FRAMEWORK FOR SPATIAL ECONOMIC ANALYSIS

OF RURAL AGRICULTURAL LAND FOR LAND USE

DECISIONS: TARGETING REPRESENTATIVE FARMS

AT NADROGA PROVINCE, FIJI ISLANDS

by

Chethna Ben

A thesis submitted in fulfilment of the requirements for the degree of

Master of Commerce

Copyright© 2015 by Chethna Ben

School of Land Management and Development

Faculty of Business and Economics

The University of the South Pacific

September, 2015

ABSTRACT

One of the primary goals of the Fiji 2020 agriculture sector policy agenda framework is

to ‘Establish a diversified and economically and environmentally sustainable agriculture

economic in Fiji’. Spatial economic tools have been used to assist in analytical modelling

and one significant area that can be addressed using this modelling is rural agriculture

land allocation. In planning for rural agriculture land use, consideration needs to give to

the question land characteristics and capability to produce crops suitable to the

economic and geographic environment. It is also important that the markets for

produce be analysed to establish that returns are favourable and support investment.

National planning of land use based on spatial criteria analysis of the suitability of a

particular crop is a fresh topic. Previously agriculture analysis in Fiji has been based on

soil surveys and on a simple assessment by government agencies recommending the

best crop to grow. There is a large amount of data on Fijian agricultural land and its use,

most of this data is hand-written and un-collated. Work must be done to convert raw

data to a form which allows it to be actively utilized in the decision making process.

There is a substantial gap in the data on local and export market volumes and on

downstream potential for value added processing of agricultural production. A

comprehensive analysis of market data, in order to validate the model, is not within the

scope of this thesis. The research makes use of surveys and case studies to prepare a

framework for connecting spatial allocation of demand/supply mechanisms to the

biophysical and socio-economic environment. The research question is “Can spatial

economic modeling be used to evaluate and substantiate land use planning decisions in the Fiji Islands

agricultural sector?” This thesis will show that spatial economic modelling of agricultural

land use can provide a valuable platform for decision making by enhancing our

understanding of the relationship between resources, people and activities; and this

thesis will show how spatial analysis of the economic and physical environment can

assist agricultural land use decision-making. It has applied basic model parameters to the

study area of representative farms in Nadroga province, using selected crops like

pawpaw, pineapple, sugarcane, cassava and dalo as examples. The research is limited to

an explanation of the theories and procedures but modelling and the application of

spatial economic analysis can be used to achieve variety of objectives. These further

applications are beyond the scope of this thesis.

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ACKNOWLEDGMENT

I would like to take this opportunity to express my sincere appreciation to everyone

who have contributed in one way or another towards the completion of this thesis. First

and foremost I would like to thank the University of the South Pacific, Faculty of

Business and Economics, Dean of Faculty of Business and Economics and Research

office for awarding me the scholarship to complete the thesis. Secondly, I would like to

thank the Head of School for Land Management and Development for accepting me as

a student and for the constant encouragement and support. Most importantly, I would

like to thank my principal supervisor and Acting Head of School and Senior Lecturer of

Land Management and Development, Dr. Kenneth Chambers for his time, valuable

comments, patience, constant encouragement and help. I wish to thank my secondary

supervisor, Head of School for Geography, Dr. John Lowry for his constructive advice.

Further, I would like to acknowledge Dr. Nicholas Rolling, Senior Lecturer School of

Geography, for being available to meet and provide valuable advice and comments on

the work of this thesis. To add on, I also wish to thank the staff at Secretariat of the

Pacific Community (SPC), Suva office. Government officials at the Ministry of Lands

and Mineral Resources, Ministry of Agriculture and Primary Industries, and iTaukei

Land Trust Board for providing data, information and advice. The consultation with the

staff at the office has been proven beneficial. Namely, I send my heartfelt gratitude to

Inoke Ratukalou Director of SPC, Maria Elder Ratutokarua the Agriculture and Forestry

Policy officer and Paitia Nagalevu, Land Use Technician at the Secretariat of the Pacific

Community. Diana Ralulu from GIS officer at Ministry of Agriculture and the research

station staff.

Furthermore, the thesis would not been completed without the warm welcome received

from farmers at Nadroga province who have been supportive to share experience

during consultation. I would also like to thank the examiners of this thesis for the most

helpful feedback and suggestions which has given more debt towards the research.

Most importantly I would like to thank my parents especially my mother, who has

tolerated my busy schedule and encouraged me consistently to achieve my goals. Also

my sisters, and friends for the love and support and review on the ideas included in this

thesis. This would not have been possible without the Lords blessing, love and

opportunity which was felt at every stage.

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Table of Contents

Abstract ........................................................................................................................................... i

Acknowledgment ......................................................................................................................... ii

Table of Contents……………………………………………………………………..iii

List of Figures ........................................................................................................................... v

List of Tables ............................................................................................................................ v

List of Maps ............................................................................................................................. vi

List of Diagrams ..................................................................................................................... vii

List of Formula ....................................................................................................................... vii

Abbreviations ......................................................................................................................... viii

Glossary of Terms .................................................................................................................... x

Chapter 1: Introduction ............................................................................................................... 1

1.0 Introduction .................................................................................................................... 1

1.1 Thesis Question ............................................................................................................... 3

1.2 Limitation of Thesis ........................................................................................................ 3

1.3 Structure of Thesis ........................................................................................................... 4

1.3 Overview ........................................................................................................................... 5

1.4 Methodology ..................................................................................................................... 6

1.5 Research Framework ....................................................................................................... 9

1.6 Study Area: Sigatoka a brief overview ........................................................................ 11

Chapter 2: Literature review ..................................................................................................... 14

2.0 Introduction .................................................................................................................. 14

2.1 Spatial Economic Modelling ........................................................................................ 15

2.1.1 Classical and non-classical theories ..................................................................... 18

2.1.2 Agriculture land economics ................................................................................. 23

2.1.3 Rural land use planning ........................................................................................ 26

2.1.4 Case studies and outcomes .................................................................................. 32

Chapter 3: Data Acquisition and Overview ........................................................................... 38

3.0 Introduction .................................................................................................................. 38

3.1.1 Land tenure ............................................................................................................ 38

3.1.2 Policies and institutions ........................................................................................ 43

3.1.3 Governance ............................................................................................................ 47

3.1.4 Infrastructure ......................................................................................................... 50

3.2 Introduction to data ...................................................................................................... 53

iv

3.2.1 Data Acquisition ........................................................................................................... 56

3.2.2 Gaps and defects in data ...................................................................................... 58

3.2.3 Data conversion ..................................................................................................... 59

3.3 Validating data ................................................................................................................ 61

3.4 GIGO- The garbage in garbage out Smell Test ........................................................ 62

Chapter 4: Methodology and Application .............................................................................. 63

4.0 Introduction .......................................................................................................................... 63

4.1 Data Application ............................................................................................................ 70

4.1.1 Using data to make the model work ................................................................... 72

4.2 Capturing the GIS land use Inventory ....................................................................... 73

4.3 The Model ....................................................................................................................... 80

4.3.1 Phase 1: Identifying land characteristics ............................................................ 84

4.3.2 Phase 2: Conducting capability test .................................................................... 90

4.3.3 Phase 3: Incorporating suitability test ................................................................ 91

4.3.4 Phase 4: Optimizing land use .............................................................................. 99

4.3.5 Phase 5: Decision making .................................................................................. 101

4.4 Validating Analysis ....................................................................................................... 102

