With population growth and expansion of economic activities, urbanized places have expanded; and with growing per capita income, residential location preferences have shifted towards suburban and rural locations. In many places, such new growth has been accommodated with the development of agricultural lands. The concern from natural resource economics perspective is that agricultural lands are multifunctional. They have production uses, for which there are efficient markets, and amenity and environmental benefits, for which there are no efficient markets to value these attributes. This multifunctionality and the possible under-valuation of agricultural lands, irreversibility of development, and speculative effects of development on farm efficiency have attracted policy intervention in many States.
This study aims to understand the relationship between regional growth in population, employment, and per capita income and agricultural land development in the Northeast United States. This region comprises 13 states and one of the fastest agricultural land developments in the nation. A system of spatial and non-spatial simultaneous equations models are introduced and estimated using three-stage-least-squares method. County level data on population, employment, income, land value, agricultural land stock, county characteristics, fiscal factors, local infrastructure, agricultural land use policies, and spatial information are used to estimate the models.
The major findings of this study are that population growth facilitates agricultural land development, more so if the growth is in a neighboring county; own county growth in income induces agricultural land development while neighboring county income growth reduces it; counties with high per acre value of agricultural land and counties surrounded by other counties that have high land values experience high agricultural land development; road accessibility and location near urbanized locations induce agricultural land development; northeastern states that implemented tax easement and transferable development rights policies experienced more agricultural land development than those that did not; and the performance of the agricultural sector in terms of income and employment creation was not significant in reducing agricultural land development.
The study recommends that agricultural land protection policies can be better coordinated at a regional level and could be more effective if integrated within state economic development programs.