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The Presence Of Conservation Reserve Program Contracts And Their Effect On Kansas Agricultural Land Values

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  • Garr, Dillon
  • Taylor, Mykel

Abstract

Conservation Reserve Program (CRP) contracts take land out of production for at least ten years, hindering production flexibility in exchange for a guaranteed annual payment. This article analyzes the question of whether having a CRP contract on a parcel of land changes that parcel’s value by employing a hedonic model using data from 2005-2014 on agricultural land sales in Kansas. Results indicate CRP contracts reduce sale price by an average of 11 percent. However, the reduction in sale price is larger in periods of high farm profitability and smaller in periods of low farm profitability.

Suggested Citation

  • 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.
    • Handle: RePEc:ags:saea16:230146
    DOI: 10.22004/ag.econ.230146
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    References listed on IDEAS

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    1. 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.
    2. 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.
    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. 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.
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    Keywords

    Agricultural and Food Policy; Land Economics/Use;

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