Chapter 5: Results .................................................................................................................... 104

5.0 Introduction .................................................................................................................. 104

5.0.1 Sugarcane .............................................................................................................. 105

5.0.2 Sugarcane Market ................................................................................................ 109

5.0.3 Papaya (Pawpaw) ................................................................................................. 112

5.0.4 Pineapple .............................................................................................................. 115

5.0.5 Tropical- Pawpaw and Pineapple Market ........................................................ 118

5.0.6 Rootcrops ............................................................................................................. 109

5.0.7 Root crop market ................................................................................................ 120

5.2 Introducing Cooperatives .......................................................................................... 125

5.3 Fair rental assessment ................................................................................................. 129

5.4 Conclusion .......................................................................................................................... 134

Chapter 6: Concluding the research ...................................................................................... 138

6.0 Summary ....................................................................................................................... 141

6.1 Further research and recommendations ................................................................... 143

Bibliography .............................................................................................................................. 158

Appendix ................................................................................................................................... 158

v

Questionnaire for Nadroga Farmers ................................................................................. 158

LIST OF FIGURES Figure 1: Research model framework ..................................................................................... 83

Figure 2: Soil textural triangle (Wielezynski, 2013) ............................................................... 86

Figure 3: Agricultures contribution to GDP .......................................................................... 92

Figure 4: Trend of Agriculture contribution to GDP from 2005- 2010 ............................ 93

Figure 5: Agricultural land in Fiji (sq.km) ............................................................................... 96

Figure 6: Graph of trend in agriculture value added production from 2005-2013 ........... 97

Figure 7: Decision support system ........................................................................................ 101

LIST OF TABLES Table 1: Census Data 2007 ....................................................................................................... 27

Table 2: Area (ha) of land use type (1991) by administrative division ............................... 36

Table 3: Stakeholder List ........................................................................................................... 55

Table 4: David Leslie’s Crop Capability Study ....................................................................... 57

Table 5: Frequency table of area per hectare based on land use class ................................ 65

Table 6: Distribution of NAC 2 questionnaire ...................................................................... 68

Table 7: Nadroga census for total area of farms by District ................................................ 69

Table 8: Nadroga form of tenure by land under farm and actual use ................................ 70

Table 9: Farm profile ................................................................................................................. 78

Table 10: Lease standalone table .............................................................................................. 78

Table 11: Soils information ....................................................................................................... 78

Table 12: Production standalone table referenced to farms ................................................ 79

Table 13: Production summary by Tikina .............................................................................. 79

Table 14: Market demand and supply standalone table ........................................................ 79

Table 15: Slope and LUC classes ............................................................................................. 88

Table 16: Frequency statistics of land suitable and not suitable for sugarcane ............... 108

Table 17: Land capable for growing sugarcane, based on land use class ......................... 108

Table 18: Suitability of land for sugarcane based on slope ................................................ 109

Table 19: Yield of sugarcane based on land Classification ................................................. 110

Table 20: Statistics of land suitable and not suitable for papaya ....................................... 112

Table 21: Land capable for papaya based on land use classification ................................ 113

Table 22: Suitability of land for Papaya based on slope ..................................................... 113

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Table 23: Yield for pawpaw based on land use.................................................................... 115

Table 24: Frequency analysis of suitable land for pineapple .............................................. 117

Table 25: Land suitable for pineapple based on land use classification ........................... 117

Table 26: Land suitable for pineapple based on slope ........................................................ 118

Table 27: Total area suitable for pineapple........................................................................... 118

Table 28: Tropical crop yield and revenue ........................................................................... 119

Table 29: Revenue from pawpaw and pineapple ................................................................. 120

Table 30: Frequency statistics for cassava ............................................................................ 121

Table 31: Land capable for growing cassava based on land use classification ................ 122

Table 32: Land Capable based for cassava based on slope ................................................ 122

Table 33: Total potential yield for cassava............................................................................ 122

Table 34: Frequency statistics for dalo .................................................................................. 123

Table 35: Land capable for dalo based on land use classification ..................................... 124

Table 36: Land capable for growing dalo based on slope .................................................. 124

Table 37: Total yield potential for dalo ................................................................................. 124

Table 38: Self sufficiency ratio of taro .................................................................................. 125

Table 39: Sugar cane leases under ALTA, 2000 .................................................................. 131

Table 40: Sugarcane land under ALTA by percent,2000……………………………132

Table 41: Non-cane leases under ALTA, 2000 .................................................................... 133

Table 42: Non-cane leases under ALTA percent, 2000 ..................................................... 122

LIST OF MAPS Map 1: Resorts at Viti Levu ...................................................................................................... 26

Map 2: Population Spread_2007 by enumeration ................................................................. 28

Map 3: Nadroga Land Tenure Classification ......................................................................... 40

Map 4: Land use capability classification for Nadroga ......................................................... 66

Map 5: Land capable to grow sugarcane at Nadroga province ......................................... 110

Map 6: Spatial allocation of sugarcane land based on market ........................................... 111

Map 7: Land capable for growing papaya ............................................................................. 114

Map 8: Land capable for growing pineapple ........................................................................ 115

Map 9: Land potential for growing pineapple ...................................................................... 116

Map 10: Spatial allocation of papaya land ............................................................................. 119

Map 11: Land capable for growing cassava .......................................................................... 121

Map 12: Land capable for growing dalo ............................................................................... 123

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LIST OF DIAGRAMS Diagram 1: Von Thumen Model.............................................................................................. 21

Diagram 2: ArcGIS Server for Data sharing .......................................................................... 59

Diagram 3: Land use classification .......................................................................................... 64

Diagram 4: Cooperative Flow Diagram ................................................................................ 128

LIST OF FORMULA Formula 1: Von Thumen Rent Calculation ............................................................................ 21

Formula 2: Population Calculation .......................................................................................... 27

Formula 3: Land use inventory formula ................................................................................. 88

Formula 4: Self-sufficiency ratio .............................................................................................. 95

Formula 5: Import dependency ratio ...................................................................................... 95

Formula 6: Output function ..................................................................................................... 98

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ABBREVIATIONS

ACIAR Australian Centre for International Agricultural Research

ALTA Agricultural Landlord and Tenant Act

ASF Area Sampling Frame

CIRDAP Centre on Integrated Rural Development for Asia and the

Pacific

DDA Demand and Market Driven Approach

EU European Union

FAO Food and Agriculture Organisation

FIBOS Fiji Islands Bureau of Statistics

FIMS Fiji Islands Metrological Office

FSC Fiji Sugar Commission

GDP Gross Domestic Product

GIS Geographic Information Systems

GoF Government of Fiji

Ha Hectares

iTLTA iTaukei Land Trust Act (previously known as NLTA)

iTLTB iTaukei Land Trust Board (previously known as NLTB)

Km Square kilometres

LSF List Sampling Frame

LOU Landowning Unit or proprietary unit, usually referring to a

mataqali

LUC Land Use Classification System

LUCIS Land Use Conflict Identification Strategy

LUU Land Use Unit, a division of the Department of Lands and

Surveys within the Ministry of Lands and Mineral Resources.

