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The Effect of the Conservation Reserve Program on Land Values

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  • JunJie Wu
  • Haixia Lin

Abstract

This paper evaluates the effects of the Conservation Reserve Program (CRP) on land values. A theoretical model is presented to analyze the interaction between farmers’ CRP participation decisions and land values. Empirical models are estimated to evaluate the effects of the CRP on land values. Results suggest that CRP participation had the largest effects in the Mountain, Southern Plains, and Northern Plains regions, where it increased average farmland values by 5% to 14%, 4% to 6%, and 2% to 5%, respectively. The CRP also had a statistically significant effect on developed land values, but the percentage increases were smaller. Implications of the results for the design of conservation programs are discussed.

Suggested Citation

  • JunJie Wu & Haixia Lin, 2010. "The Effect of the Conservation Reserve Program on Land Values," Land Economics, University of Wisconsin Press, vol. 86(1), pages 1-21.
  • Handle: RePEc:uwp:landec:v:86:y:2010:i:1:p:1-21
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    References listed on IDEAS

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    1. Richard E. Just & John A. Miranowski, 1993. "Understanding Farmland Price Changes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(1), pages 156-168.
    2. Kathleen P. Bell & Nancy E. Bockstael, 2000. "Applying the Generalized-Moments Estimation Approach to Spatial Problems Involving Microlevel Data," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 72-82, February.
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    5. Yue Jin Shi & Timothy T. Phipps & Dale Colyer, 1997. "Agricultural Land Values under Urbanizing Influences," Land Economics, University of Wisconsin Press, vol. 73(1), pages 90-100.
    6. Andrew J. Plantinga & Douglas J. Miller, 2001. "Agricultural Land Values and the Value of Rights to Future Land Development," Land Economics, University of Wisconsin Press, vol. 77(1), pages 56-67.
    7. Raymond B. Palmquist & Leon E. Danielson, 1989. "A Hedonic Study of the Effects of Erosion Control and Drainage on Farmland Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 55-62.
    8. J. Stephen Clark & K. K. Klein & Shelley J. Thompson, 1993. "Are Subsidies Capitalized into Land Values? Some Time Series Evidence from Saskatchewan," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 41(2), pages 155-168, July.
    9. Robbin Shoemaker, 1989. "Agricultural Land Values and Rents under the Conservation Reserve Program," Land Economics, University of Wisconsin Press, vol. 65(2), pages 131-137.
    10. Feather, Peter & Hellerstein, Daniel & Hansen, LeRoy T., 1999. "Economic Valuation of Environmental Benefits and the Targeting of Conservation Programs: The Case of the CRP," Agricultural Economics Reports 34027, United States Department of Agriculture, Economic Research Service.
    11. Charles H. Barnard & Gerald Whittaker & David Westenbarger & Mary Ahearn, 1997. "Evidence of Capitalization of Direct Government Payments into U.S. Cropland Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(5), pages 1642-1650.
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    Citations

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    Cited by:

    1. Wu, Feng & Guan, Zhengfei & Yu, Fan & Myers, Robert J., 2013. "The spillover effects of biofuel policy on participation in the conservation reserve program," Journal of Economic Dynamics and Control, Elsevier, vol. 37(9), pages 1755-1770.
    2. Thomas Coisnon & Walid Oueslati & Julien Salanié, 2013. "Spatial targeting of agri-environmental policy and urban development," Working Papers halshs-00795815, HAL.
    3. David A. Fleming, 2014. "Slippage effects of land-based policies: Evaluating the Conservation Reserve Program using satellite imagery," Papers in Regional Science, Wiley Blackwell, vol. 93, pages 167-178, November.
    4. Holderieath, Jason, 2014. "Impact of Increased Crop Insurance Enrollment on Cropping of Environmentally Sensitive Land," 2014 AAEA: Crop Insurance and the 2014 Farm Bill Symposium: Implementing Change in U.S. Agricultural Policy, October 8-9, Louisville, KY 184269, Agricultural and Applied Economics Association.
    5. Walid Oueslati & Julien Salanié & JunJie Wu, 2014. "Urbanization and Agricultural Structural Adjustments: Some Lessons from European Cities," Working Papers 1442, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    6. Coisnon, Thomas & Oueslati, Walid & Salanié, Julien, 2014. "Urban sprawl occurrence under spatially varying agricultural amenities," Regional Science and Urban Economics, Elsevier, vol. 44(C), pages 38-49.
    7. repec:eee:ejores:v:267:y:2018:i:1:p:368-380 is not listed on IDEAS
    8. repec:eee:ecoser:v:18:y:2016:i:c:p:175-185 is not listed on IDEAS
    9. Alix-Garcia, Jennifer & Wolff, Hendrik, 2014. "Payment for Ecosystem Services from Forests," IZA Discussion Papers 8179, Institute for the Study of Labor (IZA).
    10. Clive Potter & Steven Wolf, 2014. "Payments for ecosystem services in relation to US and UK agri-environmental policy: disruptive neoliberal innovation or hybrid policy adaptation?," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 31(3), pages 397-408, September.
    11. Lu, Lina, 2017. "Simultaneous Spatial Panel Data Models with Common Shocks," Risk and Policy Analysis Unit Working Paper RPA 17-3, Federal Reserve Bank of Boston.

    More about this item

    JEL classification:

    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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