Resource information
Rational land use decisions of privatelandowners are analysed in the framework of CommonAgricultural Policy and other public support schemeseffective in Finland in 2003. Net present values arecomputed for a marginal hectare of a typical Finnishfarm. Three alternative land uses are considered:traditional cultivation of oats (Avena sativa L.),cultivation of reed canary grass (Phalaris ArundinaceaL.) for energy production, and production of Norwayspruce (Picea abies [L.] Karst.) timber. Both arable landand forested land are considered as initial states.Experimental data from 38 afforested stands anddistance-independent individual-tree stand growthmodel are used for computing discounted net returnsfrom forestry. Statistics on market prices, averageyields, prices and costs are used for obtaining estimatesof land value under agricultural and energy production.Cultivation of energy grass gives clearly the highesteconomic outcome for arable land, but it has limiteddemand only in the neighbourhood of thermal powerstations. Maintaining arable lands under traditionalfood production gives higher land value thanafforestation. Without an option for agricultural use,public support makes afforestation investmentsprofitable even for the least successfully establishedforest stands. However, possibilities to sell or to rent outretain arable lands under agricultural production, andexplain poor success of the latest afforestationprogramme. Clearing additional forestland foragricultural production turns rational if clearing of thesite is inexpensive, relative value growth of the existingtimber stock is low, and future prospects of agriculturalproduction are dependent on scale advantages.
