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Abstract
The economic model I use to describe landowners’ land use decisions is a standard
discrete choice random utility maximization model.1 Land is of heterogeneous quality, and
suitability for the various uses depends on (multiple dimensions of) quality. Therefore, at any
given time, potential benefits derived from each parcel vary by use. As economic conditions
change, production technologies advance and the farmer accumulates human capital, the relative
desirability of land use alternatives may change on any parcel. When the top-ranked alternative
changes due to these forces, the farmer converts the parcel to a different use. The observed
pattern of land use therefore represents a snapshot of outcomes from a dynamic process.