This report was prepared by Professor David Freshwater, of the Department of Agricultural Economics and the Martin School of Public Policy, University of Kentucky, for the OECD Joint Working Party of the Committee for Agriculture and the Environment Committee.

Agricultural policies in OECD countries are in the process of evolution and there has been a shift away from production-linked support, towards various types of payments, which are frequently linked to land use. In many OECD countries, this shift in agricultural policies is intended – to an increasing extent – to be a vehicle for contributing to the economic and social revitalisation of rural areas – and not solely a means of maintaining farm incomes. Nevertheless, the sector-specificity of these policies − and their economic cost − have raised questions about their effectiveness in addressing non-agricultural objectives, including rural development.

In the report, a variety of factors that influence the conversion, or preservation, of farmland in OECD countries is considered. The stock of farmland shows slow declines in all countries, but this decline is considerably slower than might be expected given pressures for conversion of farmland to urban uses near cities, and persistent low levels of return available to farmers operating in more remote areas that are less favorable for agriculture. This suggests that while market forces are important in defining land use, there are other forces at work as well. Notably, these are: agricultural policy that alters the returns from agricultural activity, environmental policy that imposes restrictions on the way farmland is used to ensure that the natural environment is protected, and land use policy that determines which types of land use will be allowed by society on specific parcels.

Agriculture is the largest single form of land use in most OECD countries and most land currently used for crop and livestock production is unlikely to change uses substantially in the foreseeable future. But there are parcels of farmland that are susceptible to a change in use. The majority of this land is either adjacent to urban areas, or at the fringe of an inhabited areas where agricultural productivity is limited (Table A. B.1). This leads to a typology of three farmland categories: agricultural zone, urban fringe and far margin (Figure 1). Understanding the nature of land use in each region is a necessary step before assessing the ability of various types of policy to control farmland conversion.

In order to facilitate the analysis of the impacts of agricultural and land-use policies on farmland-use management, a generic typology of three agricultural categories is developed: the urban fringe or peri-urban zone; the agricultural core zone; and the far, or extensive, margin zone.

The term “land-use policy” refers to the set of rules and regulations that directly influence the use of farmland, whether they are implemented by national or sub-national governments. Land-use policy provides an alternative mechanism for influencing agricultural land use. Typically, land-use policy has not been seen as a key factor in agriculture. This, in part, reflects the prevailing assumption that the stock of farmland is largely fixed and that, while land use policy might have some impact on the stock of farmland at the local or regional level, it has limited influence on the agricultural sector taken as a whole. By its nature, land-use policy is explicitly spatial in nature. While policies may be designed to deal with broad land-use issues, they have their impact on particular parcels of land.

This chapter provides information on a range of programmes in five OECD member countries that have been designed to influence farmland preservation. Whilst the details of programmes vary from country to country, their common aim is to alter land management decisions by farmers in ways that will increase the flow of socially desirable outputs from farmland. Some programmes operate at the national level, while others are specific to a particular region. The five countries under consideration are Australia, Belgium, Canada, Finland and the Netherlands.

Rural areas are extremely diverse and the relationship between the management and use of land, and the development of rural economies is complex. Increased demand for environmentally farmland‑based countryside amenities may, in some circumstances, result in conflict between farm and non-farm activities. Intensification and specialisation of rural land-management practices in environmentally‑good land, in economically integrated rural areas, could be threatening to the provision of ecological services, although it could improve eco-efficiency (as it uses smaller amounts of chemical inputs per unit of output). On environmentally‑sensitive land, on economically marginal remote rural areas, low input and production could contribute towards preserving the diversity of the cultural landscape, but they could also be adverse effects: neglect of land management; abandonment; and afforestation, with variable consequences for the provision of farmland-based environmental rural amenities.