IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v10y2018i8p2701-d161359.html

Factors Causing Farmland Price-Value Distortion and Their Implications for Peri-Urban Growth Management

Author

Listed:
  • Yu-Hui Chen

    (Department of Agricultural Economics, National Taiwan University, Taipei City 106, Taiwan (R.O.C.))

  • Chun-Lin Lee

    (Department of Landscape Architecture, Chinese Culture University, Taipei City 11114, Taiwan (R.O.C.))

  • Guan-Rui Chen

    (Department of Agricultural Economics, National Taiwan University, Taipei City 106, Taiwan (R.O.C.))

  • Chiung-Hsin Wang

    (Department of Natural Resources and Environmental Studies, National Dong Hwa University, Hualien 97401, Taiwan (R.O.C.))

  • Ya-Hui Chen

    (Department of Business Administration, Hsuan Chuang University, Hsinchu City 300, Taiwan (R.O.C.))

Abstract

Taiwan’s Agricultural Development Act (ADA) of 2000 relaxed farmland ownership criteria and allowed non-farmers to own farms. Although this opened up the market and induced a growth in farmland trading, relaxing these criteria without proper monitoring resulted in rapid development of farmhouses that fragmented farmlands, adversely affecting agricultural production and the quality of peri-urban environments, and increased management difficulties. Relaxing farmland ownership criteria also provided opportunities for speculation, which pushed up farmland prices, causing farmland price to deviate from its production value. We used a price:value ratio as an index of price-value distortion to explore farmland price-value distortion spatially using a geographical information system (GIS). Yilan County was used as a case study since its agricultural lands suffer high development pressure due to ready accessibility from the Taipei metropolitan area. Ordinary least square and quantile regression were used to identify factors driving distortion in Yilan County. Finally, we discuss the distortion and key factors for specific sites in Yilan to assess the urban sprawl and propose a preliminary course of action for peri-urban growth management. Our findings suggest that residential activities stimulate farmland price-value distortion but do not enhance farmland value. Designation of a land parcel as agricultural within an urban area allows for speculation and increases distortion. The land parcel’s association with infrastructure such as road and irrigation systems, and the price of agricultural products, are significantly correlated with distortion. Most of these identified factors increased farmland price because of the potential for non-agricultural land-use. We propose that to resolve farmland price-value distortion in Yilan, multi-functional values, in addition to agriculture, must be envisioned.

