are often linked to shifts in population and employment figures The increasing population in suburban and metropolitan areas, alongside the expansion of small businesses and the demand for recreational and administrative spaces, significantly impacts existing land utilization.
Steinnes and Fisher (1974) developed a model to analyze population and employment growth within urban areas simultaneously In a similar vein, Carlino & Mills (1987) investigated the factors influencing population and employment densities across different regions, utilizing a theoretical framework that concurrently assesses both employment and population dynamics.
The Carlino-Mills model employs a general equilibrium approach, highlighting the geographic mobility of both households and producers Consumers aim to maximize utility based on their consumption of goods and services, proximity to workplaces, and local amenities The model posits that firms and households adapt to disequilibrium through a relationship between the number of listed species in a county and varying nonmarket amenities A traditional budget constraint balances income with expenditures on goods and services, while profit-maximizing firms face location-specific production costs influenced by regional advantages such as transport costs, labor supply variations, agglomeration economies, and local taxes Ultimately, the model establishes that equilibrium population and employment levels are determined simultaneously (Carlino & Mills, 1987).
Empirical Model
The interplay between population dynamics, employment rates, agricultural land usage, and other key variables reveals the processes of land conversion in the study area It is assumed that consumers aim to maximize their utility through the consumption of various goods and services, including location and non-market factors Consumers will migrate until their utility levels are balanced across different locations Additionally, firms and households are expected to adapt to any economic imbalances through a distributed-lag approach, which can be integrated into a general equilibrium model that also considers population changes.
Regional growth models effectively illustrate how various growth factors influence the conversion of agricultural lands As discussed earlier, changes in employment and population growth significantly contribute to the pressure on resources, highlighting the need to address these simultaneous dynamics.
The empirical model is specified following the Carlino-Mills general equilibrium model where firms and households adjust to disequilibrium by distributed-lag adjustment equations
It is a a amenities to maximize their utility Consumers are mobile over locations that maximize utility The consumption of the vector of consumer choices is limited by income (budget) Households
Producers aim to maximize profits by strategically selecting locations that offer cost and revenue advantages They consider factors such as transportation costs, agglomeration benefits, and regional labor supply variations As firms move in and out of regions, competitive profits become equalized, ensuring a balanced economic landscape.
In a general equilibrium framework, population and employment influence each other alongside various other factors that determine job availability in line with competitive profit rates and ensure equalized utility levels across different locations Numerous variables can impact both population dynamics and employment opportunities (Carlino & Mills, 1987).
Thus, following the assumptions and simultaneous determination process, the general model can be specified as:
Total employment (E) is influenced by total population (P), with both being affected by exogenous equilibrium levels represented by the vectors ΩE and ΩP These equilibrium levels depend on various factors related to employment and population dynamics.
The speed-of-adjustment coefficients, denoted as l and l, range from 0 to 1, indicating that current employment and population levels are influenced by their values from one period prior This relationship highlights the dependency on lagged levels of both population and employment, as well as the changes between equilibrium values and the lagged adjustment speeds of l and lP By substituting E* and P*, we can derive meaningful insights into these dynamics.
(5) E = lE ΨEP + lE ΦEΩ + (1-lE) Et-1
W variables that affect employment (E) and population (P), and * indicates equilibrium levels of E and P Hence, eq a al level ulation and on a vector o sets Ω
Population and employment are likely to adjust to equilibrium values with substantial lags (Mills & Price, 1984) Thus a distributed lag adjustment equation can be introduced as:
E and in equ tions 3 and 4 gi
(6 P = lPΨPE + lP ΦPΩ P + (1-lP) Pt-1
Equations 5 and 6 are simultaneou ogenous variables E nd P Each endogenous variable depends on the other endogenous variable, on a set of n its lagged values This specification reduces the simultaneity nd direction of causation problems, as end period dependent variables cannot affect beg period independent variab ollowing a similar modeling procedure, the empirical model can be specified and modified to incorporate into the system the simultaneous determination of land use variables Maintaining similar behavioral assumptions of economic agents and distributed-lag adjustment specification procedures, the simultaneous interaction of equilibrium employment and population can be stated as:
