Agricultural land abandonment in Latvia: an econometric analysis of farmers' choice

Latvian agriculture has experienced a transition from a central planning system to a market economy with surplus production, unstable market conditions, limited resources, etc. Concurrently with the transition, land is increasingly being abandoned. From 16% in 1997 to 21.2% in 2002 of total agricultural land was estimated to be unused. While being the result of an economic decision, agricultural abandonment of marginal land generally has an undesirable effect on environmental parameters, such as soil degradation. This paper reports the results of a survey (n=200) carried out in ten villages in the Cesis district in the northeast of Latvia. Farmers’ behavior towards land abandonment was modeled using a two-step approach of Structural Equation Modeling. Variables affecting the share of land allocated for abandonment were summarized in nine factors. We find that short and long-term farm management decisions, farm income, land price, social capital, personal characteristics and the physical conditions of the land all have a significant effect on the amount of abandoned land. These results suggest that the low profitability of farming and the low quality of land, both mentioned as the prime reasons for land abandonment by the farmers themselves, are not the only reasons for land abandonment. In fact, land abandonment is part of a more complex of factors related to the management of the farm. The paper was presented during The Agricultural Economics Society 78th Annual Conference, 2 - 4 April 2004m Imperial College, South Kensington, Londo