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Land Quality and Agricultural Productivity: A Distance Function Approach

10


Land quality index

We do not use time-variant measures of land quality—the percentage of agricultural land that is
classified as arable land or permanent cropland, and the percentage of arable land or permanent
cropland that is not irrigated. While frequently used, either directly or indirectly (via the Peterson
index), these measures may reflect a variety of economic and other influences in addition to
purely physical quality differences. In an effort to better isolate and control for the effects of
differences between countries in inherent land quality, we use a land quality indicator that
incorporates soil and climate properties of each country’s cropland. This measure is based on the
FAO’s Digital Soil Map of the World and associated soil characteristics (e.g., slope, depth, and
salinity), combined with spatially referenced long-run average temperature and precipitation
data.

Wiebe et al. (2000) used as their index of land quality the share of each country’s
cropland that is found in the highest three land quality classes. We use a measure that is based
on the same underlying data but incorporates a wider range of both land cover categories and
land quality classes: the average quality—on a scale of 3 (poorest) to 11 (best)—of each
country’ s cropland, irrigated cropland, and grassland. (Classes 0-2 represent inland water bodies
and other unranked categories.) This measure ranges from a low of 3.04 in Saudi Arabia to a
high of 9.86 in Bulgaria, has a median of 6.75, and lies between 6.00 and 8.00 in 77 of the 110
countries studied.

Land Quality’s Influence on Agricultural Productivity

Table 1 shows the average annual productivity growth rate from 1980 to 2003. The countries are
ranked in order of decreasing land quality index. The third column shows the productivity with
respect to the unrestricted frontier, as computed by equation (4). The fourth column shows the



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