The influence of urban sprawl on farmland prices in Belgium (refereed paper)
Since over half a century, Europe has been undergoing periurbanization; this phenomenon is similar to suburbanisation or 'urban sprawl' in the U.S. Hence, for each plot of land, there is competition for land use (agriculture, urbanisation). We here study the effect of urban sprawl on the price of farmland in Belgium. Using a set of very traditional urban economics variables, we show that the determinants of residential prices also explain the spatial variation of farmland. Indeed, the prospect of conversion from agriculture to residential land uses are high in Belgium, which is a densely inhabited country characterized by a tight urban network and where, moreover, land zoning is permissive. Therefore, urban sprawl largely dominates residential choice since over 40 years leading to fragmented landscapes where agriculture coexists with housing. We here use the Capozza & Hesley (1989) model that was recently developed by Plantinga & Miller (2001) and CavailhÃ©s & Wavresky (2003). This model aims at analyzing urban growth from a microeconomic point of view, where agricultural land is converted in residential plot. Until conversion, the price of farmland is equal to the capitalization of the agricultural land rent; after conversion it is equal to the capitalization of the residential rent. It basically depends upon the commuting distance and the anticipated date of conversion (other determinants are also discussed: Ricardian land fertility, number of inhabitants of the township, income, border effects leading to discontinuities, etc.) A hedonic log-linear equation is used where spatial autocorrelation is controlled by AnselinsÃ method (1988) and the multicollinearity (if any) by partial least squares (PLS). The same econometric equation is estimated for both developable and agricultural land price. Data were aggregated at the level of the 589 municipalities and made available for an 11 years period (1995-2005). Data are mainly provided by the Belgian National Institute of Statistics (SPF â€¦conomie - Direction GÃ©nÃ©rale Statistiques): for all communes we know the price, surface and the number of transactions per year, for both developable land (but not yet developed) and farmland (meadow and arable land). Distance between the centroid of a commune and the centroid of the closest hub-city is the shortest road distance computed on the real road network (see Vandenbulcke et al., 2007, for more details). Econometric findings show that R2 values are slightly better for developable land (R2 = 0,92) than for farmland (R2 = 0,86), but that the partial R2 value associated to urban influence variables is better for farmland (0,85) than for developable land (0,38)3. The explanation of this paradox can be theoretical (combined effect of distance and anticipated land conversion date), as well as empirical (due to data imperfections: data are aggregated by municipalities). Results also reveal that agricultural prices decrease with distance from job centres and increase with the demographic size of the commune, with population rate of increase, households' income as well as with the contiguity to the coastline. The same variables enter the regression estimated with residential land price. Figure 1 (provisional results) shows the relationship between the slope of land price according to distance to urban centres (CBD) in the 25 urban areas, for farmland as well as developable land. Explaining farmland slope (dependent variable, y-axis) by developable land slope (explanatory variable, x-axis) indeed leads to a high determination coefficient (R2 = 0,62).
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Vincent E. Breneman & Richard F. Nehring, 2006. "Urban Sprawl and Farmland Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 915-929.
- repec:cor:louvrp:-2079 is not listed on IDEAS
- Ian W. Hardie & Tulika A. Narayan & Bruce L. Gardner, 2001. "The Joint Influence of Agricultural and Nonfarm Factors on Real Estate Values: An Application to the Mid-Atlantic Region," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 120-132.
- Alex Anas & Richard Arnott & Kenneth A. Small, 1998.
"Urban Spatial Structure,"
Journal of Economic Literature,
American Economic Association, vol. 36(3), pages 1426-1464, September.
- Anas, Alex & Arnott, Richard & Small, Kenneth A., 1997. "Urban Spatial Structure," University of California Transportation Center, Working Papers qt835049q3, University of California Transportation Center.
- Richard Arnott & Alex Anas & Kenneth Small, 1997. "Urban Spatial Structure," Boston College Working Papers in Economics 388., Boston College Department of Economics.
- Plantinga, Andrew J. & Lubowski, Ruben N. & Stavins, Robert N., 2002. "The effects of potential land development on agricultural land prices," Journal of Urban Economics, Elsevier, vol. 52(3), pages 561-581, November.
- Plantinga, Andrew & Lubowski, Ruben & Stavins, Robert, 2002. "The Effects of Potential Land Development on Agricultural Land Prices," Working Paper Series rwp02-012, Harvard University, John F. Kennedy School of Government.
- Stavins, Robert & Plantinga, Andrew & Lubowski, Ruben, 2002. "The Effects of Potential Land Development on Agricultural Land Prices," Discussion Papers dp-02-11-, Resources For the Future.
- Colwell, Peter F. & Munneke, Henry J., 1997. "The Structure of Urban Land Prices," Journal of Urban Economics, Elsevier, vol. 41(3), pages 321-336, May.
- Claire Dujardin & Isabelle Thomas & Henry Tulkens, 2007. "Quelles frontières pour Bruxelles ? Une mise à jour," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(2), pages 155-176.
- DUJARDIN, Claire & THOMAS, Isabelle & TULKENS, Henry, "undated". "Quelles frontières pour Bruxelles? Une mise à jour," CORE Discussion Papers RP 1972, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Luc Anselin & Nancy Lozano-Gracia, 2008. "Errors in variables and spatial effects in hedonic house price models of ambient air quality," Empirical Economics, Springer, vol. 34(1), pages 5-34, February.
