Farm Diversification in Relation to Landscape Properties

Current European Common Agricultural Policy (CAP) has been moving from production support subsidies to direct decoupled income support. The emergence in policy making of the concept of multifunctional agriculture leads to the recognition that a farmer produces more than food: he produces jointly both commodity and non-commodity goods. Environmental contracts were developed in order to encourage the provision of non-commodity goods such as landscape or biodiversity. Next to these contracts, other activities as for example recreation can be observed. They are the result of farm diversification. The role of location in farmers¿ decision making to diversify is pointed out in literature but geographical information is generally reduced to the location within a political delimitation unit the empirical work. Objective of this paper is two-fold. Firstly, it addresses the role of location, in term of site specific natural conditions as well as neighbouring emerging dynamics in farmer¿s decision making to diversify. Attention is paid to number of activities as well as the specific types of activities, notably green services, daily recreation and other farm-linked services. Secondly, this paper introduces income from agriculture explicitly allowing testing short term price sensitivity. It was found that attractive landscape is a driver for diversification as these landscapes offer more opportunities. Furthermore, diversification is responsive to price. Thirdly, role of density of past multifunctional activities in the neighborhood influences farm diversification: multifunctional activities create an externality effects as new activities emerge next to already existing ones. This dynamic may lead to the emergence of `multifunctional hotspots¿ in landscape.