MCDA Multi-Criteria Decision Analysis

MDA Market Driven Approach

MOA Ministry of Agriculture

MPI Ministry of Primary Industries

MSF Multi Sampling Frame

NLTA Native Land Trust Act

NLTB Native Land Trust Board

PIFS Pacific Islands Forum Secretariat

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UCV Unimproved Capital Value

WTO World Trade Organisation

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GLOSSARY OF TERMS

� Agricultural economics- the social science that deals with the allocation of scarce resources among those competing alternative uses found in the production,

processing, distribution, and consumption of food and fibre.

� Agronomics- the branch of economics dealing with the distribution, management, and productivity of land.

� Capability- the ability of the land with its specific characteristics to be able to be used in a certain manner, usually considering its physical environmental factors.

“Land capability is the ability to accept a type and intensity of land use permanently,

or for a specified period under specified management, without permanent damage”1

� Ceteris Paribus- is a Latin phrase that roughly translates to "everything else being equal". This is to say that on the assumption that all the other factors remain

constant.

� Criteria – are set of guidelines or requirements used as a basis for a decision. � Decision- is a choice between alternatives � Geoprocessing- allows you to chain together sequences of tools, feeding the

output of one tool into another. One can use this ability to compose an infinite

number of geoprocessing models (tool sequences) that help you automate your

work and solve complex problems. You can share your work with others by

packaging your workflow into an easily shared geoprocessing package. You can also

create web services from your geoprocessing workflows2.

� Highest and best use –“The reasonably probable and legal use of vacant land or an improved property, that is physically possible, appropriately supported and

financially feasible, and that results in the highest value.”3

� Land – “refers to a unalienable area of the earth's terrestrial surface encompassing all attributes of the biosphere immediately above or below this surface, including

those of the near- surface climate, the soil and terrain forms, the surface hydrology

(including shallow lakes, rivers, marshes and swamps), the near-surface sedimentary

layers and associated groundwater and geo-hydrological reserve, the plant and

animal populations, the human settlement pattern and physical results of past and

1 (Northern Territory Government, 2010), (Stray Creek Catchment Vegetation Survey, 2005), (Houghton & Charman, 1986) 2 esri. (2014). ArcGIS help 10.0. Retrieved January 22, 2014, from ArcGIS Resoruces: http://resources.arcgis.com/EN/HELP/MAIN/10.1/index.html#//002s00000001000000 3 (Fanning, 1987)

xi

present human activity (terracing, water storage or drainage structures, roads,

buildings, etc.)”4 Crocombe used a simple definition to land and defined it as “a

term used to refer to space on, above and below the surface of the earth.”5

� Land capability – is the ability to accept a type or intensity of land use permanently, or for a specified period under a certain management without long

term degradation6.

� Land Rights- “land rights are said to have a bundle of rights, these are multiple

rights that belong to several different groups and constitute a tenure. Each right is

associated either with duties or with a total network of relationships.” 7

� Land Tenure – “is a legal term that means to hold or possess land, it includes the rights and obligations held by the holder of such land. Alternatively a tenure system

is all types of tenure recognized by a national and or local system of law taken

together.”8 “Defined as a system of relationships between men in respect of land,

and does not function in isolation.”9 The tenure system in Fiji follows both the

western and communal system.

� Land Use- “is characterized by the arrangements, activities and inputs people undertake in a certain land cover type to produce, change or maintain it.”10 “There

is no agreement, nor internally consistent alternative definition of the term land

use.”11 Its purpose is to select and put into practice those land uses that will best

meet the needs of the people while safeguarding resources for the future. The

driving force in planning is the need for improved management or the need for a

quiet different pattern of land use dictated by changing circumstance.”12 Land use

planning involves the task of surveying, evaluating and allocating uses to land for

the most optimum use. Land evaluation is essential towards allocating land uses.

“With that no planning authority is responsible for planning the internal

arrangement of large factory complexes, so long as proposed patterns comply with

relevant regulations and it is sensible to recognize this in defining land use.”7 “And

4 (FAO and UNEP, 1999) 5 (Crocombe, 1975) 6 Houghton & Charman, 1986 7 Prominent definition and characteristic of the property rights were explained by (Scott, 1989), (Sheehan & Small, 2002) and (Crocombe, 1975) 8 (Bruce, 2006) 9 (Crocombe, 1975) 10 (FAO, UNEP, 1999) 11 (Dickinson & Shaw, 1977) 12 (FAO, 1993)

xii

is vital to use the land according to its capability for sustainable production through

matching land use and the land.”13

� Land use planning- systematic assessment of physical, social and economic factors in such a way as to encourage and assist land users in selecting options that

increase productivity in a sustainable manner that meet the needs of the society14.

� Raster feature class- A spatial data model that defines space as an array of equally sized cells arranged in rows and columns, and composed of single or multiple

bands. Each cell contains an attribute value and location coordinates. Unlike a

vector structure, which stores coordinates explicitly, raster coordinates are

contained in the ordering of the matrix. Groups of cells that share the same value

represent the same type of geographic feature15. � Residual value of land – is a method used to determine the value and potential

profitability of a piece of property minus any expenses and costs related to the land.

The value of land that remains after any and all deductions associated with the cost

of developing, maintaining and reselling the land.

� Suitability- is the ability of the land (and the features associated with it) to derive a certain economic benefit that is financially feasible. “Land suitability is the fitness of

a given type of land for a defined use. The land may be considered in its present

condition or after improvements.”16 “The suitability of a given piece of land is its

natural ability to support a specific purpose. The land suitability classification

consists of assessing and grouping the land types in orders and classes according to

their aptitude.”17 “Land on which sustained use for the defined purpose in the

defined manner is excepted to yield benefits that justify required inputs without

unacceptable risk to land resources.”18

� Sustainable agriculture- integrates three main goals environmental health, economic profitability, and social and economic equity19.

� Sustainable development- “means development that meets the needs of the present generation without compromising the ability of future generations to meet

their own needs, and implies using resources to improve the quality of human life

13 (Ratukalou, 2011) 14 (Soil Resources, Mangement and Conservation Service (under the guidance of) working group on land use planning, 1993) 15 (GIS Dictionary, 2011) 16 (FAO, 1976) 17 (Istituto Agronomico per I'Oltremare, 2008) 18 (Mishra, 2007) 19 (Agricultural sustainability institute, 2014)

xiii

within their carrying capacity”20 “This definition established the need for integrated

decision making that is capable of balancing the economic and social needs of the

people with the regenerative capacity of the natural environment.”21

� Unimproved capital value – regulation 2 of the Native (leases and licenses) Regulation refers to the definition as “capital sum offered for sale on such

reasonable terms and conditions as a bona fide seller would require assuming that

the improvements had not been made”.

� Vector feature class- A coordinate-based data model that represents geographic features as points, lines, and polygons. Each point feature is represented as a single

coordinate pair, while line and polygon features are represented as ordered lists of

vertices. Attributes are associated with each vector feature, as opposed to a raster

data model, which associates attributes with grid cells 22.

