Agricultural Amenities and Agricultural Amenities and Optimal Land Use:Optimal Land Use:The Case of IsraelThe Case of Israel

Iddo Kan, Iddo Kan, §† §† David Haim.David Haim.†† Mickey Rapaport-Rom Mickey Rapaport-Rom†† and Mordechai Shechterand Mordechai Shechter††

§ The Department of Agricultural Economics and Management; § The Department of Agricultural Economics and Management; The Robert H. Smith Faculty of Agriculture, Food and The Robert H. Smith Faculty of Agriculture, Food and Environment; The Hebrew University of Jerusalem, Israel.Environment; The Hebrew University of Jerusalem, Israel.

† † Natural Resources and Environmental Research Center; Natural Resources and Environmental Research Center; University of Haifa, Israel.University of Haifa, Israel.

Conservation of LandConservation of Land

Fostering Water ResourcesFostering Water Resources

Preservation of the Natural EnvironmentPreservation of the Natural Environment

Development of Favorable Landscapes (Development of Favorable Landscapes (AmenitiesAmenities))

Maintenance of Cultural HeritageMaintenance of Cultural Heritage

Recreation/RelaxationRecreation/Relaxation

Viability of Rural CommunityViability of Rural Community

Food SecurityFood Security

Multi-Functionality of AgricultureMulti-Functionality of Agriculture

Studies on Agricultural AmenitiesStudies on Agricultural Amenities

Evaluations of positive effects of agricultural landscapes

USA - Halstead (1984), Bergstrom et al. (1985), Beasley et al.

(1986), Ready et al. (1997);

Canada - Bowker and Didychuk (1994);

Austria - Hackl and Pruckner (1997);

Israel - Fleischer and Tsur (2003, 2009).

Impacts of agricultural amenities on urban-rural land allocation

McConnell (1989), Lopez et al. (1994), Brunstad et al. (1999),

Fleischer and Tsus (2009).

Estimations of amenity values associated with different crops

Drake (1992), Brunstad et al. (1999), and Fleischer and Tsur (2009).

Fleischer and Tsur analyze the impact of amenities on rural-urban land allocation under population growth.

They assume constant-return-to-scale of agricultural activities.

In other words, they ignore changes in intra-agricultural land allocation among crops.

Our study focuses on improving social welfare by re-allocation of land among crops.

AssumptionsAssumptions

Policy: Regional communities consider setting a policy to encourage farmers to replace the profit maximization (PM) land allocation with the socially optimal (SO) land allocation;E.g., by compensating farmers for the profit-loss associated with the deviation from the PM solution.

Amenity Benefits: Each community takes into account only the amenities provided by the region’s agricultural lands, and only to the local residents.

Land Allocation: Rural-urban land allocations are not affected by the policy.

Research QuestionsResearch Questions

What is the impact of agricultural amenities on the socially optimal intra-agricultural land allocation among crops?

What is the welfare loss associated with ignoring the amenity value?

How the size of regional areas influences the benefits obtained from encouraging the growing of high-amenity crops?

Developing a regional scale agricultural land-use positive-Developing a regional scale agricultural land-use positive-

mathematical programming model (based on Howitt, 1995):mathematical programming model (based on Howitt, 1995):

(Suitable when only limited amount of land-use data is available)(Suitable when only limited amount of land-use data is available)

Stage I.Stage I. Calibrating the model such that it reproduces land use Calibrating the model such that it reproduces land use

observed in a base-year (2002)observed in a base-year (2002)

(the assumed profit-maximization solution).(the assumed profit-maximization solution).

Stage II.Stage II. Computing optimal allocation of land among crops Computing optimal allocation of land among crops

when the amenity value is introduced into the objective when the amenity value is introduced into the objective

function function

(the socially-optimal solution).(the socially-optimal solution).

