Land use change from agriculture to forestry: a structural model of the income and leisure choices of farmers

The role of forests in our environment is increasing in importance due to the multifunctional benefits forests provide in relation to climate change mitigation, water conservation and provision of fibre for bioenergy. However, afforestation targets across Europe are not being met. Using Ireland as a case study, we investigate why farm afforestation rates are falling, despite the availability of generous subsidies. We use a novel technique to examine the afforestation participation decision using a life cycle choice framework where we apply revealed choice methodology to afforestation for the first time. We find that the model coefficients coincide with expected economic theory relative to the utility maximisation of income, leisure and wealth (long term land value). However, we observe a cohort of farmers who do not plant forestry regardless of income derived, reflecting their preference to maintain the flexibility of the long term value of their land by continuing to farm.

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Conference Paper/ Presentation
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JEL Codes:
C5; D1; 013.

 Record created 2017-04-01, last modified 2018-01-23

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