capitalization of government support in agricultural land prices what do we know abstract the objective of this paper is to provide an overview of existing literature both theoretically and empirically on the extent to which agricultural subsidies do translate into higher land values and rents and finally benefit landowners instead of agricultural producers our review shows that agricultural support policy instruments contribute to increasing the rental price of farmland and that the extent of this increase closely depends on the level of the supply price elasticity of farmland relative to those of other factors inputs on the one hand and on the range of the possibilities of factor input substitution in agricultural production on the other hand the empirical literature shows that land prices and rents have in general a significant positive and inelastic response to government support such inelastic response is thought to reflect the uncertain future of the farm programmes and in general studies have indicated that land prices are more responsive to government based returns than to market based returns

formally testing the present value model of farmland prices this paper applies recent statistical developments in the study of stock market price movements to study the plausibility of the constant expected returns version of the present value model as an explanation of farmland prices using iowa farmland price and rent data over the 1921 86 sample period formal test results indicate that although farmland price and rent movements are highly correlated price movements are not consistent with the implications of this model there appear to be persistent predictable excess positive and or negative returns in the iowa farmland market

a comprehensive analysis of farmland value determination a county level analysis this study develops a comprehensive model of farmland value determination to analyze the effects of various economic variables such as net farm income government payments macroeconomic factors and demographic conditions on farmland values for the counties along the snake river valley in idaho land values net farm income and population show considerable variation among the counties therefore use of county level cross sectional and time series data helps to assess the impacts of various factors on land values more accurately the empirical results show that net farm income wheat yield population and credit availability have positive effects and property tax rates interest rates and debt to asset ratio have negative effects on farmland values

assessing the influence of direct payments on the rental value of agricultural land economic theory suggests that coupled and decoupled direct payments have different impacts on agricultural rental values because of the different production responses associated with these payments this study investigates the impact of both coupled and decoupled eu cap direct payments on rental values in northern ireland using panel data taken from the farm business survey for the period from 1994 to 2002 theoretically agricultural land rents are a function of expected market returns and expected associated direct payments the unobservable nature of expected returns means that actual market returns must be used as a proxy for the former in the empirical specification as a consequence the problem of bias due to expectation error arises using a gmm technique to take account of this problem the results of this study show that the impact of cap direct payments on rental values depends on the type of payment and on the nature of the production characteristics of the associated agricultural commodity

the inconsistency of land values land rents and capitalization formulas this paper examines relationships that exist between farm income land values and capital asset pricing theory using two commonly referenced data sets it is shown that land prices and land rents do not have the same time series representations a necessary condition for the simple capital asset pricing theory to hold this suggests that a fundamental rethinking of the way in which land prices are viewed and modeled is needed more complex models that allow for rational bubbles risk aversion and future shifts in government policy or commodity prices may be required

the effects of potential land development on agricultural land prices abstract we conduct a national scale analysis of the determinants of agricultural land values the theoretical basis for the study is a spatial city model with stochastic returns to future land development the empirical model of agricultural land prices is estimated with a cross section on approximately three thousand counties in the contiguous us the results provide evidence that option values associated with irreversible and uncertain land development are capitalized into current farmland values for each county we decompose the current agricultural land value into components measuring rents from agricultural production and rents from future land development

equivalent expenditure functions and expenditure dependent equivalence scales abstract this paper presents and investigates a new class of equivalent expenditure functions that is a generalization of the one that corresponds to exact independent of base equivalence scales it provides less restrictive household demands especially for children s goods and has associated equivalence scales that may depend on expenditure we show that under certain conditions equivalent expenditure functions and the associated expenditure dependent equivalence scales can be uniquely estimated from demand data we estimate them using canadian data and find that the resulting scales are both plausible and expenditure dependent the estimated equivalence scales for households with children decline significantly as expenditure increases