, and Ω AgL refer to a vector of xogenous variables having a direct or indirect relationship with population, employment and ultural land respectively
Fol o the equilibrium conditions, quations (7), (8) and (9) can linearly be represented as:
AgL* = α0AgL + β1AgLP* + β2AgLE* + ồδ1AgL Ω AgL s equations with observable end a exogenous variables, and o a inning les
Where P* and E* refer to equilibrium values of population and employment respectively,
AgL* refers to equilibrium agricultural land level, Ω P , Ω E e agric lowing Deller, et al.’s (2001) linearized expression f e
Population and employment are likely to adjust with substantial lags to their equilibrium levels Partial adjustment equations can be given as:
(14) Et = Et-1 + λE(E* - Et-1) whe nt, t-1 and Et-1 are initial conditions of population and employment
Et-1) nd employment levels spectively ubstituting the linear expressions of P* and E* (equations 10 and 11) into equations (15) and (16) results in:
(17) ∆P = Pt - Pt-1 = λP(α0P + β1PE* + ồδ1P Ω P - Pt-1) t t-1 E 0E 1E ồ 1E t-1 earranging and substituting the expressions we have:
Not the speed-of-adjustment λ b d f ent arameters α, β, and δ (Deller, et al., 2001) corporating the change in agricultural land in combination with population and em ent changes, the system of
(23) ∆AgL = α0AgL + β1AgLPt-1 + β2AgLEt-1 + β3AgL∆P+ β3AgL∆E+ ồδ1AgLΩ AgL re λP and λE are speed-of-adjustment coefficients for population and employme P
(16) ∆E = Et - Et-1 = λE(E* - where ∆P and ∆E are change in county level population a re
(19) e that coefficient ( ) is em edde in the linear coe fici p
In ploym equations growth model can be specified as:
Equations (21), (22), and (23) demonstrate that changes in population and employment are influenced by their initial levels and the interdependent fluctuations of both variables Additionally, these changes are affected by a range of external factors, which collectively determine the dynamics of population and employment variations.
8P P20KADJ 1993 + δ 9P PFEDL 92 + δ 10P PWATERAC 92 + δ 11P PFORESTL 92 + δ 12P DAG t-1 + δ 13P PINMIGRT+ δ 14P POUTWORK
(26) ∆A g L = 0 2 EN 99 + δ 2AgL PAGEMP t-1 + δ 3AgL INCFM t-1 + δ 4AgL PCROP t-1 + δ 5AgL PPAST t-1 +
The dynamics of agricultural land are influenced by the specific warranty conditions, with changes driven by population shifts over time and various environmental factors This system highlights the interconnectedness of agricultural practices and their responses to both human and natural influences.
Substituting relevant variables of interest and specifying the vector of exogenous variables, the model can be re-expressed for estimation purposes as:
(24) ∆P = α 0p + β 1P P t-1 + β 2P E t-1 + β 3P ∆E + δ 1P HWYDEN 99 + δ 2P UNERT t-1 + δ 3P MEDHVA t-1 + δ 4P MEDINC t-1 + δ 5P PCTAX t-1 + δ 6P NEARDIST 99 + δ 7P OWNOCC t-1 + δ
The equation presented includes various factors influencing economic variables, with ∆E representing the change in energy, while α, β, and δ denote coefficients for different independent variables Key components include previous energy prices (P t-1), energy consumption (E t-1), and changes in price (∆P), along with demographic factors such as migration (PINMIGRT) and workforce participation (POUTWORK) Additionally, the model incorporates historical data adjustments (P20KADJ 1993) and regional indicators (HWYDEN 99, AGSLAC t-1) to enhance accuracy Each variable is systematically defined in Table 1, ensuring clarity in the analysis.
Table 1 Definition of Specified Variables
DPOP t-1 Population density (people per square mile) 1990
DEMP t-1 Employment density (jobs per square mile) 1990
DAG t-1 Agricultural land density (agr acres per total acres)
Pittsburgh PA, or Charleston WV]
PAGEMP t-1 Proportion of total employment in agriculture 1990
PMIEMP t-1 Proportion of total employment in mining 1990
PCTAX Per capital local tax 1990
MEDHVA Median housing value 1990 t-1 Owner occupancy rate for housing 1990
P20KADJ 93 Non-metro counties adjacent to metro counties (1993 Beale
PFEDL 92 Proportion of county in federal lands
PWATERAC Proportion of county in water
PFORESTL Proportion of county in forested land
NEARDIST Distance to nearest metro area [Washington D.C.,
PCNEMP t-1 Proportion of total employment in construction 1990
PSVEM t-1 Proportion of total employment in services 1990
AGSLAC t-1 Total agricultural sales per acre 1990
PCROP t-1 Proportion of total agr land in cropland 1990
PPAST t-1 Proportion of total agr land in pasture 1990
DCONSERVE Density of non-governmental land conserved
POUTWORK Proportion of employed residents working outside county of residence (bedroom communities) PINMIGRT Proportion of resident jobs held by people outside county
The model identifies key variables influencing population density changes, which are shaped by employment fluctuations and initial population conditions through an interaction growth model Employment density changes are specified in equation (24), highlighting the relationship between median housing value, owner-occupied homes, and household income Additionally, a decrease in property values expands the utility-maximizing goods bundle, including housing and recreational choices The population equation reflects direct and indirect relationships, illustrating how crime rates and safety impact individual housing location decisions, as well as the effects of various endogenous variables influenced by a range of other factors.
