Farm Diversification in Relation to Landscape Properties

Current European Common AgriculturalPolicy (CAP) has been moving from production supportsubsidies to direct decoupled income support. Theemergence in policy making of the concept ofmultifunctional agriculture leads to the recognition thata farmer produces more than food: he produces jointlyboth commodity and non-commodity goods.Environmental contracts were developed in order toencourage the provision of non-commodity goods suchas landscape or biodiversity. Next to these contracts,other activities as for example recreation can beobserved. They are the result of farm diversification.The role of location in farmers’ decision making todiversify is pointed out in literature but geographicalinformation is generally reduced to the location within apolitical delimitation unit the empirical work.Objective of this paper is two-fold. Firstly, itaddresses the role of location, in term of site specificnatural conditions as well as neighbouring emergingdynamics in farmer’s decision making to diversify.Attention is paid to number of activities as well as thespecific types of activities, notably green services, dailyrecreation and other farm-linked services. Secondly, thispaper introduces income from agriculture explicitlyallowing testing short term price sensitivity.It was found that attractive landscape is a driver fordiversification as these landscape offer moreopportunities. Furthermore, diversification is responsiveto price. Thirdly, role of density of past multifunctionalactivities in the neighborhood influences farmdiversification: multifunctional activities create anexternality effects as new activities emerge next toalready existing ones. This dynamic may lead to theemergence of ‘multifunctional hotspots’ in landscape.