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

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

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.

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Article provided by University of Wisconsin Press in its journal Land Economics.

Volume (Year): 87 (2011)
Issue (Month): 2 ()
Pages: 223-232

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Handle: RePEc:uwp:landec:v:87:y:2011:ii:1:p:223-232
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  1. 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 12305, Iowa State University, Department of Economics.
  2. Shultz, Steven, 2006. "Differences Between Agricultural Land Value Surveys and Market Sales," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers.
  3. David Maddison, 2009. "A Spatio-temporal Model of Farmland Values," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(1), pages 171-189.
  4. 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, 06.
  5. 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).
  6. 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.
  7. Haixiao Huang & Gay Y. Miller & Bruce J. Sherrick & Miguel I. G�mez, 2006. "Factors Influencing Illinois Farmland Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 458-470.
  8. 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.
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