How soil conservation influences agricultural land prices

Abstract

Conservation practices preserve soil quality and may also increase the value of agricultural land. The economic benefits of conservation practices include increased agricultural yields, decreased risk of production losses from weather events, decreased number of farming operations, simplification of farm management, and decreased production costs. We analyze the links between soil conservation practices and the value of agricultural lands. The soil conservation practices considered in this study include no-tillage, crop rotation, contour farming, and the use of agricultural terraces. We use municipal data on annual crops in the state of Paraná from the 2006 Brazilian Census of Agriculture. Results show that the average value of lands under conventional tillage is between 10 and 22% lower than lands under no-tillage, ceteris paribus. The economic benefits of adopting no-tillage can be maximized when performed in conjunction with other conservation practices, including crop rotation, contour farming, and agricultural terracing. Finally, we discuss the critical effect of soil conservation and conservation agriculture on land prices and how these factors may affect farmers' decision-making.