This paper analyses strategic permanent grassland conversion decisions in the Dakotas. We present a binary discrete choice model with dynamic decision-making among heterogeneous farmers to evaluate these land use changes. We also explore the role of conservation easements- a policy tool to inhibit grassland conversions. We utilize a spatially-explicit panel dataset to empirically analyze permanent grass conversions relative to the neighborhood characteristics in North Dakota during 1997-2015. A duration modelling approach is used to estimate the risk of conversion for a representative land parcel as a function of the density of grasslands in its locality, and its proximity to previously allocated easements. We find that the land parcels with higher local grass-density ‘survived’ relatively longer before being permanently converted to cropland. This affirms our conjecture that strategic complementarities exist. We further find that easements are a viable conservation tool as their presence in a parcel’s proximity complements higher grass-density and inhibits conversion. However, most easements seem to have been misallocated in the sense that they are generally located away from conversion sites, in proximity of the areas where conversions did not occur anyway.


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