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Income Earning Potential versus Consumptive Amenities in Determining Ranchland Values

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  • Torell, L. Allen
  • Rimbey, Neil R.
  • Ramirez, Octavio A.
  • McCollum, Daniel W.

Abstract

The relative importance of income earning potential versus consumptive values in setting ranchland prices is examined using a truncated hedonic model. The market value of New Mexico ranches is related to annual income earning potential and other ranch characteristics including ranch size, location, elevation, terrain, and the amount of deeded, public, and state trust land on the ranch. We found ranch income to be a statistically important determinant of land value, but yet a relatively small percentage of ranch value was explained by income earnings. Ranch location, scenic view, and the desirable lifestyle influenced ranch value more than ranch income.

Suggested Citation

  • Torell, L. Allen & Rimbey, Neil R. & Ramirez, Octavio A. & McCollum, Daniel W., 2005. "Income Earning Potential versus Consumptive Amenities in Determining Ranchland Values," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 30(3), pages 1-24, December.
    • Handle: RePEc:ags:jlaare:30986
    DOI: 10.22004/ag.econ.30986
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    References listed on IDEAS

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    1. Ronald W. Spahr & Mark A. Sunderman, 1995. "Additional Evidence on the Homogeneity of the Value of Government Grazing Leases and Changing Attributes for Ranch Values," Journal of Real Estate Research, American Real Estate Society, vol. 10(5), pages 601-616.
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    1. James R. Wasson & Donald M. McLeod & Christopher T. Bastian & Benjamin S. Rashford, 2013. "The Effects of Environmental Amenities on Agricultural Land Values," Land Economics, University of Wisconsin Press, vol. 89(3), pages 466-478.
    2. Jose L. Oviedo & Lynn Huntsinger & Pablo Campos & Alejandro Caparrós, 2011. "Assessing the income value of private amenities in California oak woodlands," Working Papers 1110, Instituto de Políticas y Bienes Públicos (IPP), CSIC.
    3. d’Amato, Maurizio & Zrobek, Sabina & Renigier Bilozor, Malgorzata & Walacik, Marek & Mercadante, Giuseppe, 2019. "Valuing the effect of the change of zoning on underdeveloped land using fuzzy real option approach," Land Use Policy, Elsevier, vol. 86(C), pages 365-374.
    4. Havstad, Kris M. & Peters, Debra P.C. & Skaggs, Rhonda & Brown, Joel & Bestelmeyer, Brandon & Fredrickson, Ed & Herrick, Jeffrey & Wright, Jack, 2007. "Ecological services to and from rangelands of the United States," Ecological Economics, Elsevier, vol. 64(2), pages 261-268, December.
    5. Ovando, Paola & Campos, Pablo & Oviedo, José L. & Caparrós, Alejandro, 2016. "Ecosystem accounting for measuring total income in private and public agroforestry farms," Forest Policy and Economics, Elsevier, vol. 71(C), pages 43-51.
    6. 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.
    7. Polyakov, Maksym & Pannell, David J. & Pandit, Ram & Tapsuwan, Sorada & Park, Geoff, 2013. "Valuing Environmental Assets on Rural Lifestyle Properties," Agricultural and Resource Economics Review, Cambridge University Press, vol. 42(1), pages 159-175, April.
    8. Zheng Liu & Ron Fleming & Angelos Pagoulatos & Wuyang Hu, 2010. "The Supply of Private Acreage for Public Recreational Use in Southern and Central Appalachia," Growth and Change, Wiley Blackwell, vol. 41(4), pages 540-555, December.
    9. Ian A. Munn & Anwar Hussain, 2010. "Factors Determining Differences in Local Hunting Lease Rates: Insights from Blinder-Oaxaca Decomposition," Land Economics, University of Wisconsin Press, vol. 86(1), pages 66-78.
    10. Sun, Lili & van Kooten, G. Cornelis & Voss, Graham M., 2006. "Quality of Life as an Explanation of the Divergence between Ranchers' WTA and WTP for Public Forage," 2006 Annual meeting, July 23-26, Long Beach, CA 21162, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Sun, Lili & van Kooten, G. Cornelis & Voss, Graham M., 2009. "What accounts for the divergence between ranchers' WTA and WTP for public forage?," Forest Policy and Economics, Elsevier, vol. 11(4), pages 271-279, July.
    12. DeVuyst, Cheryl & DeVuyst, Eric, 2008. "The Impact of Beef Price and Hunting Pressure on Pasture Values in North Dakota," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2008, pages 1-6.
    13. Ashraf J. Zaied & Hatim M. E. Geli & Andres F. Cibils & Mohammed N. Sawalhah & Jerry L. Holechek & Charlotte C. Gard & Saleh A. Idhirij & Melakeneh G. Gedefaw & Greg L. Torell, 2021. "Beef Cattle Price and Production Patterns in Relation to Drought in New Mexico," Sustainability, MDPI, vol. 13(18), pages 1-20, September.
    14. William Larson, 2015. "New Estimates of Value of Land of the United States," BEA Working Papers 0120, Bureau of Economic Analysis.
    15. José L. Oviedo & Lynn Huntsinger & Pablo Campos, 2015. "Reconciling landowner income and land prices: the case of Spanish and California oak woodlands," Working Papers 1502, Instituto de Políticas y Bienes Públicos (IPP), CSIC.
    16. José L Oviedo & Pablo Campos & Alejandro Caparrós, 2022. "Contingent valuation of landowner demand for forest amenities: application in Andalusia, Spain," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 49(3), pages 615-643.

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