It is critical for U.S. policy makers to have sound information on how their policy decisions affect land use changes and how urbanization interacts with agricultural production. This is true even as the current economic decline coupled with recent spikes in crude oil prices may have temporarily dampened enthusiasm for urban expansion.

What are the potential economic, social and environmental impacts of land use changes? How does land use change affect agriculture and rural communities? What are the important economic and environmental implications for commodity production and trade, water and soil conservation, open space preservation, and other policy issues? This article addresses some of these issues and their policy implications.

Although economists have long estimated amenity values for agricultural land, a large disconnect persists between research and policy. This article clarifies exactly what amenity valuation research can and cannot tell policy makers. The article summarizes research results, identifies remaining research challenges, and guides policy makers in using amenity value estimates.

The optimal farmland preservation policy would enhance the profitability of farming, decrease the obstacles (spillovers, nuisance complaints) to productive practices, and redirect development to nonagricultural areas. Four categories of possible policies are regulatory, incentive–based, participatory, and hybrids, each of which impact the land market differently and have challenging implementation issues.

Market–based approaches are being experimented with to encourage land use practices that improve water quality or provide ecosystem services. This paper assesses two recent experiments in Oregon involving point (municipal) and non–point pollution sources and identifies lessons for future public policies that attempt to rely on market concepts.