20 (Section 2, Enviromental Management Act, 2005), (World Commission on Environment and Development, 1987) 21 (Rogers, Jalal, & Boyd, 2008) 22 (GIS Dictionary, 2011)

1

CHAPTER 1: INTRODUCTION

1.0 INTRODUCTION

The Pacific region compromises of developing nations of Melanesia, Micronesia and

Polynesia. These are Cook Islands, Fiji, Papua New Guinea, Western Samoa, the

Solomon Islands, Tonga, Tuvalu, Kiribati Vanuatu, and Marshall Islands. Australia and

New Zealand are the only two developed nations. The Pacific region has been endowed

with rich natural resources and there is major economic enterprise in agriculture, fishing,

timber and trade. Tourism has been a growing sector, which also depends on the

ecological endowment of the region. The Pacific island countries have more untouched

agricultural resources in contrast to the two developed countries, Australia and New

Zealand based on the comparison of agricultural labour and share of agriculture in

GDP. Thus developing nations, like the Pacific Islands have an advantage over the

developed countries to make use of natural resources from lessons learned with proper

modelling tools that can help optimize these riches. The global community provides aid,

and development programs to establish self-sufficient economy. Many of the strategies

developed by the Pacific Island Nations have a core focus on improving data collection

and developing tools useful for sustainable decision making.

Fiji, as a hub for the Pacific Islands, is a tropical nation filled with beautiful agricultural

resource. Land, however, has been constantly underutilized due to the socio-political

and economical setting. Spatial analysis and recommendations however, can provide

self-sufficiency for farmers and communities. In a step towards sustainable livelihood

and development, a proper decision modelling framework would be able to capture the

best interests of all stakeholders. Spatial economical modelling combines the sustainable

development principle and employs land characteristics and economic variables as part

of the decision making tool. A simple model, however, requires the availability of quality

data in the appropriate format. The proper utilization of agricultural land resources is

the key to securing food and ensuring sustainable development through application of

agronomics1 to derive best returns. This means that the agricultural activities need to

accommodate the capability and suitability of land resources in order for land to be

allocated at its highest and best use.

1 the branch of economics dealing with the distribution, management, and productivity of land

2

Discussion on agriculture production and sustainable livelihood has had its share of

knowledge-based transitions towards allocating land uses based on an economic

measure, but on the other hand, this method of allocation is often the reason for

spatially unbalanced distribution of resources, environmental degradation, and land use

conflict. Although the agricultural sector currently provides foreign exchange to the

government and subsistence lifestyle to land owning units, cane farmers, truck drivers

and mill workers it lacks meaningful micro-economic analysis. The micro-economic

sector needs to consider commercialisation of local farms on a spatial context (per tikina

for example) that can encourage local investment and capital gains.

Although the ratio is diminishing, substantially most rural agricultural land in Fiji is used

for sugar cane farming. 63% of that land is leased from indigenous Fijians who own

about 91% of some 1.8 million hectares of land in Fiji. In 1998, there were

approximately 22,146 registered growers involved in the cane production with a total

contract area of about 100,000 hectares. The actual harvested area was about 57,000. By

2003, the number of registered growers had decreased to 20,693 with a total contract

area of about 96,730 hectares, and an actual harvest area of 61,000 hectares. The latest

figures for year 2012 reveals that the number of registered/contracted growers has

decreased to 15,948, the actual harvest area has therefore also decreased to 42,000

hectares2. This implies that from 1998 to year 2012 Fiji has lost 6,198 growers, 15,000

hectares of land and an average of 552,000 tonnes of cane production. Fiji Sugar

Corporation however is formulating policy decision to increase area used for cane. The

plans proposed by the Fiji government and the Fiji Sugar Corporation to increase area

used for cane however should consider spatial location and encourage potential non-

sugar agricultural crops as a share farming approach and concentrate on community

farming to increase total agriculture contribution to GDP.

2 (Fiji Sugar Corporation, 2013)

3

1.1 THESIS QUESTION

The thesis question is: “Can spatial economic modelling be used to evaluate and substantiate land

use planning decisions in the Fiji Islands agricultural sector?” This thesis demonstrates by

reference to representative farms in the Nadroga study area that integrated dataset

management is the key to efficient use of geo-spatial tools, and that the efficient use of

these tools will in turn significantly enhance agriculture sector decision making and

support planning that is sustainable.

1.2 LIMITATION OF THESIS

The thesis objective is to show how spatial economic tools can be used to perform

analysis and how to make better decisions based on it. The thesis has certain limitations.

The framework for the spatial economic analysis has been proposed using the datasets

available in Fiji. There is a large amount of data on Fijian agricultural land and its use,

most of it is hand-written and un-collated. Work must be done to convert this data to a

form which allows it to be utilized in the decision making process. Some valuable work

has been done, but more is needed. There is a substantial gap in the data on local and

export market volumes and on downstream potential for value added processing of

agricultural production. A comprehensive analysis of market data, in order to validate

the model, is not within the scope of this thesis. Therefore, the analysis has

incorporated a simple economic analysis on the return a crop production can gain once

spatial concentration is made. It does not make a micro-economic analysis. The micro-

economic analysis can be very useful and it can be performed and therefore

recommends it as future research.

Notwithstanding the above limitations, the thesis has been successful in answering the

question that spatial economic tools are useful for deciding where and what agriculture -

crops to allocate on land. It has done so by providing a conceptual framework using the

existing limited datasets and the results using basic tools and analysis. Upon completion

the thesis is successful in justifying that spatial planning enables improved allocation of

commercial market and produce, which ensures self-sufficiency and local investment.

4

1.3 STRUCTURE OF THESIS

This thesis is divided into six chapters. Chapter One sets the context of the thesis, it

provides a brief overview of the research objective, methodology, procedure and need

for optimizing land use. This chapter is an introductory to the reader to understand how

the framework of the research has been set and what is expected out of the study. This

chapter also sets the structure and organization of other following chapters. Chapter

Two is a literature study broken into five main areas in contextualizing the thesis

question. The first part looks at a brief analysis of the spatial economic models which

explains how it works. The second and third part provides a review of principles that

economists have used in agriculture and how this classifies with the spatial economic

analysis. Part four later explains the nature of a rural environment and how population

and human activity influences our decision. Part five, then provides case studies of work

done by different authors in the field of rural planning and policies. The case study

examples show how great interests in agriculture and rural planning have been

developing. Using these illustrations the thesis has drawn that the gap in the work is

spatial in nature.

Chapter Three has two parts and provides more information on discussions made in

Chapter Two with an overview of the study area and data needs. The first part looks

into the land tenure in Fiji, and the policies for land allocation as important components

for determining the limitations, opportunities and issues faced with the tenure system.

The governing institutions are briefly described to establish an understanding of the

legal framework. Infrastructure has also been briefly discussed in the Chapter to portray

relationship between infrastructure and development. This is important because

substantiating spatial economics requires that development proposals are

complementary to the infrastructure available. Part Two of Chapter Three is an analysis

of the data acquisition process, the sources, gap, defects and recommendations for

improvement.

Chapter Four of the thesis further works on the application of the data. The second part

then explains the model and five phases of determining the highest and best use in

allocation of land use for agriculture crop. There are five phases being discussed; phase

one looks at identifying the land characteristics; phase two involves conducting the

capability test; phase three incorporates the suitability test; and phase four looks at the

5

optimising land use. The final phase (five) relates to the consultation phase for

consolidated decision making of available options and opportunities for the tested area.

Chapter Five is the results section where basic findings and maps have been published.

It gives a representation of how the analysis can be made. Because it was a basic analysis

it has provided maps showing where land is capable of growing the selective crops of

sugarcane, pawpaw, pineapple, dalo and cassava and the expected returns. This proves

that the use of spatial model allows human judgment to be critical by providing the best

options as per the set parameters in a timely manner. The final Chapter Six concludes by

setting out areas for further research and answering the thesis question with

recommendations; re-emphasizing the need for spatial integration of agricultural land

use and the economy.

