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Agri-environmental Policy and Urban Development Patterns: A General Equilibrium Analysis

Lookup NU author(s): Thomas Coisnon, Professor Walid Oueslati


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This paper investigates the spatial effects that the provision of environmental public goods have on residential location choices in a suburban context. Specifically, a spatial general equilibrium framework is developed to analyze the consequences of adopting an agri-environmental policy promoting the provision of positive farming externalities. We use a static monocentric model of an open city where agricultural bid-rents and agricultural amenities vary endogenously in space, and where the positive externalities associated with agricultural production are valued by households. Consistent with empirical evidence of the potential side effects that conservation policies may have in terms of urbanization patterns and land price changes, we show that under certain conditions implementing an agri-environmental policy may promote additional suburban development. Moreover, we demonstrate that the emergence of disconnected suburban areas may be significantly influenced by the location of land regulated by an agri-environmental policy. Finally, we discuss distributional aspects and show that while introducing an agri-environmental policy has a negative impact on most residential land value, it can have positive effects on farmland and residential land located within the regulated areas, suggesting the non-neutrality of such policies regarding the agents’ assets.

Publication metadata

Author(s): Coisnon T, Oueslati W, Salanié J

Publication type: Article

Publication status: Published

Journal: American Journal of Agricultural Economics

Year: 2014

Volume: 96

Issue: 3

Pages: 673-689

Print publication date: 01/04/2014

Online publication date: 04/02/2014

ISSN (print): 0002-9092

ISSN (electronic): 1467-8276

Publisher: Oxford University Press


DOI: 10.1093/ajae/aat114


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Funder referenceFunder name
Region Pays de la Loire
convention 11-MUTS-PDD-3-CVS-019French Ministry of Environment (PAYTAL)
FP7-PEOPLE-2010-IEF - 273191 - LUPUSEuropean Union