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Passive farming and land development: a real option approach�

Di Corato, Luca and Brady, Mark (2016). Passive farming and land development: a real option approach�. Uppsala: (NL, NJ) > Dept. of Economics, Sveriges lantbruksuniversitet. Working paper series / Swedish University of Agricultural Sciences, Department of Economics ; 2016:04
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Abstract

We examine the impact that subsidies paid to passive farmers have on the lease of land and on the speed of land development. First, we find that, even if delaying land development, paying passive farmers increases the value of the land. Second, when bargaining for the lease of land, we show that the agreement between the parties is conditional on an underlying development project passing a threshold level in terms of profitability. Third, we identify the conditions leading to a Pareto improvement. Last, we illustrate our findings by considering the establishment of an energy crop on leased land.

Authors/Creators:Di Corato, Luca and Brady, Mark
Title:Passive farming and land development: a real option approach�
Series/Journal:Working paper series / Swedish University of Agricultural Sciences, Department of Economics (1401-4068)
Year of publishing :12 April 2016
Depositing date:12 April 2016
Number:2016:04
Number of Pages:32
Place of Publication:Uppsala
Publisher:Department of Economics, Swedish University of Agricultural Sciences
ISSN:1401-4068
Language:English
Publication Type:Report
Full Text Status:Public
Agris subject categories.:X Agricola extesions > X70 Economics and management
Subjects:(A) Swedish standard research categories 2011 > 5 Social Sciences > 502 Economics and Business > Economics
Agrovoc terms:land use, contracts, prices, land development, extensive farming, subsidies
Keywords:Real Options, Land development, Passive Farming, Nash Bargaining
URN:NBN:urn:nbn:se:slu:epsilon-e-3382
Permanent URL:
http://urn.kb.se/resolve?urn=urn:nbn:se:slu:epsilon-e-3382
ID Code:13269
Faculty:NJ - Fakulteten för naturresurser och jordbruksvetenskap
Department:(NL, NJ) > Dept. of Economics
External funders:FORMAS
Deposited By: DR LUCA DI CORATO
Deposited On:14 Apr 2016 14:24
Metadata Last Modified:14 Apr 2016 14:24

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