Highway density, proximity to urbanized areas, and adjacency are key factors influencing accessibility and its impact on population changes Greater accessibility in a county is anticipated to correlate with an increase in population density, reflecting higher population growth in those areas.
Household income in the sample counties significantly impacts demographic changes, reflecting how housing and property values affect spatial location decisions An increase in income is associated with positive population growth, highlighting the connection between economic factors and demographic shifts.
Per capita tax rates and unemployment significantly influence population dynamics, particularly through labor mobility Higher unemployment rates can lead to population declines by discouraging individuals from relocating to areas with fewer job opportunities Additionally, elevated per capita tax rates may drive residents to seek locations with lower fiscal burdens, potentially resulting in out-migration Conversely, some individuals may prefer areas with higher taxes if they offer less congestion and greater natural amenities The relationship between these factors and population trends requires empirical analysis to ascertain their true impact.
The agricultural variables influence population changes by providing natural amenities, preserving federal land, and affecting agricultural intensity, which in turn impacts property values and employment opportunities Improved highway infrastructure facilitates the temporary migration of labor, making it easier for distant workers to access job markets For example, a growing service industry can draw employment away from lower-paying sectors, potentially leading to job cuts in those areas.
EMPIRICAL RESULTS AND ANALYSIS
SUMMARY AND CONCLUSION
Summary
The relationship between humans and the environment is complex, with a growing population and rising social demands placing significant strain on natural resources Among these resources, land is particularly vital, and as the economy expands, the pressure on land use intensifies.
This study aims to investigate the factors influencing spatially varying land use changes, with a particular focus on agricultural land transformation In the United States, the evident loss of agricultural land is driven by the expanding demands of non-agricultural sectors, exerting both direct and indirect pressure on the conversion of agricultural land nationwide The research emphasizes the critical role of agricultural land use in understanding these changes.
Land value and land use changes have been significant topics in economic history since the time of Adam Smith Land is treated as an economic good, with consumers seeking to maximize their utility based on location, while producers aim to enhance profits that differ across various areas The interplay between these demands shapes the location bid rent, ultimately determining how land is utilized This leads to land being allocated to its highest and best use, which has raised considerable concern and research, particularly regarding the loss of agricultural land Such losses not only threaten rural character but also jeopardize the environmental and natural amenities that are integral to farming practices.
Spatial land use changes are closely linked to regional economic patterns, reflecting the decision-making behaviors of households and firms Individuals seek to maximize their utility, which influences their preferences for residential and recreational locations As urban areas face increasing congestion, pollution, and crime, there has been a notable shift in population and structural composition towards suburban and accessible rural areas, significantly impacting rural land use.
Business enterprises strategically adjust their locations to minimize costs amid growing populations in suburban and urban areas This study focuses on the implications of these trends for the agricultural sector A system of equations model, adapted from the work of Carlino and Mills, is employed to analyze changes in agricultural land density in relation to employment and population shifts, as well as other conversion factors The model highlights the externalities associated with urban development, identifying locations where these externalities are minimal and natural amenities are abundant This shift has led to changes in economic practices, particularly in agriculture, as service-based industries and various business activities intensify to capture emerging markets and labor cost advantages.
The interaction of these business and household decisions to maximize gains across locations results in a re-allocation of l
To systematically capture the interaction of different growth factors and agricultural
The model analyzes how shifts in population and employment density affect agricultural land use It incorporates a distinct equation that accounts for regional economic changes, specifically focusing on the distribution of population and employment across different areas, and translates these impacts into the rate of land utilization.
Research shows that changes in population density are adversely affected by natural amenities, federal lands, agricultural land density, per capita taxes, and proximity to urban and suburban areas Conversely, factors such as highways, employment growth, and owner-occupied housing positively impact population density changes.
The employment density model reveals that factors such as access, population growth, dominance in construction and service sector employment, and agricultural sales positively influence employment density expansions Conversely, the unemployment rate, agricultural employment, and distance negatively impact changes in employment density.
The agricultural land density model highlights that the conversion of agricultural land is driven by factors such as population growth, highway development, proximity to urban areas, and underperforming agricultural sectors This model effectively identifies the pressures leading to agricultural land conversion and specifies the agricultural activities impacted by this process.
