Urban Sprawl and Farmland Prices

This article develops a theoretical model of farmland valuation that explicitly accounts for three effects of urban sprawl: conversion of farmland to urban uses, effect on agricultural returns, and speculative effect as represented by the probability of farmland conversion. This model is estimated using county level data in the continental United States. Evidence is found for all three effects of urban sprawl on farmland values. Counties more accessible to major urban centers have higher net agricultural returns. Subsidiary evidence supports that the latter effect may be attributed to survival of (or conversion to) high-valued agriculture around urban centers