Responsiveness of Rural and Urban Land Uses to Land Rent Determinants in the U.S. South

Ricardian und von Thtinen land rent models are combined into a single land use shore model including farm, forest, and urban lurid uses. The lurid share model is applied to the Southern United States, and elasticities are extracted that measure land share response to changes in iqulation, income, land values, prices, and costs in counties with d$ferent degrees of urbanization. The study explores the effeet of treating either rural or urban land as a residual use. While this practice is common in existing land use studies, it is found to significantly affect parameter estimates in this county-level analysis. (JEL R 14) In a paper prepared for a forthcoming Yearbook of Environmental Economics, Bockstael and Irwin observe that “Often policies of the public sector seek to affect land uses by providing incentives or disincentives that affect landowners ’ land use decisions. Perhaps even more often, land use decisions are affected by policies that have been designed to address completely different social concerns, but the consequences for land use change can be both unintended and severe” (1999, 14). Policy effects, whether intended or unintended, also may vary substantially across space and through time, and may combine and interact in ways that make a targeted analysis of a particular policy incomplete. As a consequence, there is value in knowing how land use is responding to change in population, income, farm revenue, timber establishment cost, and other land use determinants. Such positive results can summarize the combined effects of existing policies. They also can indicate where and how much land use might change if new policies affect the determinants of land use. This paper presents a county-level land use analysis for 1,459 counties in the U.S. South. The analysis is based on two traditional land rent models: a Ricardian rent model for rural land use and a von Thiinen location rent mode1 for urban land use. The Ricardian model has seen extensive use in the agricultural economics literature (Caswell