social welfare and interpersonal utility comparisons in applied policy research it is a fair generalization to say that most applied policy analysis during the past half century has been conducted according to compensation principles a policy change has been thought potentially desirable if the sum over all individuals of the subjective money value of the change is positive whether winners should compensate losers is a separate issue left to politicians this paradigm is expedient because it is unconcerned about whether in the absence of full compensation the policy change is good or bad and because the pareto principle upon which it rests is very weak it suggests that welfare economics has achieved the status of a value weak science the only problem remaining would be to refine the measures of an individual s money equivalent of an economic change hallam unfortunately the compensation test has proved to be an inadequate analytical tool its inadequacy does not arise from the oftenmentioned difficulties with utility change measurement uncertainty or preference reversals rather it arises from a failure to fully address questions that policy makers ask to which framework should one turn if as is likely compensation is very costly or if it alters resource allocations stiglitz p 31 runge and myers even if compensation is costless and nondistorting how should one think about the desirability of compensation itself to answer these questions satisfactorily one must appeal to social welfare functionals and to the interpersonal and ethical information the functionals incorporate in the following a social welfare approach to applied policy research is outlined and some issues in implementation are discussed

birth date dependent population ethics critical level principles abstract this paper investigates birth date dependent principles for social evaluation in an intertemporal framework in which population size may vary we weaken the strong pareto principle in order to allow individuals birth dates to matter in establishing a social ordering using the axiomindependence of the utilities of the dead we characterize population principles with a recursive structure if the individual substitution principle and an individual intertemporal equivalence axiom are added birth date dependent generalizations of the critical level generalized utilitarian principles result stationarity leads to the special case of geometric discounting journal of economic literatureclassification numbers d63 d71

social criteria for evaluating population change abstract many applications of economic analysis require social evaluations of alternatives involving different numbers of people in this paper we use the tools of social choice theory to provide an axiomatic formulation of this problem it yields a class of social criteria called critical level generalized utilitarianism this class and its implications are compared with other criteria and are found to yield intuitively appealing results

linking the price of agricultural land to use values and amenities the recent appreciation in agricultural land values across the united states has raised a number of important questions for farmers farmland owners lenders and policy makers while traditional economic theory suggests that farmland values are determined by the discounted stream of expected returns previous research has shown that agricultural land values are actually driven by a complex set of factors this study leverages the unique characteristics of a national land based usda survey on farmland values and cash rents to estimate broad national level determinants of the market value of cropland and pastureland our results support past research findings that indicate farmland values are only partially explained by agricultural returns we find that multiple nonagricultural attributes of farmland also contribute to the market value

the value of limited altruism abstract discounting the utilities of future people or giving smaller weights to groups other than one s own is often criticized on the grounds that the resulting objective function differs from the ethically appropriate one this paper investigates the consequences of changes in the discount rate and weights when they are moved toward the warranted ones using the utilitarian value function it is shown that except in restrictive special cases those moves do not necessarily lead to social improvements we suggest that limitations to altruism are better captured by maximizing the appropriate value function subject to lower bounds on some utilities journal of economic literature classification numbers d63 d71

vegetable spirits and energy policy this study investigates the extent to which the 2005 energy policy act specifically the ethanol mandate contributed to the rise in farmland values we use the location of new ethanol plants to identify the capitalization effect of the mandate by these spatially advantaged operations we use a difference in difference propensity score matching estimator to control for the non random selection of ethanol production facilities the empirical strategy uses farmland parcel values from the 2001 7 june agriculture survey we find that new ethanol facilities had no effect on nearby farmland values prior to the mandate but had statistically significant effects after the policy copyright 2013 oxford university press

understanding farmland price changes this paper develops a structural model of land prices which includes the multidimensional effects of inflation on capital erosion savings return erosion and real debt reduction as well as the effect of changes in the opportunity cost of capital the results show that inflation and changes in the real returns on capital are major explanatory factors in farmland price swings in addition to returns to farming additionally the effects of credit market constraints and expectations schemes are considered explicitly in the analytical model

the evolution of farm programs and their contribution to agricultural land values the economic environment of agricultural producers has been influenced by formal u s agricultural policy for more than seventy years among the first pieces of new deal legislation proposed by incoming president franklin d roosevelt was a farm program designed to address declines in crop prices and net farm income key features of the agriculture act of 1933 included mandatory price support for specified commodities direct subsidy payments to farmers and supply controls farm programs once viewed as temporary and supplementary to agricultural earnings are increasingly viewed as permanent and of major proportion gardner examined the relationships between u s farm commodity programs and u s farm structure while others see sumner for concept evidence and implications have examined farm programs and specific crops gardner 2002 and weersink et al analyzed the effects of farm program programs upon land values these studies examined various aspects of agricultural policy including whether farm program payments have enhanced land prices and landowner wealth rather than the welfare of producers while it would seem logical that revenueenhancing farm programs would increase land values reliably estimating the magnitudes of farm program effects upon land values is an empirically challenging task both statistical and budgeting based methodologies have been used to estimate the share of land prices generated by farm program payments statistically based studies are complicated by the fact that both real per acre crop receipts

