The Impact of Natural Amenity on Farmland Values: A Quantile Regression Approach

Farmland values are influenced not only by agricultural production but also by several other economic and environmental factors. Among the attributes that contribute value to farmland are certain amenity characteristics. Using farm-level data this study examines the impact of natural amenity on farmland values in the United States. In contrast to previous studies that assume a homogeneous relationship across the entire distribution of farmland values, this study uses quantile regression to estimate the empirical model. Our quantile regression analysis offers some insightful results. Natural amenity is positively correlated with farmland values and its impact is often more pronounced at higher price range of farmland. On the other hand, land retirement programs like CRP and WLP have positive impacts on farmland values but, at the lower quantiles. Direct farm payments have a significantly positive effect on farmland values and the impact increases monotonically across quantiles. Finally, policy implications are discussed. (C) 2012 Elsevier Ltd. All rights reserved.