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Vegetable Spirits and Energy Policy

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  • Charles Towe
  • Constant I. Tra

Abstract

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.

Suggested Citation

  • Charles Towe & Constant I. Tra, 2013. "Vegetable Spirits and Energy Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(1), pages 1-16.
    • Handle: RePEc:oup:ajagec:v:95:y:2013:i:1:p:1-16
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    File URL: http://hdl.handle.net/10.1093/ajae/aas079
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    Cited by:

    1. Cheu, Sungmin & Gammans, Matthew, 2023. "The Effect of Ethanol Capacity on Cover Crop Use in the Midwest," 2023 Annual Meeting, July 23-25, Washington D.C. 335819, Agricultural and Applied Economics Association.
    2. Buchanan, Kathryn & Russo, Riccardo & Anderson, Ben, 2015. "The question of energy reduction: The problem(s) with feedback," Energy Policy, Elsevier, vol. 77(C), pages 89-96.
    3. Kuethe, Todd H. & Walsh, Nicholas & Ifft, Jennifer, 2013. "Farmland versus Alternative Investments Before and After the 2008 Financial Crisis," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2013, pages 1-12, June.
    4. Callahan, Scott & Ifft, Jennifer & Michaud, Clayton P., 2022. "The impact of countercyclical farm programs on agricultural land values," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322579, Agricultural and Applied Economics Association.
    5. Stefan Seifert & Christoph Kahle & Silke Hüttel, 2021. "Price Dispersion in Farmland Markets: What Is the Role of Asymmetric Information?," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(4), pages 1545-1568, August.
    6. 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).
    7. Ifft, Jennifer & Wu, Shang & Kuethe, Todd, 2014. "The Impact of Pasture Insurance on Farmland Values," Agricultural and Resource Economics Review, Cambridge University Press, vol. 43(3), pages 390-405, December.
    8. Shukun Wang & Changquan Liu & Lei Han & Tingting Li & Guolei Yang & Taofeng Chen, 2022. "Corn Grain or Corn Silage: Effects of the Grain-to-Fodder Crop Conversion Program on Farmers’ Income in China," Agriculture, MDPI, vol. 12(7), pages 1-16, July.
    9. Junpyo Park, 2022. "Distance to Biorefinery Plants and Its Influence on Agricultural Land Value: Evidence from the United States Midwest Region," Land, MDPI, vol. 11(9), pages 1-14, September.
    10. Jennifer Ifft & Deepak Rajagopal & Ryan Weldzuis, 2019. "Ethanol Plant Location and Land Use: A Case Study of CRP and the Ethanol Mandate," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 41(1), pages 37-55, March.
    11. Sampson, Gabriel S. & Al-Sudani, Amer & Bergtold, Jason, 2021. "Local irrigation response to ethanol expansion in the High Plains Aquifer," Resource and Energy Economics, Elsevier, vol. 66(C).
    12. Ifft, Jennifer & Rajagopal, Deepak & Ryan, Weldzius, 2016. "The effect of the ethanol mandate on the Conservation Reserve Program," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236178, Agricultural and Applied Economics Association.
    13. Hendricks, Nathan P. & Sinnathamby, Sumathy & Douglas-Mankin, Kyle & Smith, Aaron & Sumner, Daniel A. & Earnhart, Dietrich H., 2014. "The environmental effects of crop price increases: Nitrogen losses in the U.S. Corn Belt," Journal of Environmental Economics and Management, Elsevier, vol. 68(3), pages 507-526.

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