Harvesting the Concrete: Urban Expansion and Agricultural Land Productivity

Land quality and productivity are fundamental to agricultural development, yet urban expansion poses a growing challenge by reallocating high-quality land away from agriculture for urban development. Focusing on China, a country that features both agricultural land protection and growth-oriented political incentives, this paper examines how land-based urbanization affects agricultural land productivity. Using high-resolution satellite data, we document a significant decline in both the quantity and quality of agricultural land due to urban expansion. To understand the mechanisms behind this decline, we develop a theoretical model that extends the monocentric city framework by incorporating local political incentives and land quality considerations into land allocation decisions. The model predicts that strict farmland protection policies focusing on land quantity, such as China’s Agricultural Land Protection Policy (ALPP) introduced in 2010, may inadvertently reduce land quality when local leaders prioritize economic growth. Empirical evidence supports this prediction: we find that ALPP enforcement leads to a decline in agricultural land quality, particularly in regions where political incentives for urban expansion are stronger. Additionally, urban expansion reduces agricultural productivity by decreasing the use of modern agricultural technologies and increasing reliance on fertilizers. These findings underscore the need for policies that balance land conservation with quality considerations to ensure long-term agricultural sustainability.