The capitalisation of agricultural subsidies into farmland prices
A meta-analysis of empirical literature
This study systematically reviews the empirical literature of the past three decades on the capitalization of agricultural subsidies into land prices. We undertake a comprehensive meta-analysis and conduct a qualitative assessment of main econometric and data issues and their potential solutions. In total, we reviewed 26 papers published between 1997 and 2020 that contain 841 estimates of capitalization rates for rental prices and land values. After applying the outlier correction procedure, the final sample consisted of 719 estimates (433 for rental prices and 286 for land values). The average estimated capitalization rate across studies is 33% for rents and 12% for land values. The results from meta-analyses show that several drivers explain the variation of subsidy capitalization estimates across studies: (i) the type of subsidies and their implementation details; (ii) the estimation approach, (iii) the type of data used (e.g., micro data versus aggregated data, FADN, ARMS) and geographical coverage of the studies, and (iv) the type of publication outlet (working paper versus a journal publication) and the publication period. The results also suggest systematic differences in the drivers affecting the estimated capitalization rates for rental prices and land values across studies, mainly related to the econometric approach and the type of data used.
BALDONI Edoardo;
KANCS D'Artis;
CIAIAN Pavel;
DRABIK Dusan;
2021-12-13
Publications Office of the European Union
JRC126423
978-92-76-44468-8 (online),
1831-9424 (online),
EUR 30905 EN,
OP KJ-NA-30905-EN-N (online),
https://publications.jrc.ec.europa.eu/repository/handle/JRC126423,
10.2760/028215 (online),
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