1.4 OVERVIEW

Land, labour and capital are factors of production of goods and services. Humans

largely depend on land as a source of food, livelihood and survival therefore there is no

doubt, as identified in the land use planning guideline of Food and Agricultural

Organization 1993, that as population increases, demand for arable land, grazing land,

forestry, wildlife, tourism and urban development also increases. The relationship of

demand and supply often leads to scarcity of land resources, and choices of opportunity.

This leads to much land use conflicts; common problems of which include: inadequate

access to land, inability to secure benefit and maximize use from the land due to

policies, infrastructure, government restrictions, land tenure issues, and political

uncertainty – all of which deplete and degrade this scarce resource. Agriculture in Fiji is

currently driven by sugar cane production. It is a significant contributor to Fijian GDP.

The sugar industry has been supported by a European Union (EU) preferential pricing

agreement, but this agreement is due to expire in 2017. Seeing as how the EU has

announced that they will be reducing and eliminating the preferential price, Fiji now has

to look for other means of sustaining the agricultural sector. Further, the Ministry of

Agriculture (2012) has also reported that the benefits of horticulture produce as a means

for commercial agriculture to increase the profitability of the economy was positive. For

over 140 years, the agricultural land allocation in rural areas has been policy driven with

limited micro economic demand supply analysis, heavily reliant on macro-economics.

This is based on policy, lease structure, and traditional practices; contradictory to the

6

highest and best use potential to devote this land to grow other productive output. The

agricultural sector needs to make use of the local market opportunities in order for it to

optimize farmers’ returns and retain their interest and confidence. The trade service and

import substitution schemes introduced by government are favourable opportunities

that assist local producers to optimize their returns and market their produce. These

schemes are, however, led by economic analysis; lacking the spatial parameters to ensure

the best use of land, and local cluster development which is the primary route to

sustainable development.

In answering the thesis there are two main objectives 1.) to analyse rural agricultural

land use to integrate supply/demand economics with physical characteristics, and 2.) to

show how spatial economic inventory can assist in analysis of sustainable rural

agricultural land use.

1.5 METHODOLOGY

The research has considered both qualitative and quantitative approach in carrying out

the analysis. The research topic is comprehensively important in Fiji, however the layers

of information needed for proper planning is a major drawback. The research has

noted that working with and creating datasets for rural areas needs a partnership

approach by agencies and organizations who are currently working to achieve discrete

and independent objectives. It is also fundamental that provincial and district level data

collection in the form of spatial reference can provide greater opportunities for

improving performance and market opportunities. A sample of this collection of data, in

provinces or districts has been noted in “Chapter 4.2: Capturing the GIS land use

inventory”. Evaluation of various government organizations roles, example the Ministry

of Lands and Mineral Resources, Ministry of Agriculture, iTaukei Land Trust Board, Fiji

Bureau of Statistics, and NGO showed that most project strategies dealt with spatial

agricultural use and economic analysis, which needed a quantitative supply and

management of data. Since most organizations are familiar with ESRI ArcGIS software

and geographic information systems, the thesis shows how this software can be applied

to achieve the various discrete objectives if a framework is established.

7

Government organizations were consulted during the phase of the study, to understand

and study the trend of agriculture market and production market. Organization roles

and structure were also studied to establish how decisions on the allocation of land use

were made. Studies discussing sugarcane trends were also noted, with case studies on

the production of higher return tropical fruits and use of cooperatives. The research has

reviewed literature case studies of land use planning, land evaluation, land allocation,

GIS and agriculture economics in several databases. The literature has contributed

significantly to understanding how to create a simple framework that is manageable and

provides a more holistic approach, whereby integrating these different datasets will

assist sustainable management and planning of rural lands. These literatures have

formed the foundation that explains the quantitative approach to this research. Review

of the selected existing models, in Chapter 3, Section 3.2, briefly explains the objective,

methodology, and data needs.

The findings of this research from the data collection phase reflect the need to better

understand and appreciate the heterogeneous nature of available data in a rural

agricultural sector. It has to be noted that a proper Land Information System (LIS) is

needed to manage and analyse the natural resources available. Government and

cooperate agencies are known to be working independently, and policy decisions are

affecting the business environment and productive land use. In order for an effective

measure to this relationship, an inclusive association of farmers', government, tourism,

private or cooperative markets, together with researchers, needs to be formed to share

information and suggestions with each other through partnership, consultancy and

workshops.

The spatial economic analysis and its highest and best use of agricultural land at

Nadroga province (set out and discussed in Chapters 3, 4 and 5 of the thesis) does not

stand on its statistical or empirical base alone. Land policies, including security of tenure

and utilization, together with administrative institutions, governance, rural planning, and

physical infrastructure, give shape and form to the spatial economic analysis by

providing an understanding of the capability and suitability components in the analysis.

This range of peripheral issues is further complicated by land use policy; leasing,

planning, and agriculture administration which have different organizational and

institutional goals; as stated previously in the introductory point.

8

Nevertheless, geo-processing operations provide a graphical user interface that is able to

perform operations and make calculated analyses. The selection queries with defined

expression are an effective way of selecting choices to land. The research model (spatial

economic analysis) is divided into five stages of decision making. These are:

1.) identifying land characteristics;

2.) conducting capability test in relation to agriculture crop requirement;

3.) incorporating suitability test;

4.) optimising land use decisions; and

5.) result consultation and decision making.

Much of the work has referenced David Leslie's data and soil classification. The

economic information, was calculated and entered into the ArcGIS using the unique

identifier (Parcel Id) which carried the land capability details of the property, following

parameters where the land soil quality requirement was matched against the topography

and crop requirement according to the Fiji Soil Taxonomic Handbook by Leslie & Seru,

(1998), and a reference manual for utilizing and managing the soil resources of Fiji by

Leslie D. M., (2012).

A questionnaire and interview was conducted with farmers at areas where shift of

cultivation or decline in agriculture produce was noted. The sample size was randomly

selected to illustrate the use of GIS inventory. Farmers’ experience on deciding the

allocation of resources was investigated. Central to the methodology of this research

was the interview of a total twenty (20) farmers from different locations of Malomalo,

Tagitagi, Cuvu, Bilalevu, Ciriwai and Kavanagasau. Communication with local

population had been intended to establish the following; (1) understanding the main

economic activities of the population, (2) size of population, (3) structure of local

community, (4) basic available infrastructure, and (5) environmental and development

problems. Each community had production of different crops and vegetables, and a

selection of representative farmers’ earnings and returns from producing the specific

crops was analysed. Feedback was received on the value of sales and market at their

area, which made it useful in performing the economical calculations on returns. The

thesis has also referenced the debate on rental structure based on residual land value

approach opposed to the iTaukei Land Trust Act unimproved capital value method of

assessing and collecting rental. It has been found that having spatial database helps

9

apply Von Thunen’s model and validate the theory. The representative area of Nadroga

province has been considered as the sample study area for the research project and it is

proven highly that having spatial economic analysis on a national level means that land

is allocated in a more sustainable manner with better interpretation for consultancy.

