FOR 2569:  Agricultural Land Markets - Efficiency and Regulation

• Subject Area: Agriculture, Forestry and Veterinary Medicine
• Term: since 2017
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 317374551

Growing food prices and high liquidity in international financial markets have boosted the demand for land. As a result, agricultural land prices have steadily increased over the past decade in many parts of the world. This development has fueled public debates on whether land markets as an allocation device work efficiently and whether current legislation is in line with political objectives and societal needs. Despite existing research, the current state of knowledge on land-related topics remains fragmented and does not provide clear answers to this debate. The proposed research unit FORLand pursues two overall objectives. First, we aim to evaluate the outcome of land markets and verify whether they fulfill their societal functions or whether adapted policy interventions are needed. To this end, we take a comprehensive view of recent developments on agricultural land markets and their drivers. Our second objective is to evaluate existing and proposed policy instruments to inform discussion on the design of optimal regulation. This involves an empirical (ex-post) evaluation of existing regulations in conjunction with the development of theoretical (microeconomic) models. We focus on developed economies (including mature and transition countries) since in many developing and emerging countries land markets have not been completely established and face different challenges. The complexity of factors that determine the outcome of land markets calls for a multidisciplinary approach including (agricultural) economics, sociology, ethics, geography and statistics. Apart from direct outcomes such as prices and their spatial and regional patterns, we also consider indirect outcomes such as land use because they affect important societal concerns. To carve out the impact that land market regulation has on land market outcomes we have to control for external factors, particularly urban sprawl and the developments on financial markets. Moreover, the interplay with other policy instruments, particularly agricultural, energy and environmental policies, has to be taken into account. Complementary to the economic perspective, we discuss equality issues of land ownership from a sociological and ethical perspective and consider environmental outcomes of land market dynamics. The outcome of this project will be particularly beneficial for transition countries that currently face the task of establishing agricultural land markets.

• DFG Programme: Research Units
• International Connection: Austria

Projects

• Coordination Funds (Applicant Odening, Martin )
• Efficiency of agricultural land markets – The role of liquidity and competition (Applicants Odening, Martin ;  Ritter, Matthias )
• Empirical and experimental analysis of land rental rates and farmland prices (Applicant Mußhoff, Oliver )
• Ethical issues in agricultural land markets (Applicant Valentinov, Vladislav )
• Impacts of strategic behavior on land market dynamics and regulation effects (Applicants Appel, Franziska ;  Balmann, Alfons ;  Graubner, Marten )
• Investigating Market Scepticism Regarding Agricultural Land Markets (Applicant Balmann, Alfons )
• Is regulation of agricultural land markets warranted? - A microstructural investigation (Applicants Hüttel, Silke ;  Seifert, Stefan ;  Werwatz, Axel )
• Quantifying the concentration of land ownership and trade-offs in agriculture (Applicants Lakes, Tobia ;  Müller, Daniel )
• Understanding farmers land use behavior under different institutional settings (Applicant Salhofer, Klaus )

• Spokesperson: Professor Dr. Martin Odening