social welfare of alternative controlled price policies recent developments in social welfare analysis provide insights into the selection of price policies in the presen t paper a ces social welfare function and a weighted average of utilitarian and leximin rules are used to identify optimal producer prices in an economy where government is the price setter and agents are risk averse the analysis distinguishes between the interests of commercial producers peasant producers consumers and taxpayers a n application to zimbabwe indicates that a maize producer price in the low medium to medium portion of the historical range would be social ly optimal if egalitarian preferences are moderate this outcome is somewhat insensitive to group weighting schemes and to interpersonal utility correspondences copyright 1993 by mit press

the kaldor compensation test and rational choice abstract it is well known that the kaldor compensation test can be inconsistent in the sense that it leads to contradictory or cyclical recommendations in some situations this paper shows that there is a close relationship between the consistency of this test and the rationalizability of choices from given utility possibilities sets this observation suggests that if the kaldor test is consistent social decisions can be made using a social welfare ordering in the first place therefore the information assumptions embodied in some social welfare ordering have to be accepted if the kaldor test is to be applied consistently

land markets and the value of water hedonic analysis using repeat sales of farmland author s buck s auffhammer m sunding d abstract the lack of robust water markets makes it difficult to value irrigation water because water rights are appurtenant to land it is possible to infer the value of water from observed differences in the market price of land we use panel data on repeat farmland sales in california s san joaquin valley to estimate a hedonic regression equation with parcel fixed effects this controls for sources of omitted variables bias and allows us to recover the value of irrigation water to landowners in our sample we show that a more traditional cross sectional regression results in an artificially low value of irrigation water the author 2014

the impact of decoupled payments on u s cropland values an extensive literature has shown that various farm programs may influence the value of farmland but other studies have not examined the cropland price effects of direct or decoupled payments separate from countercyclical payments this study uses nationally representative confidential field level panel data with farmer reported per acre land values we analyze the impact of decoupled and other farm program payments on farmland values using a fixed effects model and controlling for various factors that influence farmland values we find that an additional dollar of decoupled payments has a large and statistically significant impact on farmland values of about 18 per acre these results are comparable with similar studies undertaken in europe

the effect of agricultural policy on farmland values the extent to which agricultural support programs have been capitalized into farmland prices has been examined in this study a present value land price model was developed which decomposes returns to the land base into its two possible sources farm production and government subsidies and allows the discount rates associated with these two income sources to vary the empirical results indicate that government payments are discounted less than marketbased returns in ontario thus government payments have been viewed as a more stable source of income to ontario farm operators during the last half century than market based returns

output and input bias effects of u s direct payments this study examines the national effect of u s direct payments on the extent and direction of biased technical change on u s agriculture we also assess the economic significance of the estimated bias effects for economic policy modeling endeavors involving a reduction of domestic support payments a two outputs livestock and crops and four inputs labor capital land and material translog cost function was estimated from national time series 1948 2011 data results indicate that payments do not induce output biased technical change we do find evidence of hicksian bias that is land using and material input saving attributable to support payments global computable general equilibrium simulations suggest that price and output effects of discontinuing direct payments are 1 4 to 1 3 the size once the bias effects are incorporated

evaluating the impact of the french tax credit on the employment rate of women abstract this paper investigates the employment impact of a new tax credit programme that was put in place in france in 2001 according to the theoretical labour supply model tax credits will have a positive effect on individual labour market participation as they increase the rewards from work however tax credits may discourage married women s participation mainly due to income effects we analyse the introduction of the french measure by adopting a non experimental evaluation method various treatment and control groups are defined the first specification adopted relies on the policy eligibility rules for the construction of the control and treatment groups the others hinge respectively on marital status for women in couple households and on the presence of children for single women we find evidence of a negative employment effect for married women with a reduction of about three percentage points in the employment rate after the introduction of the policy in particular it seems to be the conditioning on total household resources that discourages married women s labour market participation on the contrary the employment impact of the measure is positive for cohabiting women and twice as large the policy effect is very small and statistically not significant for single women the net impact of the introduction of the tax credit on the total employment of women is very marginal amounting to the creation of about two thousand new jobs