2 CONCLUSION ding to the derivation of necessary implications p is believed to provide relevant information for the ongoing land use issues in West Virginia
Modeling complex economic interactions in spatial dimensions presents significant challenges Theories play a crucial role by highlighting specific relationships among key economic variables, while avoiding excessive detail or exhaustive explanations.
This study utilized established structural growth modeling techniques to draw significant conclusions regarding agricultural land conversion in West Virginia By analyzing the model's framework and the dynamics of the state's economy, key results have been identified that highlight the trends and implications of land use changes in the region.
The study focused on factors that are directly and/or indirectly associated with changes in agricultural land density from 1990 to 1999 Following is a summary of the research results
Population density tends to decrease as the distance from metropolitan, urbanized, and semi-urbanized areas increases due to rising transportation costs that outweigh the benefits of lower property values and attractive natural amenities Additionally, population density is inversely related to the per capita tax burden, which varies significantly across different regions.
The density of highway systems is insignificant and negatively related to population density changes across the state
Population density decreases as agricultural land density increases, indicating a negative relationship between the two Additionally, federal land ownership plays a crucial role in limiting population density growth by providing physical protection against the conversion of agricultural land for development purposes.
The rate of owner occupied housing in regions is positively related population density changes
Population density is negatively related with the stock of natural amenities A negative relationship is isolated between population densities and the percentage by forest and water resources of land covered
Population density changes are positively linked with unemployment rates
A change in employment density will positively influence population density changes
Changes in population density are inversely associated with the percentage of local jobs occupied by non-residents, while simultaneously showing a positive correlation with the share of employed residents working outside their home county.
Change in employment density is positively affected by population changes Population growth is found to be significantly attracting employment changes in West Virginia
Changes in employment density are inversely related with per capita taxes
Employment density changes are positively related with access endowments Highway density is found to affect employment growth
The change in employment density is insignificantly related to employment in the mining, agricultural, and construction sectors, but significantly and positively related with service sector employment
An inverse relationship is captured between unemployment rate and employment density changes
Employment densities are found to be positively related with agricultural sales upport some
This result possibly recognizes that employment growth need not necessarily have only negative effects on agricultural sector, but could possibly s market creation
Counties with high county land ownership have a significant positive relationship with changes in employment density
Change in employment density is positively and significantly related with proportion of resident jobs held by people outside the county and negatively ty of
C related with proportion of employed residents who work outside coun residence
The Agricultural Land Density Model
High agricultural land density changes are associated with high population density changes Thus population growth is the driving force behind farmland conversion in West Virginia
Highway expansion negatively impacts agricultural land densities by promoting land claims and intensifying economic activities in accessible areas, leading to the conversion of farmland.
Limitations of the Study and Areas of Further Study
The study of land use changes, along with the identification and modeling of the forces influencing land allocation, presents significant challenges Analyzing this issue at the broader state level adds complexity to understanding land use changes To address these challenges, a rium model has been introduced to examine land use issues in West Virginia, leading to relevant conclusions over time.
This study analyzes land use trends in West Virginia, highlighting the relationship between land use and various influencing factors It introduces and examines the dynamics of the land use system, ultimately establishing a growth equilibrium based on the findings.
However, the study faces its own limitations that can be summarized as follows:
This study focuses on West Virginia, systematically isolating the effects of regional changes while treating key variables as constant However, the emergence of a new economy has led to increased interdependence among states and regions in areas such as policy and trade As a result, modeling land conversion solely within a state-level framework presents significant limitations.
Policies influencing agricultural land use in West Virginia are currently lacking, as there is no explicit framework for land use and growth management In contrast, the Northeastern Region has implemented such policies, which have implications for growth dispersion that remain unexamined By adopting a broader regional perspective and integrating relevant policy variables, we can better understand land conversion processes and their effects on managing growth and conserving agricultural land.
The location of an activity significantly impacts land use, making it crucial to identify appropriate proxies or variables that accurately represent this spatial influence Commonly used measures include physical distances, proximity to urbanized areas, and adjacency to interstate highways However, these spatial measures can be enhanced by incorporating applied GIS techniques to better analyze and understand the effects of location on land use changes.
Modeling: this study models the change in land uses using a static system of
Further research on land use changes can benefit from a spatial growth model focused on a single decade, comparing initial conditions with end-of-decade values Employing a dynamic model may enhance our understanding of the interactions between various forces influencing land use A dynamic analysis, incorporating policy and effective measures within a regional growth modeling framework, is essential for comprehensively addressing these changes.
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