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The Impact of Ethanol Plants on Surrounding Farmland Values: A Case Study

Author

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  • Ben H. Blomendahl
  • Richard K. Perrin
  • Bruce B. Johnson

Abstract

The expansion of the corn ethanol industry after 2003 increased corn prices throughout the United States, and, in some cases, prices were shown to be higher with proximity to individual ethanol plants. This leads to the hypothesis that the value of farmland in close proximity to ethanol plants is higher than comparable farmland located farther away. This hypothesis was explored by examining the sale of 961 farmland parcels during 2004–2008, in the vicinity of two corn ethanol plants in northeastern Nebraska. Hedonic models including land characteristics as well as spatial and plant proximity measures failed to show support for the hypothesis.

Suggested Citation

  • Ben H. Blomendahl & Richard K. Perrin & Bruce B. Johnson, 2011. "The Impact of Ethanol Plants on Surrounding Farmland Values: A Case Study," Land Economics, University of Wisconsin Press, vol. 87(2), pages 223-232.
  • Handle: RePEc:uwp:landec:v:87:y:2011:ii:1:p:223-232
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    References listed on IDEAS

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    1. Paul Gallagher & Robert Wisner & Heather Brubacker, 2005. "Price Relationships in Processors' Input Market Areas: Testing Theories for Corn Prices Near Ethanol Plants," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 53(2-3), pages 117-139, June.
    2. Kevin McNew & Duane Griffith, 2005. "Measuring the Impact of Ethanol Plants on Local Grain Prices," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(2), pages 164-180.
    3. Turnquist, Alan & Fortenbery, T. Randall & Foltz, Jeremy D., 2008. "Progress or Devastation? The Effects of Ethanol Plant Location on Local Land Use," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6125, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Haixiao Huang & Gay Y. Miller & Bruce J. Sherrick & Miguel I. Gómez, 2006. "Factors Influencing Illinois Farmland Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 458-470.
    5. repec:oup:revage:v:27:y:2005:i:2:p:164-180. is not listed on IDEAS
    6. Raymond B. Palmquist, 1989. "Land as a Differentiated Factor of Production: A Hedonic Model and Its Implications for Welfare Measurement," Land Economics, University of Wisconsin Press, vol. 65(1), pages 23-28.
    7. Gallagher, Paul W. & Wisner, Robert N. & Brubaker, Heather, 2005. "Pricing Relationships in Processors' Input Market Areas: Testing Theories for Corn Prices Near Ethanol Plants," Staff General Research Papers Archive 12305, Iowa State University, Department of Economics.
    8. David Maddison, 2009. "A Spatio-temporal Model of Farmland Values," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(1), pages 171-189.
    9. Shultz, Steven, 2006. "Differences Between Agricultural Land Value Surveys and Market Sales," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers.
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    Citations

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    Cited by:

    1. Liu, Bing & Hudson, Darren & Farmer, Michael, 2015. "The Impact of a Sorghum-Based Ethanol Plant on Local Cotton Acreage: A Spatial Approach," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229799, Southern Agricultural Economics Association.
    2. Chris Shultz & Joshua C. Hall & Michael P. Strager, 2015. "Production of Wind Energy and Agricultural Land Values: Evidence from Pennsylvania," Working Papers 15-11, Department of Economics, West Virginia University.
    3. 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, 2016, Boston, Massachusetts 236178, Agricultural and Applied Economics Association.
    4. Ifft, Jennifer & Wu, Shang & Kuethe, Todd, 2014. "The Impact of Pasture Insurance on Farmland Values," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 43(3), December.
    5. 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.
    6. Zhang, Wendong & Irwin, Elena G. & Nickerson, Cynthia J., 2012. "The Expanding Ethanol Market and Farmland Values: Identifying the Changing Influence of Proximity to Agricultural Delivery Points," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124690, Agricultural and Applied Economics Association.

    More about this item

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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