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Drivers for farmland value revisited: adapting the returns discount model (RDM) to the sustainable paradigm

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  • Bazyli Czyżewski
  • Piotr Kułyk
  • Łukasz Kryszak

Abstract

In recent studies many researchers have identified non-agricultural attributes of land that significantly contribute to its value. They claim that the increasing proportion of the value of land may now be explained by environmental amenities in rural areas. On the other hand, mainstream economics says that farmland values are determined by the discounted stream of returns (present value model). The main aim of this work was to adapt neoclassical concept of the Returns Discount Model (RDM) of Saphiro–Gordon type to the case of a land market in Poland. We introduced a modified RDM (i.e. the multilevel variance component model) to answer whether it remains applicable to the valuation of farmland in the context of sustainable agriculture. It was found that in spite of the growing role of non-productive functions of agriculture the improved RDM continues to perform well as a tool to assess changes in land prices.

Suggested Citation

  • Bazyli Czyżewski & Piotr Kułyk & Łukasz Kryszak, 2019. "Drivers for farmland value revisited: adapting the returns discount model (RDM) to the sustainable paradigm," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 2080-2098, January.
    • Handle: RePEc:taf:reroxx:v:32:y:2019:i:1:p:2080-2098
    DOI: 10.1080/1331677X.2019.1642778
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    Cited by:

    1. Aleksander Grzelak, 2022. "The income-assets relationship for farms operating under selected models in Poland," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 68(2), pages 59-67.

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