Economics of forest land clearing for agriculture

Authors

• K. U. Pihkala

DOI: https://doi.org/10.23986/afsci.71850

Abstract

In the literature review an account is given of the methodological problems of the economic comparison of land use for agriculture or forestry. In the empirical study, the comparison is focused on situations where a decision on the possible transfer from forest to agricultural use may have current interest. On the basis of data, mostly collected from pioneer farms established after the war on forest or peat land within four main study areas in Finland, estimates of gross margin, social output, labour income and land rent are made, using the price structure of 1959-63. The comparisons indicate among other things that although agricultural land rent in the existing structure of farm size is often negative, the land rent in marginal calculation maybe positive. The land rent is neither the sole criterion of land use to the farmer, nor to the national economy, as the labour income plays an important role. The farmer's problem is to find the optimum combination of agricultural and forest activities. In the national economy, not only labour in primary production but also in secondary and tertiary industries has to be considered. The economic losses caused by badly timed forest land clearing are illustrated by calculations.