Estimating the Environmental Impact of Land and Production Decisions with Multivariate Selection Rules and Panel Data

19 Pages Posted: 8 Apr 2020

See all articles by Alban Thomas

Alban Thomas

University of Toulouse 1 - Toulouse School of Economics (TSE); delete

Date Written: April 2011

Abstract

We propose an estimation procedure dealing with multivariate selection and dynamics in land choice and unobserved heterogeneity in structural and crop selection equations. The method is applied to a multi‐output profit function with multiple corner solutions and farm‐level panel data. Estimation results reveal that the single selection rule associated with the Tobit procedure is rejected in favor of our multivariate selection treatment. Inconsistent estimates are expected with the Tobit procedure, or if farmer fixed effects are omitted, which can have important consequences for policy recommendations, as illustrated in an evaluation of nitrogen runoff elasticities with respect to economic variables.

Keywords: environmental impact, land use, panel data, sample selection

Suggested Citation

Thomas, Alban and Thomas, Alban, Estimating the Environmental Impact of Land and Production Decisions with Multivariate Selection Rules and Panel Data (April 2011). American Journal of Agricultural Economics, Vol. 93, Issue 3, pp. 784-802, 2011, Available at SSRN: https://ssrn.com/abstract=3570828 or http://dx.doi.org/10.1093/ajae/aar008

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

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