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Agriculture & Location Theory – Chapter 13

Agriculture & Location Theory – Chapter 13. Questions? Review 2 lectures left! Agriculture Environmental Impact Von Th ü nen and Location theory . Environmental Impact of Contemporary Agriculture. Monoculture: specialization on a massive scale Loss of fence-line diversity

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Agriculture & Location Theory – Chapter 13

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  1. Agriculture & Location Theory – Chapter 13 • Questions? • Review • 2 lectures left! • Agriculture • Environmental Impact • Von Thünen and Location theory

  2. Environmental Impact of Contemporary Agriculture • Monoculture: specialization on a massive scale • Loss of fence-line diversity • Riparian zone • Intensive livestock • Water quality • Air quality • Environmental goods and services

  3. 1986 2002

  4. Von Thünen • Location Theory • Model of land use • Prussian landowner (Pomerania) • How net prices of farm products controls what crops are grown (i.e. agric. land use) • Important because • concept of economic rent • normative approach to location theory

  5. Assumptions of Von Thünen’sDer Isolierte Staat • Isolated agricultural region • Homogeneous in soil, climate, etc. • Agricultural region served by a single market / central place • Central place functions to sell and consume agricultural products • Farmers will allocate land use to its highest and best use (most profitable function) • Transportation costs are: • Linear and proportional to distance in all directions (assume no terminal costs) • May vary for different crops / commodities

  6. Parameters of the Von Thünen Model • Understand the role of: • Distance • Price • Yields • Transport costsIn defining the “Highest and best” use of land and hence allocation of land use on market principles i.e. spatial variation in these factors

  7. Definitions: Rent Surplus return to land after meeting all costs of production • Producer surplus e.g. (market price – cost of production) • “ECONOMIC RENT” (ER) • ER is a non-spatial concept ER = p – c

  8. Von Thünen Model • Definitions: • “LOCATION RENT:” • “Economic Rent” that may be earned due to location of land. • Explicitly spatial concept • Different land uses earn different rents • Rent depends on location relative to market • - transportation costs vary with distance

  9. Von Thünen Model Distance of parcel from market Transportation rate (e.g. $/ton-km) Yield yield LR = E (p – a) – E (f*k) Location-specific production costs Price received (gross revenue) Yield-specific gross revenue potential without spatial effects The role of geographic location in adding to total production costs and reducing revenues for given yield

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