Urbanization and the Viability of Local Agricultural Economies

Urbanization presents both opportunities and challenges for farmers and farm-supporting rectors on the urban fringe. This paper examines the effects of urbanization on the viability of input suppliers and output processors and on the cost and profitability of farming. An analytical model is developed to provide insights into such effects. This model motivates-a multiple-equation empirical model that we estimate using county-level panel data for California, Idaho, Oregon, and Washington. Results provide evidence that urbanization has a significant impact on agricultural infrastructure, farm production costs, and net farm income and suggest that agriculture-related opportunities of urbanization outweigh the challenges. (JEL O18)