1.6 RESEARCH FRAMEWORK

The principle of sustainable development brings a wide aspect of consideration into the

issue of allocation of land. Although sustainable development is a common ground, it is

only a principle. Decisions require data analysis, and understanding of goals and

objectives of stakeholders. Government is responsible to establish network between

members of the society, and draw plans from previous and ongoing or planned

activities. It is important that the relationship of proposed projects be connected to the

broad national development, to ensure complementarity of activities and avoid

duplication. Information gathering ultimately includes (Schwab, 1993):

1. Country data including demographic structure, economic situations, national

development plan, debt structure and adopted political system;

2. General environmental situation of the country including climate condition,

topography, natural resource base, and dependence of development on the

natural resource;

3. Natural resource and environmental constraints on development, and existing

government institutional structure dealing with the environment;

4. Related projects and activities undertaken or being implemented by international

development assistance organizations, UN agencies, governmental and non-

governmental organizations; and

5. Agricultural activity projects, existing land ownership, adopted system of

cultivation, pricing of agricultural commodities, and accessibility of individual

farmers and cooperatives to local market.

A number of plans are underway for the development of land in Fiji. The recent

European Union (EU) proposal for 2015 has focused on rural development as key area

of focus for aid funding support in Fiji. Deputy Ambassador to the Pacific Johnny

Engel-Hansen told the Fiji broadcasting news on 23rd January, 2015 that EU is focusing

on the whole of rural sugar sector, reforestation, feeder roads and climate change. The

Ministry of Lands and Mineral Resources in August 2014 recognized the need to have a

10

National Land Use Master Plan, as prescribed under pillar 6 of the Peoples Charter for

Change and Progress - "Making more land available for productive and social purposes". The

Ministry of Lands and Mineral Resources thus identified lack of comprehensive land use

maps to allow the government to keep track of all developments on land, with no

commitment from other Ministry or institute for the collation of spatial and non-spatial

data for the storage of data pertaining to national land use.

In 2007, the Secretariat of the Pacific Community released a ten year framework of

programmes on 'sustainable consumption and production patterns'. The Land Resources

Division together with the Food and Agriculture Organization had recognized the

immense problems and challenges relating to agriculture. Part of the framework

recognized the development of sustainable agriculture through the three pillar

developments and thus strategies in this framework gave motion towards the research

undertaking. In addressing the underlying issue together with the Ministry a market

driven approach was considered to be one of the approaches in increasing value of

produce and sustaining future agriculture production. The programme was uniquely

identified to include the private sector to support the integrating market and

community. The demand driven approach is significantly important and spatial

allocation as per this research, is highly valuable in assisting the proper land capability

and market suitability dynamics. This is deliberated to be a successful operation should

the farmers be assisted with private sector support. The allocation schemes can be

further investigated and improved with inventory audit and the government can be

better in-tuned and responsive to the needs of the market. The above is suitability valid

to the Agriculture Marketing Authority (AMA) Act No.2 of 2004, which facilitates the

purchase, sale, and exportation of agro-produce.

The framework has noted achievements under the following related programs: the

Ministry of Agriculture Sustainable Land Management program and the United Nations

Convention to Combat Desertification (UNCCD) Program for sustainable agriculture;

signed by the UNDP representative and Permanent Secretary of Ministry of Agriculture

and Primary Industries in January 2008. In many ways the above implementations are

important and related to the Agenda 21, and much of the sustainable development

needs. Sustainable agricultural and rural agriculture has been defined as "the management

and conservation of the natural resource base, and the orientation of technological and institutional

11

change in such a manner as to ensure the attainment and continued satisfaction of human needs for

present and future generations. Such sustainable development (in agriculture, forestry and fisheries

sectors) conserves land, water, plant and animal genetic resources, is environmentally non-degrading,

technically appropriate, economically viable, and socially acceptable" FAO, (1995). The use of

spatial science in creation of knowledge based interactive tools have assisted explorers

map the world around us. The geographic information shared of how people relate to a

place and the use of thematic representation of a city/place, helps map the waterlines,

place names in annotation, addresses and distances, and use symbols to classify feature

type through map legends3. It is therefore important to use this dynamic in rural land

use planning.

1.6 STUDY AREA: SIGATOKA A BRIEF OVERVIEW

In order to determine the study area, an understanding of project requirements and

trade-off among various considerations needs to be made, such as proximity to sources

of raw materials, markets, and infrastructure facilities, access to labour market and

government premises (Schwab, 1993). Schwab therefore notes that the following

considerations need to be made:

1. Availability of surveys, studies and information on the geography of the country;

2. Socioeconomic development, environmental conditions and related problems in

the various regions of the country;

3. Principal economic activities undertaken by the local population living in the

main regions of the country, example for this project, agriculture;

4. Priority given by the government to the various regions; and

5. Extent of security and social stability of different regions.

On average 9.2% of Fiji's land mass is arable according to World Bank (2015) because

of the topography of the island. Noting Schwab’s considerations above, Nadroga

province was selected. The province falls on the central western side of Viti Levu,

southwest of Suva under the Nadroga-Navosa province, which makes it a central area in

Fiji close to major utilities, infrastructure and markets and has very rich natural

resources. Its geographical reference has been considered the "salad bowl" of the island

because it is a major supplier for the nation’s fruits, spices, and vegetables for both local

3 (Zeiler & Murphy, 1999,2000)

12

consumption and export. The economy of the area has been dependent on the

blooming tourism sector with high concentration of resorts and hotels that exist around

Coral Coast and outside of Nadi. Tourism thus accounts for the primary source of

employment and for provincial development generally. The agriculture market of

Sigatoka has flourished because of this, and has had a diverse supply of crops.

Nadroga province covers 921 square miles of Fiji's total land mass which is equivalent

to 2,385 square kilometres (238,500 hectares); the 2007 census recorded a population of

58,387 with 48,765 rural residents. The principal urban centre of the area Sigatoka town

is governed by Sigatoka Town Council, which an approximate of 9,622 residents. The

Nadroga-Navosa province has 22 districts and 121 villages. The Nadroga province has

an approximate 14,600 families and has the famous Mamanuca group of islands as part

of this. The province falls under the Burebasaga confederation of the native iTaukei

chiefly traditional hierarchies. Similarly, the Development of Sustainable Agriculture in

the Pacific (DSAP) Fiji 2007 program had looked at the security of rural farm

communities in economically deprived areas. There were four project sites of the

program, and one closely related to this research study area; the area of Tilivalevu at

Nadroga province. Tilivalevu has high market value, because of the tourism and resort

establishments. The DSAP had concluded that the closure of a 20 year long government

beef scheme project had negatively affected the rural sector in the year 1988. The Land

Use Section had later organized an implementation of a Land Conservation Technology

because of the physical environment; which the DSAP followed. The DSAP framework

also looks into the Food Security Programme, to promote exports and substitute

imports, with the Ministry of Agriculture. Therefore makes it an appropriate study area

with socio-economic, environmental and development opportunities and challengers

According to the land use classification system of Fiji, a sum of or 14% of

the total Nadroga province is identified as arable land. Sigatoka has evolved with its

agricultural plantation, known for its high production of vegetables. From 1912 to 1923,

banana plantations in the Sigatoka valley suffered severe episodes of a fungal infection

known as the Black Sigatoka disease; this is why the study did not take banana as a

potential local crop. Recent developments along the area have witnessed major growth

in international residential developments. The area is of highly competitive nature, with

growing interests in development of tourism, residential and industrial uses with rich

13

natural resources. The natural surrounding lining near the coast line with an upward

valley highland, open space, and centre to Nadi and Suva. This places Nadroga as a

major asset for Fiji. The province is one of Fiji's sugar producing areas, however the

number of farms and production have declined in the last 10 years as farmers seek to

diversify their crops and move to more lucrative crop options. The many reasons for the

decline in sugar production were expiring native land leases, distance to mill, production

cost and removal of preferential pricing. Sugarcane is still grown in the middle to lower

valleys, which are divided into three sectors: Cuvu, Olosara and Lomawai. Sigatoka is

highly recognized for its diversity of natural resource and potential market and

opportunities for these resources.