Suggested Citation

  • Yu-Hui Chen & Chun-Lin Lee & Guan-Rui Chen & Chiung-Hsin Wang & Ya-Hui Chen, 2018. "Factors Causing Farmland Price-Value Distortion and Their Implications for Peri-Urban Growth Management," Sustainability, MDPI, vol. 10(8), pages 1-18, August.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:8:p:2701-:d:161359
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/10/8/2701/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/10/8/2701/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ian W. Hardie & Tulika A. Narayan & Bruce L. Gardner, 2001. "The Joint Influence of Agricultural and Nonfarm Factors on Real Estate Values: An Application to the Mid-Atlantic Region," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 120-132.
    2. Plantinga, Andrew J. & Lubowski, Ruben N. & Stavins, Robert N., 2002. "The effects of potential land development on agricultural land prices," Journal of Urban Economics, Elsevier, vol. 52(3), pages 561-581, November.
    3. Choumert, Johanna & Phélinas, Pascale, 2015. "Determinants of agricultural land values in Argentina," Ecological Economics, Elsevier, vol. 110(C), pages 134-140.
    4. McMillen, Daniel, 2015. "Conditionally parametric quantile regression for spatial data: An analysis of land values in early nineteenth century Chicago," Regional Science and Urban Economics, Elsevier, vol. 55(C), pages 28-38.
    5. James Yoo & Thomas Frederick, 2017. "The varying impact of land subsidence and earth fissures on residential property values in Maricopa County – a quantile regression approach," International Journal of Urban Sciences, Taylor & Francis Journals, vol. 21(2), pages 204-216, May.
    6. Patrick A. Stewart & Lawrence W. Libby, 1998. "Determinants of Farmland Value: The Case of DeKalb County, Illinois," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 20(1), pages 80-95.
    7. Benoît A. Delbecq & Todd H. Kuethe & Allison M. Borchers, 2014. "Identifying the Extent of the Urban Fringe and Its Impact on Agricultural Land Values," Land Economics, University of Wisconsin Press, vol. 90(4), pages 587-600.
    8. Zhang, Wei & Ricketts, Taylor H. & Kremen, Claire & Carney, Karen & Swinton, Scott M., 2007. "Ecosystem services and dis-services to agriculture," Ecological Economics, Elsevier, vol. 64(2), pages 253-260, December.
    9. David M. Henneberry & Richard L. Barrows, 1990. "Capitalization of Exclusive Agricultural Zoning into Farmland Prices," Land Economics, University of Wisconsin Press, vol. 66(3), pages 249-258.
    10. W. Patrick Beaton, 1991. "The Impact of Regional Land-Use Controls on Property Values: The Case of the New Jersey Pinelands," Land Economics, University of Wisconsin Press, vol. 67(2), pages 172-194.
    11. Philip Kostov, 2009. "A Spatial Quantile Regression Hedonic Model of Agricultural Land Prices," Spatial Economic Analysis, Taylor & Francis Journals, vol. 4(1), pages 53-72.
    12. John Faux & Gregory M. Perry, 1999. "Estimating Irrigation Water Value Using Hedonic Price Analysis: A Case Study in Malheur County, Oregon," Land Economics, University of Wisconsin Press, vol. 75(3), pages 440-452.
    13. Carolyn A. Dehring & Melissa S. Lind, 2007. "Residential Land-Use Controls and Land Values: Zoning and Covenant Interactions," Land Economics, University of Wisconsin Press, vol. 83(4), pages 445-457.
    14. Fivos Papadimitriou, 2012. "The Algorithmic Complexity of Landscapes," Landscape Research, Taylor & Francis Journals, vol. 37(5), pages 591-611, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Martina Agosta & Emanuele Schimmenti & Caterina Patrizia Di Franco & Antonio Asciuto, 2025. "Agricultural Land Markets: A Systematic Literature Review on the Factors Affecting Land Prices," Land, MDPI, vol. 14(5), pages 1-25, May.
    2. Lee, Brian & Chang, Hung-Hao & Wang, Szu-Yung, 2021. "Solar power promotion plans, energy market liberalization, and farmland prices – Empirical evidence from Taiwan," Energy Economics, Elsevier, vol. 99(C).
    3. Wann-Ming Wey, 2018. "A Commentary on Sustainably Built Environments and Urban Growth Management," Sustainability, MDPI, vol. 10(11), pages 1-5, October.
    4. Xiaoyu Xu & Luyao Wang & Kai Zhao, 2020. "Exploring Determinants of Consumers’ Platform Usage in “Double Eleven” Shopping Carnival in China: Cognition and Emotion from an Integrated Perspective," Sustainability, MDPI, vol. 12(7), pages 1-18, April.
    5. Sebastiano Carbonara & Davide Stefano & Michele Fischetti & Lucia Della Spina, 2023. "The Value of Agricultural Areas: An Estimation Model of the Area to the Southeast of the City of Bari," Land, MDPI, vol. 12(7), pages 1-11, July.
    6. Shingo Yoshida & Hironori Yagi, 2023. "Effects of Sustainability Practices on Farm Continuity in Urban Agriculture: From the Creating Shared Value Perspective," Sustainability, MDPI, vol. 15(21), pages 1-20, October.
    7. Shingo Yoshida, 2020. "Effects of Urbanization on Farmland Size and Diversified Farm Activities in Japan: An Analysis Based on the Land Parcel Database," Land, MDPI, vol. 9(9), pages 1-23, September.