MethodologyMethodology

Ll

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1

1

2

,...,

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max1

The Mathematical Programming ModelThe Mathematical Programming Model

IllNA ,...,, 1

First StageCalibrating the cost functions based on the assumed profit maximization solution

Second Stage Adding the amenity-value function and calculating the socially optimal solution

0

200

400

600

800

1000

0 100 200 300 400 500

py-Fpy-F

py-Fpy-F

Tomato (Greenhouse)Tomato (Greenhouse) Wheat (Open field)Wheat (Open field)

py-py---((ll))py-py---(500-(500-ll))

Calibrating for land allocation under the PM solutionCalibrating for land allocation under the PM solutionand solving for the SO land allocationand solving for the SO land allocation

Land (hectares)

$/he

ctar

e-ye

ar py-py---(500-(500-ll))++AA

Profit Loss

Welfare Increase

PM Solution

SO Solution

Amenity Value Increase

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The Mathematical Programming ModelThe Mathematical Programming Modelunder the Socially-Optimal Solutionunder the Socially-Optimal Solution

322331132112

22

13

11,...,, LLγLLγLLγ)LρL(μNllNA nn

nnnI

Fleischer & Tsur (2009):

L1 = Orchards & Citrus

L2 = Vegetables, Field Crops & Preserved Open Spaces

L3 = Greenhouses

Depends on regional specific factors (income, etc.)

0

0.5

1

1.5

2

0 5000 10000 15000 20000 25000

Regional Agricultural Land (ha)

cen

t/h

ouse

hol

d-h

a-yr

0

0.5

1

1.5

2

0 5000 10000 15000 20000 25000

Regional Agricultural Land (ha)

cen

t/h

ouse

hol

d-h

a-yr

All Crops

L1 - Orchards & Citrus

L2 - Vegetables & Field Crops

L3 - Greenhouse

0

0.5

1

1.5

2

0 5000 10000 15000 20000 25000

Regional Agricultural Land (ha)

cent

/hou

seho

ld-h

a-yr

Lopez (1994) - Deerfield Mass., US

Lopez (1994) - East Longmeadow Mass., US

Lopez (1994) - Alaska, US

Fleischer & Tsur (2008) - Israel

Marginal (maximal) Amenity Value:Marginal (maximal) Amenity Value:Variation with Regional Agricultural SizeVariation with Regional Agricultural Size

0L

L 1 - Orchards & Citrus

L 2 - Vegetables, Field Crops & Open Spaces

L 3 - Greenhouses

0500

1,0001,5002,0002,5003,0003,5004,0004,500

0 5,000 10,000 15,000 20,000 25,000 30,000

L1 (

ha)

Maximum Amenity

0

5,000

10,000

15,000

20,000

25,000

30,000

0 5,000 10,000 15,000 20,000 25,000 30,000

L2 (

ha)

0

500

1,000

1,500

2,000

2,500

3,000

0 5,000 10,000 15,000 20,000 25,000 30,000Regional Agricultural Land (ha)

L3 (

ha)

Regional Regional Size Effect Size Effect

0L

0

0.5

1

1.5

2

0 5000 10000 15000 20000 25000

Regional Agricultural Land (ha)

cen

t/h

ouse

hol

d-h

a-yr

All Crops

L1 - Orchards & Citrus

L2 - Vegetables & Field Crops

L3 - Greenhouse

Israel -Israel -Partitioning Partitioning intointoNatural ZonesNatural Zones

Natural Regions

Observed Nationwide Land Allocation among 45 CropsObserved Nationwide Land Allocation among 45 Crops (2002, The Assumed Profit-Maximization Solution) (2002, The Assumed Profit-Maximization Solution)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Ora

nge

Gra

pefr

uit

Lem

ons

App

les

Pea

r

Pea

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non-

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Oni

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Let

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Cab

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Cel

ery

Rad

ish

Art

icho

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Gar

lic

Bea

n

Whe

at

Bar

ley

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ton

Chi

ckpe

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Cor

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Sun

flow

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ter

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age

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er-m

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Tom

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gree

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Cuc

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Pep

per

Str

awbe

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Lan

d (

ha)

Orchards & CitrusOrchards & Citrus Vegetables & Field CropsVegetables & Field Crops GreenhouseGreenhouse

