Amenity benefits and public policy: An application to the Georgia Pecan Industry

Abstract

Most agricultural production results in both marketable and non-marketable products. Most policy decisions however, tend to be made based only on the market value, which ignores the non-marketable value or amenity benefits. One type of amenity benefits is farmland amenities which are attributes of farmland that are uniquely provided by actively farmed land. Examples include the scenic beauty of rolling pasture, orchards and the cultural value of farming as a way of life. Farmland also produces non-farm amenities, such as open space, wildlife habitats, and groundwater recharge. Most amenity benefits are classified as public goods in that they are non-excludable and non-rival in terms of use. Thus, most amenities do not have a market value associated with them so that their value can not be captured by landowners and therefore are subject to market failure. This failure leads to government intervention in an effort to encourage and support agriculture with programs for farmers through various public policies. Failure to include amenity benefits results in under-allocation of resources like land towards pecan production.