A Tobit Model of the Demand for Farmland

The market for farmland has often been a subject of interest to agricultural economists, as evidenced by numerous studies that have investigated factors determining rural land values (Aines; Reynolds and Timmons; Ruttan; Sco-field). Despite the wealth of literature concerned with land values, little is known about who owns and exercises entrepreneurial control over land resources in the U.S. Consequently, there is a lack of understanding concerning the decision to purchase farmland. Lewis has suggested that better understanding of landowner investment decisions is important in determining and implementing effective land-use policy. Also, Wunderlich has noted the importance of understanding land ownership with regard to land-use decisions. Long et al. (p. 44) have suggested that “if policies are to be designed to influence private landowners’ decisions, then it seems imperative that the factors affecting landowners’ decisions and the decision process be better understood.”