Rural land use: traditional agriculture or forestry?

摘要

The signing of the Kyoto Protocol and the official recognition of forestry's capacity to sequester carbon has prompted considerable interest, within the European Union, in forestry as a competing land use application. However, despite large increases in grants to forestry, afforestation rates, in certain EU countries, are below national targets. In this paper, a real options model is employed to theoretically explain why farmers may be slow to switch land from traditional agriculture to forestry. The theoretical model is then used to motivate an empirical dynamic panel data model and both models are applied to Irish data. Results indicate that the Irish government would need to increase the ratio of profits from forestry to those of traditional agriculture by approximately 14% to give farmers the incentive to increase the number of hectares planted from 14 000 per annum to the government target of 20 000 per annum..