IDEAS home Printed from https://ideas.repec.org/a/ags/jasfmr/189878.html
   My bibliography  Save this article

The Impact of the Conservation Reserve Program on the Sale Price of Agricultural Land

Author

Listed:
  • Schmitz, Nick
  • Shultz, Steven

Abstract

Hedonic price modeling of 1,951 non-pasture agricultural land sales across North Dakota indicates that land enrolled in the Conservation Reserve Program (CRP) sold for 14 percent less than otherwise similar cropland over the 2000 to 2004 time period. This price discount is assumed to result from the increasing opportunity costs associated with maintaining agricultural land in conservation, particularly in light of the steadily increasing commodity prices over the study period. Similar findings have recently been reported in the adjacent state of Minnesota. These multi-state results explain why many landowners nationwide are actively lobbying the USDA to allow voluntary opt-outs of remaining CRP contracts. This may also indicate the need to either shorten the length of future CRP contracts and/or to have CRP payment values tied to commodity and/or land price indices. Continued research on this topic would be facilitated and improved with the inclusion of parcel-specific (GIS based) CRP enrollment data.

Suggested Citation

  • Schmitz, Nick & Shultz, Steven, 2008. "The Impact of the Conservation Reserve Program on the Sale Price of Agricultural Land," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2008, pages 1-9.
    • Handle: RePEc:ags:jasfmr:189878
    DOI: 10.22004/ag.econ.189878
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/189878/files/288_shultz.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.189878?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Kennedy, Peter E, 1981. "Estimation with Correctly Interpreted Dummy Variables in Semilogarithmic Equations [The Interpretation of Dummy Variables in Semilogarithmic Equations]," American Economic Review, American Economic Association, vol. 71(4), pages 801-801, September.
    2. Robbin Shoemaker, 1989. "Agricultural Land Values and Rents under the Conservation Reserve Program," Land Economics, University of Wisconsin Press, vol. 65(2), pages 131-137.
    3. Ruben N. Lubowski & Michael J. Roberts, 2005. "How Cost-Effective Are Land Retirement Auctions? Estimating the Difference between Payments and Willingness to Accept in the Conservation Reserve Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1239-1247.
    4. Raymond B. Palmquist, 1989. "Land as a Differentiated Factor of Production: A Hedonic Model and Its Implications for Welfare Measurement," Land Economics, University of Wisconsin Press, vol. 65(1), pages 23-28.
    5. Glaser, Lewrene K., 1986. "Provisions of the Food Security Act of 1985," Agricultural Information Bulletins 309344, United States Department of Agriculture, Economic Research Service.
    6. Raymond B. Palmquist & Leon E. Danielson, 1989. "A Hedonic Study of the Effects of Erosion Control and Drainage on Farmland Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 55-62.
    7. Shultz, Steven, 2007. "Non-Local Purchases of Agricultural Land for Hunting Purposes," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2007, pages 1-9.
    8. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    9. Glaser, Lewrene, 1986. "Provisions of the Food Security Act Related to the Food Sector," Food Review/ National Food Review, United States Department of Agriculture, Economic Research Service, vol. 0(1), June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mykel R. Taylor & Nathan P. Hendricks & Gabriel S. Sampson & Dillon Garr, 2021. "The Opportunity Cost of the Conservation Reserve Program: A Kansas Land Example," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 849-865, June.
    2. Garr, Dillon & Taylor, Mykel, 2016. "The Presence Of Conservation Reserve Program Contracts And Their Effect On Kansas Agricultural Land Values," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230146, Southern Agricultural Economics Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mykel R. Taylor & Nathan P. Hendricks & Gabriel S. Sampson & Dillon Garr, 2021. "The Opportunity Cost of the Conservation Reserve Program: A Kansas Land Example," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 849-865, June.
