Farmland values and agricultural growth: The case of Chile

Guillermo Donoso, Jose Cancino, William Foster
  • Economía Agraria y Recursos Naturales, January 2013, Asociacion Española de Economia Agraria
  • DOI: 10.7201/earn.2013.02.02

Identifying the Determinants of farm land values in Chile

What is it about?

This study analyzes the relationships between farmland values and factors associated with the growth in Chilean agriculture and with development more generally. This research identifies agricultural land value’s determinants by estimating a log-linear hedonic function. The results indicate that a parcel’s market value varies according to its suitability and productivity for different crops, its location and transport costs, its potential for residential use, and other factors that determine expectations of future utility streams. The presence of buildings and other farm’s infrastructure and irrigation investments has a positive impact on per hectare land value. Furthermore, farms with soil aptitude for fruits, high-valued, export-oriented crops that have led Chile’s agricultural boom, have higher values than those with forestry soil aptitude. Urban growth, measured indirectly by the rate of change of population density, has a positive impact on agricultural land value. Finally, the results of this study are consistent with the results reported in the literature for Chile and other countries.

Why is it important?

Agricultural land values are an important source of information for tracing the distribution of benefits generated by agricultural growth.

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The following have contributed to this page: Guillermo Donoso