The primary aim of this study is therefore to show how land use and economic

principles can be applied for the creation and management of an integrated rural

geographic information system for representative farms at the study area of Nadroga

province. The literature suggests that success of GIS implementation in decision making

is a complex function of inter-related variables. The primary goal of integration is to

implement a flow and organization structure that works to achieve economic, social, and

environmental objectives. The next chapter will therefore quote work of authors who

have made use of the social, economic and environmental considerations in allocating

agricultural land use.

14

CHAPTER 2: LITERATURE REVIEW

2.0 INTRODUCTION

“Spatial economics is concerned with the allocation of scarce resources over space and

the location of economic activity,” Broll, Roldan-Ponce, & Wahl, (2010). The driving

principle of using spatial economics, in this thesis, is to incorporate the major pillars of

sustainable development4. Sustainable development according to Agenda 21 (UNCED,

1992) is to achieve the holistic balance of social, economic and environmental needs of

the society. Spatial referencing of social, environmental and economic patterns helps

stakeholders to identify the potential risks and opportunities of a proposed

development. In the context of the allocation of land for agriculture, the important

question is to decide “what to grow”, “how much”, “where to grow it” and “when”.

The literature on spatial allocation of land using GIS have used a lot of linear and

multicriteria analysis and model. The objective of this thesis, on the other hand is to

present how simple use of spatial analysis (using queries) can evaluate and substainate

land use planning decisions of agricultural sector in Fiji Islands. This chapter therefore

will not discuss the technical aspects or theories of GIS, but review the work of

agricultural economics in land use decision. It will then present the data available in Fiji

to illustrate how practical use of ArcGIS software can enable better land use decisions.

The literature review has therefore looked at three areas relative to the objective of the

thesis; one, how agriculture economics influences the decision of land use allocation.

Two, how land tenure, policies and the socio-economic set up of land use plannng in

agriculture have exlcuded spatial economic planning and part three looks at how

performing a spatial query, using the data available, can improve land use decisions.

4 Definition of sustainable development (EMA 2005): development that meets the needs of the

present generation without compromising the ability of the future generation to use that

resource.

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2.1 SPATIAL ECONOMIC MODELLING

Land is a scarce natural resource, and demand for land is continuously growing. To

satisfy the basic needs, wants and desires of the people, the best use of the land resource

needs to be made. Sustainable use of land has been largely encouraged so that the

benefits of the resource can be long term and sustained. However, individual needs of

people are different. There are different behaviours, knowledge, priorities, interests and

concerns that people have in relation to land which makes decision making on a

particular resource difficult. Often resource allocation requires identification of different

alternatives and variables. The land use conflict related to land however is spatial,

because it is located somewhere and has a relative relationship to something. In

identifying the alternatives and criteria requires capturing the interests of different

stakeholders. The stakeholders include; government, private, public, land owners and

tenants. These stakeholders often have different ideas, preference and objectives to the

use of land. It has been long recognised that spatial patterns will shift, with the structure

of demand and production, in the level of technology, and with the social and political

organization of the nation (Berry, 1967).

In the Theory of Value, Debreu (1959) noted that spatial economics is about adding a

spatial dimension. He further explained that a commodity is defined by all its

characteristics including its location. He noted that when a good traded in different

locations it must be treated as different commodities. However, the above explanation

creates serious problems, as pointed most clearly by Starlet (1974). It was argued that a

homogenous space where firms face the same convex production set, and consumer

preferences are the same. Transporting commodities between locations is costly. Then

the spatial impossibility theorem states that, with a finite number of locations, consumers,

and firms, no equilibrium involves transportation. The intuition behind this result is

straightforward: since economic activities are perfectly divisible and agents have no

objective reason to distinguish between three (3) locations, each location operates in

autarchy to save on transport costs. To avoid this very counterfactual result (no trade),

one of the assumptions behind the spatial impossibility theorem needs to be relaxed. If

one takes transport costs as an unavoidable fact of life, one must assume either some

non-homogeneity of space or some non-convexity of production sets.

16

Considering the first branch of trade theory, it is possible to develop a framework for

spatial economics that builds only local productivity differences. This approach was

established by Ricardo (1821), who developed a theory of land use based on relative

fertility. The second theory of Heckscher-Ohlin (1933), which builds on Ricardo’s

theory of comparative advantage looks at factor endowments of a trading region. The

model essentially states that countries will export products that use their abundant and

cheap factor(s) of production and import products that will use the countries scarce

resources. Leamer (1995), noted that the trade patterns needs to be linked to the factor

or resource supplies, using the factor-productions model in understanding the

international trade. Using the similar theory a micro-economic analysis of a country has

been proposed.

In an indigenous economic system, producers frequently faced choices between a

variety of techniques and products (Bolard, 1979, p. 146). The decisions reflect on

location, environment, social and market ability to generate economic gain.

Understanding and mapping the pattern of economic activity relative to location can

provide great avenues for understanding failure and success of market systems. In the

early stages of development, the concept of marginal return from the pattern of spatial

relationship is likely to differ across regions. In Fiji, since the expiration of agricultural

and cane leases, urban and sub-urban areas have witnessed a rise in residential

development and a decline in the agricultural GDP. “Fiji is no longer an agriculture

based economy. The distribution of economic power in the country comparing to the

size of the major sector shows that the primary resource based sector- which

encompasses agriculture, forestry, fishing and mining- has declined in its share of GDP

since 1986 from 25 to 18 percent,” (Fiji Today, 2004/2005, p. 27). To minimize and

eliminate the issue of development challenges and optimise the use of natural resources,

a spatial economic inventory and analysis needs to be created that is able to understand

the trend and economic performance of the rural economies, its relationship to the

interdependent society, and resources.

A Spatial Multi-criteria Decision Analysis (MCDA) is one of the models that aids in land

use planning and development. This model has been an active area of research since the

1970's. GIS techniques and procedures have an important role in analysing decision

problems. It is a decision support system which integrates spatially referenced data in a

17

problem solving environment. Using a Multi-Criteria Decision Analysis can be seen as a

process that transforms and combines geographical data and value judgements to obtain

information for decision making. The Multi-criteria evaluation is determined by the

attributes of the layers and criteria. The evaluation first requires defining the problem or

goal. The goal needs to be SMART. This means that it needs to be Specific,

Measureable, Attainable, Relevant and Time bound (SMART). The goal assists in

determining the criteria and standardizing the factor or criteria. The criteria should be

measurable. The criteria, therefore requires proper data or attributes which can be

helpful in the decision making. It then needs to allocate weight of each factor and

produce final result after analysis is performed. The results then require validating or

verifying to ensure that the criteria have been met successfully and the results are

authentic. This can be done through field survey to verify sample area, and sensitivity

analysis by asking “How does altering the set of criteria and weights affect the result” or

“Is the result reasonable and reflect the reality of the situation” Mateo (2012).

