Premium
Production Incentives from Static Decoupling: Land Use Exclusion Restrictions
Author(s) -
Just David R.,
Kropp Jaclyn D.
Publication year - 2013
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1093/ajae/aat060
Subject(s) - payment , production (economics) , direct payments , subsidy , incentive , natural resource economics , economics , decoupling (probability) , land use , business , microeconomics , finance , market economy , civil engineering , control engineering , engineering
Many agricultural support payments are based on past production with restrictions on how land may currently be used. When support payments to field crops are analyzed in a static framework, they do not directly impact current production decisions. However, over time, as relative profits change, these payments affect current output. The payments may keep land in less profitable production of program crops through restrictions prohibiting potentially more profitable endeavors such as cultivating fruits and vegetables. These payments have the potential to lead to production and trade distortions similar in magnitude to the distortions associated with direct production subsidies.