    2. Anwar Hussain & Ian A. Munn & Jerry Brashier & W. Daryl Jones & James E. Henderson, 2013. "Capitalization of Hunting Lease Income into Northern Mississippi Forestland Values," Land Economics, University of Wisconsin Press, vol. 89(1), pages 137-153.
    3. Lautrup, M. & Panduro, T.E. & Olsen, J.V. & Pedersen, M.F. & Jacobsen, J.B., 2023. "Is there more to trees than timber? Estimating the private amenity value of forests using a hedonic land model for combined agricultural properties," Forest Policy and Economics, Elsevier, vol. 146(C).
    4. Choumert, Johanna & Phélinas, Pascale, 2015. "Determinants of agricultural land values in Argentina," Ecological Economics, Elsevier, vol. 110(C), pages 134-140.
    5. Johanna CHOUMERT & Pascale PHELINAS, 2015. "Farmland Rental Values in GM Soybean Areas of Argentina: Do Contractual Arrangements Matter?," Working Papers 201532, CERDI.
    6. Garr, Dillon & Taylor, Mykel, 2016. "The Presence Of Conservation Reserve Program Contracts And Their Effect On Kansas Agricultural Land Values," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230146, Southern Agricultural Economics Association.
    7. Palmquist, Raymond B., 2006. "Property Value Models," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 16, pages 763-819, Elsevier.
    8. Marcelo Caffera & Felipe Vásquez & Daniel Rodríguez & Leonidas Carrasco-Letelier & José Ignacio Hernández & Mariela Buonomo, 2019. "Spatial Spillovers in the Implicit Market Price of Soil Erosion: An Estimation using a Spatio-temporal Hedonic Model," Documentos de Trabajo/Working Papers 1909, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
    9. Gardner, Grant & Sampson, Gabriel S., 2022. "Land Value Impacts of Ethanol Market Expansion by Irrigation Status," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(3), September.
    10. Johanna Choumert & Pascale Phelinas, 2018. "Volcanic hazards, land and labor," CERDI Working papers halshs-01845041, HAL.
    11. Temesgen, Chalachew & Dupraz, Pierre, 2014. "The role of farmers’ competition on farmland price in local markets: Bretagne region of France," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170610, Agricultural and Applied Economics Association.
    12. Sampson, Gabriel & Gardner, Grant, 2021. "Land Value Impacts of Ethanol Market Expansion Differ by Irrigation Status," 2021 Annual Meeting, August 1-3, Austin, Texas 313854, Agricultural and Applied Economics Association.
    13. JunJie Wu & Haixia Lin, 2010. "The Effect of the Conservation Reserve Program on Land Values," Land Economics, University of Wisconsin Press, vol. 86(1), pages 1-21.
    14. Tione, Sarah E. & Holden , Stein T., 2019. "Urban proximity, demand for land and land prices in Malawi," CLTS Working Papers 1/19, Norwegian University of Life Sciences, Centre for Land Tenure Studies, revised 16 Oct 2019.
    15. Hussain, Anwar & Munn, Ian A. & Loden, Emily K. & Grado, Stephen C. & Jones, Daryl W., 2005. "Factors Influencing Lease Revenue and Non-industrial Landowners' Willingness to allow Hunting Access," 2005 Annual meeting, July 24-27, Providence, RI 19326, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Jean-Sauveur Ay & Jean-Marc Brayer & Jean Cavailhès & Pierre Curmi & Mohamed Hilal & Marjorie Ubertosi, 2012. "La valeur des attributs naturels des terres agricoles de Côte-d'Or," INRA UMR CESAER Working Papers 2012/1, INRA UMR CESAER, Centre d'’Economie et Sociologie appliquées à l'’Agriculture et aux Espaces Ruraux.
    17. Ma, Shan & Swinton, Scott M., 2011. "Valuation of ecosystem services from rural landscapes using agricultural land prices," Ecological Economics, Elsevier, vol. 70(9), pages 1649-1659, July.
    18. Arthur Grimes & Andrew Aitken, 2008. "Water, Water Somewhere: The Value of Water in a Drought-Prone Farming Region," Working Papers 08_10, Motu Economic and Public Policy Research.
    19. Cristián Mardones, 2006. "Impacto de la Percepción de la Calidad del Aire sobre el Precio de las Viviendas en Concepción-Talcahuano, Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 43(128), pages 301-330.
    20. Ritter, Matthias & Hüttel, Silke & Odening, Martin & Seifert, Stefan, 2020. "Revisiting the relationship between land price and parcel size in agriculture," Land Use Policy, Elsevier, vol. 97(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:jasfmr:189878. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/asfmrea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.