Environmental Research Journal vol:5 issue:4 pages:505-522
In this paper we develop a spatially explicit economic land-use model that gives insights into the determinants of land-use patterns and how these patterns are affected by policy changes. The model explicitly takes into account the decision-making process as to why and where farmers convert the use of forest land. This is different from previous spatially disaggregated models – such as simulation models – where the underlying decision-making process is imposed. The micro-economic focus in this paper is crucial for understanding the ongoing human-induced land-use change process and is essential in the land-use change literature – that is dominated by natural scientists focusing on geophysical and agro-climatic processes. Our model is extremely valuable to inform land-use policy as it specifies how individual decision makers will react to policy and other exogenous changes in their environment and how this response will alter the landscape.
The model is derived from the von Thunen-Ricardo land rent model that describes land-use patterns as a result of variability in geophysical land attributes and differences in location and transport costs. However, this model is valid only under certain assumptions and is less suited to describe land-use patterns in forest frontier areas characterized by semi-subsistence agriculture and imperfect markets. We refine the model to account for the fact that agricultural prices and wages might be endogenously determined and households cannot be considered as profit maximizing agents.
We empirically estimate the model for a forest-frontier area in Indonesia using a combination of data from satellite image interpretation, GIS data and a socio-economic survey data. The results demonstrate that differences in Ricardian land rent are important in determining spatial land-use patterns. However, we do not find evidence in support of the von Thunen idea that land-use patterns are determined by differences in transport costs. Rather the labor intensity of land-use systems, population levels, the access to technology and household characteristics matter. This has important implications for forest conservation and land-use policy. In addition, the refinement of the von Thunen-Ricardo land rent model – which incorporates more realistic descriptions of economic behavior – is justified by the empirical results.