Spatial Externalities in Agriculture: Empirical Analysis, Statistical Identification, and Policy Implications

Abstract

Summary Spatial externalities can affect economic welfare and landscape pattern by linking farm returns on adjoining parcels of land. While policy can be informed by research that documents spatial externalities, statistically quantifying the presence of externalities from landscape pattern is insufficient for policy guidance unless the underlying cause of the externality can be identified as positive or negative. This article provides a springboard for empirical research by examining the underlying structure, social-environmental interactions, and statistical identification strategies for the analysis and the quantification of agricultural spatial externalities that are derived from observations of landscape change. The potential for original policy treatments of agricultural spatial externalities in development and environment outcomes is highlighted.