- Capozza, Dennis & Li, Yuming, 1994. "The Intensity and Timing of Investment: The Case of Land," American Economic Review, American Economic Association, vol. 84(4), pages 889-904, September.
- Fujita,Masahisa, 1991. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521396455, August.
- Fujita,Masahisa, 1989. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521346627, October.
- Livanis, Grigorios T. & Moss, Charles B. & Breneman, Vincent E. & Nehring, Richard F., 2005. "Urban Sprawl and Farmland Prices," Working Papers 15657, University of Florida, International Agricultural Trade and Policy Center.
- Florence Goffette-Nagot & Isabelle Reginster & Isabelle Thomas, 2011. "Spatial Analysis of Residential Land Prices in Belgium: Accessibility, Linguistic Border, and Environmental Amenities," Regional Studies, Taylor & Francis Journals, vol. 45(9), pages 1253-1268, February.
- GOFETTE-NAGOT, Florence & REGINSTER, Isabelle & THOMAS, Isabelle, "undated". "Spatial analysis of residential land prices in Belgium: accessibility, linguistic border, and environmental amenities," CORE Discussion Papers RP 2448, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Florence Goffette-Nagot & Isabelle Reginster & Isabelle Thomas, 2011. "A spatial analysis of residential land prices in Belgium : accessibility, linguistic border and environmental amenities," Post-Print halshs-00464385, HAL.
- Florence Goffette-Nagot & Isabelle Reginster & Isabelle Thomas, 2009. "A spatial analysis of residential land prices in Belgium: accessibility, linguistic border and environmental amenities," Working Papers 0929, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
- Follain, James R. & Jimenez, Emmanuel, 1985. "Estimating the demand for housing characteristics: A survey and critique," Regional Science and Urban Economics, Elsevier, vol. 15(1), pages 77-107, February.
- Capozza, Dennis R. & Helsley, Robert W., 1990. "The stochastic city," Journal of Urban Economics, Elsevier, vol. 28(2), pages 187-203, September.
- Brown, James N & Rosen, Harvey S, 1982. "On the Estimation of Structural Hedonic Price Models," Econometrica, Econometric Society, vol. 50(3), pages 765-768, May.
- James N. Brown & Harvey S. Rosen, 1982. "On the Estimation of Structural Hedonic Price Models," NBER Technical Working Papers 0018, National Bureau of Economic Research, Inc.
- Brueckner, Jan K. & Thisse, Jacques-Francois & Zenou, Yves, 1999. "Why is central Paris rich and downtown Detroit poor?: An amenity-based theory," European Economic Review, Elsevier, vol. 43(1), pages 91-107, January.
- BRUECKNER, Jan K. & THISSE, Jacques-François & ZENOU, Yves, "undated". "Why is central Paris rich and downtown Detroit poor? An amenity-based theory," CORE Discussion Papers RP 1370, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Brueckner, J.K. & Thisse, J.-F. & Zenou, Y., 1996. "Why is central Paris rich and downtown Detroit poor ? An amenity-based theory," CORE Discussion Papers 1996065, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Jean-Marie Halleux, 2009. "The spatial structuring of interurban housing markets: application to building sites prepared for self-provided housing," Environment and Planning A, Pion Ltd, London, vol. 41(9), pages 2143-2161, September.
- Isabelle Reginster & Florence Goffette-Nagot, 2005. "Urban environmental quality in two Belgian cities, evaluated on the basis of residential choices and GIS data," Environment and Planning A, Pion Ltd, London, vol. 37(6), pages 1067-1090, June.
- Tamer Isgin & D. Lynn Forster, 2006. "A Hedonic Price Analysis of Farmland Option Premiums Under Urban Influences," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 54(3), pages 327-340, 09.
- Claire Dujardin & Harris Selod & Isabelle Thomas, 2004. "Le chômage dans l'agglomération bruxelloise : une explication par la structure urbaine," Revue d'économie régionale et urbaine, Armand Colin, vol. 0(1), pages 3-27.
- DUJARDIN, Claire & SELOD, Harris & THOMAS, Isabelle, "undated". "Le chômage dans l'agglomération bruxelloise: une explication par la structure urbaine," CORE Discussion Papers RP 1821, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- 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.
- Cheshire, Paul & Sheppard, Stephen, 1998. "Estimating the Demand for Housing, Land, and Neighbourhood Characteristics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(3), pages 357-382, August.
- repec:cor:louvrp:-1997 is not listed on IDEAS
- repec:cor:louvrp:-2143 is not listed on IDEAS
- Jean CavailhËs & Pierre Wavresky, 2003. "Urban influences on periurban farmland prices," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 30(3), pages 333-357, September.
- Cunningham, Christopher R., 2006. "House price uncertainty, timing of development, and vacant land prices: Evidence for real options in Seattle," Journal of Urban Economics, Elsevier, vol. 59(1), pages 1-31, January.
- Capozza, Dennis R. & Helsley, Robert W., 1989. "The fundamentals of land prices and urban growth," Journal of Urban Economics, Elsevier, vol. 26(3), pages 295-306, November. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa10p1628. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.