    8. Qi, Yuan & Hou, Yuchen & Li, Yaoyao & Li, Luyue & Zhang, Jiaqing & Chang, Yuyang & Zhu, Daolin, 2023. "The price gap between state-owned and collective farmlands: Evidence from Xinjiang and Heilongjiang, China," Land Use Policy, Elsevier, vol. 124(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. B. James Deaton & Chad Lawley, 2022. "A survey of literature examining farmland prices: A Canadian focus," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 70(2), pages 95-121, June.
    2. Chun-Chang Lee & Yi-Xin Chen & Yun-Ling Wu & Wen-Chih Yeh & Chih-Min Liang, 2020. "Multilevel Analysis of the Pressure of Agricultural Land Conversion, Degree of Urbanization and Agricultural Land Prices in Taiwan," Land, MDPI, vol. 9(12), pages 1-21, November.
    3. Emma Bruno & Rosalia Castellano & Gennaro Punzo & Luca Salvati, 2024. "Direct and spillover effects of short‐ and long‐term land pricing drivers: Evidence from Italian districts, 1992−2019," Journal of Regional Science, Wiley Blackwell, vol. 64(3), pages 804-839, June.
    4. Marques, Felipe César & Telles, Tiago Santos, 2023. "Spatial effects are determinants of agricultural land prices in Brazil," Revista de Economia e Sociologia Rural (RESR), Sociedade Brasileira de Economia e Sociologia Rural, vol. 61(3), January.
    5. Czyżewski, Bazyli & Trojanek, Radosław, 2016. "Drivers of agricultural land prices in terms of different functions of rural areas in Poland," Problems of Agricultural Economics / Zagadnienia Ekonomiki Rolnej 249742, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    6. Kathryn Anderson & Diana Weinhold, 2005. "Do Conservation Easements Reduce Land Prices? The Case of South Central Wisconsin," Urban/Regional 0506001, University Library of Munich, Germany.
    7. Lee Changro, 2021. "Determinants of farmland prices and their local variation," Bulletin of Geography. Socio-economic Series, Paradigm, vol. 54(54), pages 77-87, December.
    8. Ayala Wineman & Thomas S Jayne, 2018. "Land Prices Heading Skyward? An Analysis of Farmland Values across Tanzania," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 40(2), pages 187-214.
    9. Ma, Shan & Swinton, Scott M., 2011. "Valuation of ecosystem services from rural landscapes using agricultural land prices," Ecological Economics, Elsevier, vol. 70(9), pages 1649-1659, July.
    10. Czyżewski, Bazyli, 2016. "Political Rents of European Farmers in the Sustainable Development Paradigm. International, national and regional perspective," MPRA Paper 74253, University Library of Munich, Germany.
    11. Schilling, Brian J. & Sullivan, Kevin P. & Duke, Joshua M., 2013. "Do Residual Development Options Increase Preserved Farmland Values?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(3), pages 1-17.
    12. Allan, Corey & Kerr, Suzi & Owen, Sally, 2020. "Over-valued or over-looked? A theoretical and empirical investigation of agricultural land values against profitability in Aotearoa New Zealand," Working Paper Series 9129, Victoria University of Wellington, School of Economics and Finance.
    13. Paul Feichtinger & Klaus Salhofer, 2016. "The Fischler Reform of the Common Agricultural Policy and Agricultural Land Prices," Land Economics, University of Wisconsin Press, vol. 92(3), pages 411-432.
    14. Jean Cavailhès & Mohamed Hilal & Pierre Wavresky, 2011. "Urban influence of farmland prices and its impact on agriculture [L'influence urbaine sur le prix des terres agricoles et ses conséquences pour l'agriculture]," Post-Print hal-02645617, HAL.
    15. Eric C. Edwards, 2016. "What Lies Beneath? Aquifer Heterogeneity and the Economics of Groundwater Management," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(2), pages 453-491.
    16. Temel, Tugrul, 2011. "The formation of offer prices in farmland markets: A hedonic price approach," MPRA Paper 31921, University Library of Munich, Germany.
    17. Ay, Jean-Sauveur & Latruffe, Laure, "undated". "The Empirical Content of the Present Value Model: A survey of the instrumental uses of farmland prices," Working papers 157112, Factor Markets, Centre for European Policy Studies.
    18. Ariel Ortiz‐Bobea, 2020. "The Role of Nonfarm Influences in Ricardian Estimates of Climate Change Impacts on US Agriculture," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(3), pages 934-959, May.
    19. Liu, Xiangping & Lynch, Lori, 2006. "Do Agricultural Preservation Programs Affect Farmland Conversion? Evidence from a Propensity Score Matching Estimator," Working Papers 28569, University of Maryland, Department of Agricultural and Resource Economics.
    20. Uematsu, Hiroki & Mishra, Ashok K., 2012. "The Impact of Natural Amenity on Farmland Values: A Quantile Regression Approach," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119804, Southern Agricultural Economics Association.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:10:y:2018:i:8:p:2701-:d:161359. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager The email address of this maintainer does not seem to be valid anymore. Please ask MDPI Indexing Manager to update the entry or send us the correct address (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.