Question

Economic determinant of land used

Answer 1

Two reduced-form, econometric models of developed land area were estimated with the data from the USDA’'s National Resource Inventory and numerous other sources for 49 states during 1982-1997. In these linear and semi-quadratic fixed-effects models, developed land area is smaller where the average real gas price or conservation- reserve-program payment per enrolled acre during the previous five years is higher. This area also decreases as the average share of lower-house Democrats or real per-capita agricultural and mining production during the previous five years grows. Increases in a state’'s average population and average annual growth rate of real non-agricultural and non-mining output per capita during the previous five years induce land development. Policies that increase real CRP payments per enrolled acre, improve the real returns to agriculture and mining, reduce population growth, or raise real gasoline prices are likely to reduce land development.