The nature of a multi-criteria analysis is participatory and is useful for complex scenarios

involving multiple criteria. Prudent research has identified that land use models are

largely based on the Land Use Conflict Identification Strategy (LUCIS). The LUCIS is a

goal driven GIS model that produces a spatial representation of probable patterns of

future land use. In Odum's Compartment Model, areas of the landscape were classified

into four types: (1) productive areas which include agriculture, (2) protective areas which

are conservation sites of natural areas, (3) compromise areas, where some areas include

combination of the first two types, and (4) urban areas which support human activity

and developments example, residential, industrial and commercial uses. The steps of

using a LUCIS model is similar to the MCDA in defining goals of the preferred use,

acquiring data relevant to the goal, analysing data to determine suitability for each goal

and combining the relative suitability of each goal to determine preference. The last

stage involves comparing the ranges of land use preference to determine the likely areas

of future land-use conflict.

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2.1.1 Classical and non-classical theories

The classical and non-classical economic theories have provided a lot of equitable

opportunities. In that, it has been deemed that a lot of economists have worked on the

factor of production, however displaced from its natural environment. A fraction of

consideration is needed. Implying the theories to the spatial location of where the

activities occur will make market and communities perform much better. Classical and

non-classical theories have aligned over the years defining and measuring relative

economics of the nation, with conceptual theories on the allocation of resources.

Because of the importance of economical understanding towards land resources and its

relationship in deciding allocation, the theories are vital in understanding the operation

and choices of firms and households.

Smith (1776) [theory of wealth of nations] held the argument that wealth was fixed and

finite, and trade with other countries was a successful means of prospering; holding into

account the notion that exports should be higher than imports. In his theory of

'invisible hand' he made a notion of free market and trade to allow free trade, and open

markets to compete. In his ‘An Inquiry into the Nature and Cause of Wealth of

Nations’ (1776), Smith wrote his treatise during industrial revolution and thus amplified

agriculture as the principal source of the wealth of the nation. Further from this, the

main three principles that were shared by Smith (1776) to bring universal prosperity

included: enlightened self-interest, limited government interference, free market

economy and solid currency. In enlightened self-interest, the household and producer

context explained quality trade, savings and investment. At the time of the theory, there

was limited capital, and focus was on long term returns principle – where capital should

save labour costs. Smith wrote of limited government intervention and taxation, by

eliminating tariffs to allow free trade across borders. The government was proposed to

only intervene when the people acted on their short term interests, against natural

justice and defence.

In addressing the wealth of nations, Smith founded the general equilibrium, marginal

utility, comparative advantage, entrepreneurship, and time preference of theory interest

that formed a crucial factor to allocating market economies. Smith's ‘theory of value’

expressed that under competition, a costless item can never have a price. The services of

land are costless in comparison to the capital invested in the land. Smith (1776), Mill

19

(1848), and Marshall (1890) had focused on land markets used by farmers, and the

implication of land tenure contracts for agricultural efficiency. It has been argued that

share tenancy causes inefficient resource allocation, and tenants receive only a fraction

of the marginal revenue. Furthermore, it reduces the tenants’ incentive to supply labour

or other inputs at optimal level, assuming that tenants work cannot be monitored and

enforced, and there is no production (Benin, Place, Nkonya, & Pender, 2006). Other

economists have argued that if tenants’ work efforts can be monitored and enforced at

minimum cost by the landlords, resource allocation can be efficient under sharecropping

under owner-cultivation or fixed rent tenancy, as noted by Marshall (1870) in his

argument (Cheung, 1969). The theories are reasonable to explain the value of land as

rent in terms of equity based on spatial resemblance and resource allocation.

Moving on, mercantilism led economic philosophy and practice in Europe from the 16th

to 18th century, promoted government regulation of a nation's economy for the purpose

of augmented state power at the expense of rival national powers. This theory

elaborated wealth according to labour distribution, as wealth was mainly based on large

population that supplied labour for extraction, process, and manpower. This theory is

proven true due to the very reason that extract to value from land, labour is important.

The Tableau Economique model by Physiocrats' visualized the stationary economic

process as a circular flow model. The key variable was agriculture, due to its unique

ability to yield a net product, which was disposable surplus over cost (Hubacek & Bergh,

2002). Ricardo (1821) based his theory of land use on land fertility. His theory was later

generalised to also refer to the exogenous technological differences for all types of

goods. The second branch of the trade theory was founded on the differences regarding

factorial endowments of trading regions approach, which was also known as the

Heckscher-Ohlin theory of international trade. These two authors' contributions led to

the development of theories on location and commerce, based on the existence of

exogenous comparative advantages between several locations. Although these

approaches were essential for its sister discipline international trade, it has a less

important role in the development of spatial economics at a micro level. However, it is

important to consider Ricardo's theory of land use based on fertility to allocate

agriculture land use.

20

Further, the work of Henderson (1974) is known as the ‘urban systems’ approach;

framework cities arising endogenously as the result of a trade-off between

agglomeration economies and urban crowding. To reduce such endogenous increase; an

agriculture rural development strategy is needed. Agglomeration in the larger market is

beneficial for firms because it gives them better access to consumers. John Stuart Mill in

'Principles of Political Economy' (1848), introduced a number of new ideas on land, and

extended Ricardo's theory by considering the competitive uses of land, these included

residential, agriculture and mining, manufacturing and applying the rent to production in

general, and was the first in recognising the diminishing returns in agriculture in 1817.

Ricardo's definition of rent provided a need for consideration, as it should be a value

that is derived as a result of the use of land and not price of land, which Ricardo

claimed. He defined ‘rent’ as the “portion of the produce of the earth which is paid to

the landlord for the use of the original and indestructible powers of the soil” and

believed that it was determined by the interaction of demand and supply. However,

Ricardo was focused on the demand – supply determinants, which is a progressive

structure. Indicating that as the value of return increases, the price received for rental

also increases.

On the other hand, Mill considered the many facets of land in rental - example the

quality of soil, natural environment, surrounding views, modes of production, and

introduced the function of land as a provider for amenity services. Henry Carey believed

settlers progress from worst soils, on the mountain tops, to soils which are more fertile

near the valley. Henry considered the management and use of this land as indicators to

how the returns will be established; through a localised economy with cooperation

between manufacturing and agriculture. This can be considered true as human

intervention on land; through cultivation and use have increased the potential of

agricultural area, with limiting factors of floods, erosion and conversion to other uses.

The system of demand and supply is important to determining rent; however it also

needs to factor the productivity of land and returns it is able to generate. It should also

consider any other limiting factors as noted by Mill. This is because a marginal

productive land should not have a comparable rent to that of a highly productive land.

This ensures that tenants and landlords are working on mutual understanding of what

value the land can derive on its successful use. Land economics can be regarded as

having a split off from agricultural economies. It retained the classical view of the

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uniqueness of land resources, and stressed the land factor, rather than its management

(Hubacek & Bergh, 2002). This has a direct complication to the lease and land use

structure.

Moving on, the Thunen (1826) complexities iterate distance to market as a factor of

increasing transportation costs. It was argued that the intensity of agriculture decreases

with distance to the market. Under the classical theory of agriculture, location and land

use is determined by the economic rent per unit of land. Thunen found a negative and

linear relationship between the distance and relationship to economic rent. This

relationship is now specified as curvilinear. O'Kelly (1988) examined the effect of

transport on crop production. It was implied that improvements to rural ro