The Value of Farmland and Its Determinants—The Current State of the Art

Abstract

This article aims to perform a literature review on the topic of farmland valuation, covering the determinants of farmland value and the models that are used to price land. To do so, recent literature on the topic was combined with classical and well-known papers. All the factors considered in these papers to explain farmland prices and/or to model them were retrieved, presented, and compared. Then, the main models proposed in the literature are presented and their suitability and goals are explained. This study can help academics as it gives an overview of the current state of the art, summarizes the main factors proposed by researchers to explain farmland prices, and sheds light on new lines of research. Besides that, it is also relevant for policymakers because farmland valuation and its use have implications on society and on urban planning, which is a hot topic under discussion.

Influential Factors in the Evaluation of Agricultural Lands in the Huambo Province, Angola

“…Variables and factors that impact agricultural land prices, either positively or negatively, are outlined by Refs. [2,8]. These factors encompass spatial location, infrastructure, legal regulations, socioeconomic and political context, climatic properties, production infrastructure, labor availability, land size, and differential rent components.…”

“…According to authors Refs. [3,8], agricultural lands can provide essential attributes for well-being, including food and other fundamental elements that relate to entertainment, beauty, and culture. There is significant variability in defining whether a farm is small or large, as each reality has its own specificity [21].…”

“…According to Ref. [8], it is undeniable that interventions in agricultural lands lead to benefits and amenities. To some extent, in order to achieve such satisfaction, the owner accumulates several years of production to cover and earn a return on their investment.…”

Impact of Comparative Assessment of Soil Quality on Determining the Value of Agricultural Land (Ukraine)

“…Researchers emphasize the importance of accurate assessment of agricultural land for both local governments and landowners and land users (Tretiak et al, 2016;Popov et al, 2022). In addition, land valuation may be inaccurate due to methodological, technical and legal factors (Tavares et al, 2022). The process of improving the assessment of agricultural land should be based on the economic and political situation, because the issue of land pricing is complex and multifaceted, and the development of the land market depends on its solution (Buiak et al, 2019).…”

Towards diverging land prices in agricultural districts? Evidence from Italy before and after the great crisis

“…According to traditional economic theory, farmland values are determined by discounted future rent streams. However, given the breadth and complexity of factors influencing farmland values (for a review, see Tavares et al 2022) and the possibility of converting farmland into alternative uses, traditional economic theory can only value farmland partially. Since the late 1990s, the hedonic price approach has been widely used to value farmland (Aksu and Karaman 2022).…”