Nationwide Results Nationwide Results

Profit Maximization

Socially Optimum Difference Difference (%)

PM SO SO-PM 100(SO-PM)/SO

Welfare Elements (106 $/yr)

Farming Profits 456.5 454.0 -2.5 -0.5

Amenity Value 212.4 231.0 18.6 8.8

Social Welfare 668.9 685.1 16.2 2.4

Land Allocation (ha)

Orchards and Citrus 61,179 61,659 480 0.8

Vegetables & Field Crops 310,794 309,002 -1791 -0.6

Greenhouses 16,189 17,579 1390 8.6

30%

18.6/2.5≈7.5

Regional Scale Changes in Welfare ElementsRegional Scale Changes in Welfare Elements($/yr)($/yr)

0

0.5

1

1.5

2

2.5

3

Her

mon

(29

1)

Hul

a B

asin

(21

1)

Nor

ther

n G

olan

(29

2)

Eas

tern

Upp

er G

alil

ee (

212)

Elo

n (2

44)

Nah

ariy

ya (

245)

Mid

dle

Gol

an (

293)

Yeh

i'am

(24

3)

Haz

or (

213)

Akk

o (2

46)

Kin

nero

t (22

1)

Sou

ther

n G

olan

(29

4)

Eas

tern

Low

er G

alil

ee (

222)

She

far'a

m (

241)

Kar

mi'e

l (24

2)

Hai

fa (

311)

Naz

aret

h M

ount

ains

(23

7)

Hof

HaK

arm

el (

321)

Zik

hron

Ya'

aqov

(32

2)

Jezr

ael V

alle

y (2

34)

Yoq

ne'a

m (

235)

Kok

hav

Pla

teau

(23

3)

Men

ashe

(23

6)

Har

od V

alle

y (2

32)

Bet

She

'an

Bas

in (

231)

Ale

xand

er M

ount

ain

(323

)

Had

era

(324

)

Wes

t S

haro

n (4

11)

Eas

t S

haro

n (

412)

Sou

ther

n S

haro

n (4

21)

Pet

ah T

iqw

a (4

22)

Lod

(43

1)

Ris

hon

Lez

iyyo

n (4

42)

Tel

Avi

v (5

11)

Ram

at G

an (

512)

Hol

on (

513)

Reh

ovot

(44

1)

Ash

dod

(613

)

Jude

an M

ount

ains

(11

1)

Jude

an F

ooth

ills

(11

2)

Mal

'akh

i (61

1)

Ash

qelo

n (6

14)

Lak

hish

(61

2)

106 $

/yea

r

Profit Reduction

Welfare Increase

Regional Scale Changes in Welfare Elements (%)Regional Scale Changes in Welfare Elements (%)

0

2

4

6

8

10

12

14

16

Her

mon

(29

1)

Hul

a B

asin

(21

1)

Nor

ther

n G

olan

(29

2)

Eas

tern

Upp

er G

alile

e (2

12)

Elo

n (2

44)

Nah

ariy

ya (

245)

Mid

dle

Gol

an (

293)

Yeh

i'am

(24

3)

Haz

or (

213)

Akk

o (2

46)

Kin

nero

t (22

1)

Sou

ther

n G

olan

(29

4)

Eas

tern

Low

er G

alile

e (2

22)

She

far'a

m (

241)

Kar

mi'e

l (24

2)

Hai

fa (

311)

Naz

aret

h M

ount

ains

(23

7)

Hof

HaK

arm

el (

321)

Zik

hron

Ya'

aqov

(32

2)

Jezr

ael V

alle

y (2

34)

Yoq

ne'a

m (

235)

Kok

hav

Pla

teau

(23

3)

Men

ashe

(23

6)

Har

od V

alle

y (2

32)

Bet

She

'an

Bas

in (

231)

Ale

xand

er M

ount

ain

(323

)

Had

era

(324

)

Wes

t S

haro

n (4

11)

Eas

t S

haro

n (

412)

Sou

ther

n S

haro

n (4

21)

