Rural landscape and optimal agricultural land-use

As a supplement to the supply of agricultural products, agricultural lands provide a range of amenity services that are valuable for society, including recreation areas, cultural heritage and rural landscapes. These amenities are the driving force behind policies established in some developed countries to reward farmers for the positive external benefits they generate (EC 2003; OECD 2000, 2003; Peterson et al. 2002), and by this means to slow urbanization and other economic processes that shrink agricultural lands. Contrary to agricultural products that can be shipped to a distance, rural landscape is a non-transportable resource, and therefore it is in the interest of local communities to preserve their agricultural open spaces.Various studies have evaluated the willingness to pay for maintaining agricultural lands, including Halstead (1984), Bergstrom et al. (1985), Beasley et al. (1986), Bowker and Didychuk (1994), Hackl and Pruckner (1997), Ready et al. (1997), Ready and Abdalla (2005) and Fleischer and Tsur (2003). In McConnell (1989), Lopez et al. (1994), Brunstad et al. (1999) and Fleischer and Tsur (2009) the allocation of land between urban and rural uses is analyzed in view of the agricultural landscape amenity values.