Journal Article

Agri-environmental Policy and Urban Development Patterns: A General Equilibrium Analysis

Thomas Coisnon, Walid Oueslati and Julien Salanié

in American Journal of Agricultural Economics

Published on behalf of Agricultural and Applied Economics Association

Volume 96, issue 3, pages 673-689
Published in print April 2014 | ISSN: 0002-9092
Published online February 2014 | e-ISSN: 1467-8276 | DOI: https://dx.doi.org/10.1093/ajae/aat114
Agri-environmental Policy and Urban Development Patterns: A General Equilibrium Analysis

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  • Urban, Rural, and Regional Economics
  • Household Analysis
  • Agricultural Economics

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This paper investigates the spatial effects that the provision of environmental public goods have on residential location choices in a suburban context. Specifically, a spatial general equilibrium framework is developed to analyze the consequences of adopting an agri-environmental policy promoting the provision of positive farming externalities. We use a static monocentric model of an open city where agricultural bid-rents and agricultural amenities vary endogenously in space, and where the positive externalities associated with agricultural production are valued by households. Consistent with empirical evidence of the potential side effects that conservation policies may have in terms of urbanization patterns and land price changes, we show that under certain conditions implementing an agri-environmental policy may promote additional suburban development. Moreover, we demonstrate that the emergence of disconnected suburban areas may be significantly influenced by the location of land regulated by an agri-environmental policy. Finally, we discuss distributional aspects and show that while introducing an agri-environmental policy has a negative impact on most residential land value, it can have positive effects on farmland and residential land located within the regulated areas, suggesting the non-neutrality of such policies regarding the agents’ assets.

Keywords: agricultural amenities; agri-environmental policy; land development; leapfrog; monocentric model; urban sprawl; Q15; Q18; R13; R14; R21

Journal Article.  8070 words.  Illustrated.

Subjects: Urban, Rural, and Regional Economics ; Household Analysis ; Agricultural Economics

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