Research needs and methods for decentralised economic planning

International debates on food and agricultural policy increasingly endorse the principles of the free market and stress the responsibilities of national governments for active policies to manage development, to achieve food security and to safeguard the environment. This paper argues that consequently policy-oriented research needs to establish databases and develop models, in which both rural and urban households figure prominently and in a properly geo-referenced manner. This will enable the policy analyst to design policies and to monitor their effect on a regional basis. The paper emphasises that policy-oriented research should provide a nationwide perspective, because in relation to sustainability, as far as environmental economics is concerned, virtually all theory and theory-based policy guidelines have been formulated for national economies in their totality. With respect to the representation of agricultural production itself, we discuss a class of spatial estimation techniques that can deal with missing data and account for qualitative observations, and that can make full use of spatially explicit information on crop yield potentials as generated by agro-ecological models.