Pet

ah T

iqw

a (4

22)

Lod

(43

1)

Ris

hon

Lez

iyyo

n (4

42)

Tel

Avi

v (5

11)

Ram

at G

an (

512)

Hol

on (

513)

Reh

ovot

(44

1)

Ash

dod

(613

)

Jude

an M

ount

ains

(11

1)

Jude

an F

ooth

ills

(112

)

Mal

'akh

i (61

1)

Ash

qelo

n (6

14)

Lak

hish

(61

2)

%

Profit Reduction

Welfare Increase

ConclusionAllow local communities to decide on policy implementation,rather than applying a nationwide program.

L 1 - Orchards & Citrus

L 2 - Vegetables, Field Crops & Open Spaces

L 3 - Greenhouses

0500

1,0001,5002,0002,5003,0003,5004,0004,500

0 5,000 10,000 15,000 20,000 25,000 30,000

L1 (

ha)

Maximum Amenity

0

5,000

10,000

15,000

20,000

25,000

30,000

0 5,000 10,000 15,000 20,000 25,000 30,000

L2 (

ha)

0

500

1,000

1,500

2,000

2,500

3,000

0 5,000 10,000 15,000 20,000 25,000 30,000Regional Agricultural Land (ha)

L3 (

ha)

L 1 - Orchards & Citrus

L 2 - Vegetables, Field Crops & Open Spaces

L 3 - Greenhouses

0500

1,0001,5002,0002,5003,0003,5004,0004,500

0 5,000 10,000 15,000 20,000 25,000 30,000

L1 (

ha)

Maximum Amenity

Profit Maximization

0

5,000

10,000

15,000

20,000

25,000

30,000

0 5,000 10,000 15,000 20,000 25,000 30,000

L2 (

ha)

0

500

1,000

1,500

2,000

2,500

3,000

0 5,000 10,000 15,000 20,000 25,000 30,000Regional Agricultural Land (ha)

L3 (

ha)

L 1 - Orchards & Citrus

L 2 - Vegetables, Field Crops & Open Spaces

L 3 - Greenhouses

0500

1,0001,5002,0002,5003,0003,5004,0004,500

0 5,000 10,000 15,000 20,000 25,000 30,000

L1 (

ha)

Maximum Amenity

Profit Maximization

Socially Optimum

0

5,000

10,000

15,000

20,000

25,000

30,000

0 5,000 10,000 15,000 20,000 25,000 30,000

L2 (

ha)

0

500

1,000

1,500

2,000

2,500

3,000

0 5,000 10,000 15,000 20,000 25,000 30,000Regional Agricultural Land (ha)

L3 (

ha)

Regional Regional Size Effect Size Effect

0L

0

0.5

1

1.5

2

0 5000 10000 15000 20000 25000

Regional Agricultural Land (ha)

cen

t/h

ouse

hol

d-h

a-yr

All Crops

L1 - Orchards & Citrus

L2 - Vegetables & Field Crops

L3 - Greenhouse

In regions larger than L0, the PM land allocation may also be the SO land allocation.

Partitioning the country into larger regions increases the probability of such events.

However, the amenity-value function itself may depend on the regional scale.

Thus, it is essential to conduct such an analysis while using an amenity-value function, which is estimated based on the same regional partition.

Nationwide benefits are estimated at only 2.4%, whereas regional benefits amount to up to 15%. Therefore:

It is recommended to grant local communities the authority to decide on policy implementation, instead of applying a nationwide program.

Why are the SO and PM land allocations so similar?a) Willingness to pay may be small.b) The preferred agricultural landscape may be similar to the observed

one due to adaptation of the population to its surrounding. What are the implications of the regional size effect? a) It is essential to use an amenity-value function, which is estimated

based on the same regional scale, as done here.b) However, it is unknown whether the selected partitioning of the

country into “natural zones” represents the actual exposure of residents to the agricultural landscape in their surrounding.

Concluding RemarksConcluding Remarks

Thank you for your Thank you for your attention!attention!