Aggregated Versus Individual Land-Use Models: Modeling Spatial Autocorrelation to Increase Predictive Accuracy

The objective of this paper is to compare the predictive accuracy of individual and aggregated econometric models of land-use choices. We argue that modeling spatial autocorrelation is a comparative advantage of aggregated models due to the smaller number of observation and the linearity of the outcome. The question is whether modeling spatial autocorrelation in aggregated models is able to provide better predictions than individual ones. We consider a complete partition of space with four land-use classes: arable, pasture, forest, and urban. We estimate and compare the predictive accuracies of individual models at the plot level (514,074 observations) and of aggregated models at a regular 12 x 12 km grid level (3,767 observations). Our results show that modeling spatial autocorrelation allows to obtain more accurate predictions at the aggregated level when the appropriate predictors are used.