Assessing the Relationship Between Crop Choice and Land Use Change Using A Markov Model

There is widespread concern among environmental and agricultural interest that land use change will affect the future productivity of the agricultural industry by utilizing highly productive land for development. This paper considers the links between land use change and crop choices in order to analyze whether land use change is influencing crop choices. In order to account for potential endogeneity between crop choices and land use choices, we develop a Markov Model that allows us to capture potential endogeneity between these two choices (land use and crop choice). The Markov model is developed for the 12 Midwestern U.S. States using USDA NRI data at the county level.