von Thnens Model Johann Heinrich von Thnen 1783

von Thünen’s Model Johann Heinrich von Thünen (1783 -1850)

• Reread Pg 338 -339 – Theory of Rural Land Use o Define comparative advantage o Define land rent…don’t just say “profitablity”

Who was von Thünen? • German farmer and economist • 1826 wrote down his ideas • Noticed that one crop or commodity gave way to another as one moved away from the market (city) • Each market, or city, had its own “concentric rings” around it • Also noticed that farmers near the market produced very different things than farmers far from the market

Assumptions of the model • The market is a central Isolated State • The Isolated State is surrounded by forest • The terrain is homogeneous, flat, isotropic plane and has no rivers or mountains. There are no barriers to transport for farmers to bring their goods to market • Soils and climate are even and consistent • Farmers behave rationally to maximize profits

The classic model

A “modernized” look

Yet, another look

Main factors of v. T. • • Land rent or cost = Bid Rent Labor costs Transport costs (distance to market) Production costs

von Thünen is about… • • Price of land (think distance to CBD or hinterlands) Distance to market (transport costs, bulk, weight, etc. ) What should be grown where Perishability Fragility Specialty Organic

The classic model again

Modern usefulness of von Thünen: What has changed? • Refrigeration and freezing • Preservatives – vacuum packing, canning, chemical and natural preservatives • Modern transport systems – containers, trucks, ships, planes - flowers flown into NYC from the Caribbean • Factories/Agribusiness or Industrial Agriculture • Where do Farmer’s Markets fit into von Thünen?

Farmers’ Markets • • 1. 2. 3. 4. 5. 6. Local Foods Carbon Footprint Sustainable Farming and Methods What are the elements tied to von Thünen: Perishability Fragility Transportation Freshness Specialized goods Organic/non-GMO

…fairly accurate to TRLU

Portlandia spoof of local foods movement • http: //www. youtube. com/watch? v=WAl. Wr. T 5 P 2 VI

• v. T Minecraft

• The math of von Thünen Locational rent, a term used by von Thünen in his argument, is to be understood as the equivalent to land value. It corresponds to the maximum amount a farmer could pay for using the land, without making losses. It can be defined as the equation below: L = Y(P − C) − YDF is. . . • L: Locational rent (in $/km 2) • Y: Yield (in tons / km 2) • P: Market price of the crop (in $ / t) • C: Production cost of the crop (in $ / t) • D: Distance from the market (in km) • F: Transport cost (in $ / t / km) L=Y(P-C)-YDF

Solve Take the locational rent of a product with a yield of 1, 000 t / km 2, for example, with a fixed price of 100 $/t in the market. Production and transport costs are respectively, 50 $/t and 1 $/t/km. The locational rent is 50, 000 $/km^(2) at the market, 40, 000 $/km^(2) 10 km from the market and only 20, 000 $/km^(2) 30 km from the market. Since locational rent falls with increasing distance from the market, the amount each farmer is willing to pay for agricultural land will shrink and the price of land will eventually decline.