The role of economic returns in land use change: Evidence from farm-level data in the US Northern Great Plains

Abstract

Conversion of grassland to cropland in the US Prairie Pothole Region is of longstanding concern. The region's grasslands are carbon (C) sinks and provide important breeding grounds for many migratory bird species. Crop production requires more input use, potentially increasing pollution in the greater Mississippi watershed. Previous analyses of land conversion in the Prairie Pothole Region generally invoke neoclassical economic models and typically use secondary data to assess conversion decisions. To more deeply investigate farmers' land use choices, we use data from focus group meetings to learn about their conversion decisions, conversion costs, and motives. Farmers mentioned profit-related factors frequently as a factor in their land use decisions. However, our respondents who converted to cropland report conversion costs to be well below estimated increases in land value. This suggests that those who choose not to convert land forego such gains, and thus financial motivations may be far from complete in explaining land conversion decisions. We found several quantitative indications that other factors might be crucial in preventing more grassland losses: (1) for those who converted from grass to crop, the gain in returns is so large that conversion costs could be recovered in one year; (2) for those who converted from crop to grass, the gain was negative; and (3) lifestyle choices and stewardship opinions were found to be statistically significant in land use decisions. Thus, nonmarket factors, including lifestyle choice and stewardship perspectives, may be important determinants of land use decisions and act to slow the rate of conversion to cropping.