Land use behavior under different institutional settings

For a long time, economists have argued that insecure property rights lead to an inefficient allocation of resources. One example of this is agricultural land tenure. Given that a farmer expects her rental contract to end after a few years, she will perhaps be less careful in managing this land than she would be with her own property. She may, for example, cultivate more erosion-prone crops and use less crop rotation. This will lead to lower soil quality and yields in the long term. The ratio of rented land to total farmed land is already very high and still increasing in most EU countries. Therefore, it is important to fully understand the impact of ownership on farmers` land use behavior in order to take appropriate measures if necessary. One possible measure are voluntary agri-environmental schemes, which provide farmers with a monetary incentive to adopt environmentally friendly production technologies. Against this background, our research project will investigate the influence of property rights and agri-environmental programs on the behavior of farmers with regard to soil protection. Amongst others, we intend to answer the following research questions: 1) How do property rights and contract terms affect the cultivated plant species and crop rotation? 2) To what extent does land ownership play a role in farmers decision to participate in agri-environmental schemes? 3) Is there a positive or a negative link between economic and environmental efficiency of farms, and what is the role of land ownership in this regard? 4) What kind of relation to nature do farmers have, and does this influence their actual land-use behavior or their participation in agri-environmental schemes? 5) Can we identify different types of farmers, which can be motivated in different ways to adopt more environmentally-friendly behavior? To answer these questions, we revert to both economic and social-psychological theories and models. We aim to expand these methods and adapt them to the situation of relatively small part- time and family-owned farms, whose production is closely linked to nature. The empirical part of our work is based on a very extensive and exceptional data base. On the one hand, we use a data set that includes farmers` cultivation decisions at the field level for several years throughout Austria. On the other hand, we link economic data from the bookkeeping results of individual companies with data from a social-psychologically motivated survey of these farmers. The results of our research will improve our understanding of farmers land use decisions, and how those are influenced by the institutional framework. It thus contributes to the long-term preservation of soil fertility.

For a long time, economists have argued that insecure property rights lead to an inefficient allocation of resources. One example of this is agricultural land tenure. Given that a farmer expects her rental contract to end after a few years, she will perhaps be less careful in managing this land than she would be with her own property. She may, for example, cultivate more erosion-prone crops and use less crop rotation. This will lead to lower soil quality and yields in the long term. Importantly, the share of rented land is already very high and still increasing in most EU countries. Against this background, our research project investigated the influence of land ownership and agri-environmental programs on the behavior of Austrian farmers with regard to soil protection. To answer these questions, we use both economic and social-psychological theories and models. We analyze large data sets that include information at the level of single farms and single plots of farms, as well as surveys and interviews with farmers. The most important results of our research are: i) Land rental is important for farms to improve their economic performance. Farms with higher rental shares produce closer to their technical possibilities and their size is closer to the optimal scale. However, an important pre-condition seems that rental contracts are secured and long-term. ii) Our results regarding the effect of land rental on the environmental performance of farms are mixed. On the one hand, utilizing a large data set with information at the plot level and qualitative interviews, we find that most Austrian farmers do not differ their crop choice between rented and owned cropland. A survey confirms these finding for a list of 16 different soil conservation measures. On the other hand, based on farm-level data, we find a significant negative impact of the rental share on farms' soil conservation efficiency and a considerable potential to decrease soil loss. The main reduction potential comes from setting aside erosion-prone areas with low yield potential. iii) Based on interviews with farmers we identify four distinct types of farmers whose soil management is motivated by different aspects. These include concerns over the environment, farm profitability, food production, and personal freedom. Building on this farmer typology, we show that different farmer types indeed differ in their level of participation in agri-environmental programs. The results of our research improve our understanding of farmers' land use decisions, and how those are influenced by the institutional framework. It thus contributes to better policies and the long-term preservation of soil fertility.