The Informational Content of Land Price and its Relevance for Environmental Issues

Abstract

As the support of human and natural activities, land is a resource of major interest both for environmental and socioeconomic issues. Research aimed at improving land management and conservation has long recognized the need to integrate both issues, but a consensual and consistent framework is still lacking. We argue that land price could be one of the possible links here, as a consistent proxy for some of the multiple dimensions of values that people put on land resources. We present the elementary economic theory about land price, namely the present value model, and we review the abundant empirical literature using this classical theory to study the informational content of land price. We then propose a typology of this literature, highlighting its strengths and weaknesses, in order to guide future environmental research which aim at drawing out some socioeconomically oriented policy recommendations.

What drives competition on the farmland market? A case study in Brittany (France)

“…Most papers aiming at studying the functioning of agricultural land markets are primarily concerned with price formation and the drivers which may influence it. Ay and Latruffe (2016), Latruffe et al (2013), Letort and Temesgen (2014) provide such recent examples for France and even for the particular regional French context we are interested in, namely Brittany. The references therein nonetheless provide an extensive list of works in other national contexts and time periods.…”

Financial development, growth and productivity

“…Credit is expected to become even more important due to the emergence of new environmentally related risks (e.g. climate risks), which will affect land values, output and productivity (Ay and Latruffe, 2017). According to World Bank (WB) data, despite its importance, the total credit to agriculture disbursed by commercial banks has been below 3% in 2017, which is lower than the contribution of the agricultural sector to the global Gross Domestic Product (GDP).…”