Agricultural Land Markets – Efficiency and Regulation

The research unit FORLand is motivated by the observation of a
pronounced price surge in agricultural land markets in many parts of
the world in the aftermath of the financial crisis. It has been
conjectured that the high liquidity in financial markets increased the
demand for land by financial investors. At the same time, the share of
farmland owned by farmers is constantly decreasing in most
developed economies. This raises concerns by policy makers and
other stakeholders worrying about an “unsound” or “unfair”
concentration of land property rights and “unhealthy” farming
structures. These developments have 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. Against this backdrop, FORLand takes a fresh look at
agricultural land markets from different angles using refined and
innovative theoretical models and simulation models, as well as
innovative econometric methods in conjunction with detailed and
disaggregated data. FORLand pursues two overall objectives. First,
we aim to evaluate a broad set of outcomes of land markets and
verify whether they fulfill their societal functions. To this end, we take
a comprehensive view of recent developments in agricultural land
markets and their drivers. Apart from direct market outcomes, such as
prices and their spatial and regional patterns, we consider other
outcomes, such as changes in land use, farming structure and
environmental indicators, because they affect important societal
concerns and expectations. Our second objective is to evaluate
existing and proposed policy instruments to inform discussion on the
design of optimal regulation. A necessary condition for land market
regulations, which go beyond a general institutional framework, is a
kind of “market failure”. The reasoning is that this failure could result
in: the non-attainment of societal goals, such as an inefficient
allocation of land and inefficient agrarian structure, foster the
emergence and exercise of market power, market intransparency and
high and/or asymmetrically distributed and informational transaction
costs, and lead to an unequal distribution of wealth, ownership and/or
negative (or positive) externalities. The aim of the coordination project
is to: foster an environment for knowledge generation; ensure FAIR
research data handling; ease transfer of knowledge, methods and
results to stakeholders; support a family-friendly working environment;
promote young researchers in their career; and support activities
fostering diversity and gender balance. We will facilitate cooperation
among subprojects through holding regular meetings, supporting
guest stays, and encouraging young researchers to use specific offers
for exchange and development. We will provide the infrastructure for
sustainable data documentation, storage, and transfer of jointly used
data within the group as well as to external researchers.

Principal Investigators
Odening, Martin Prof. Dr. agr. habil. (Details) (Agricultural Farm Management)

Financer
DFG: Forschergruppen

Duration of Project
Start date: 08/2020
End date: 07/2023

Research Areas
Agricultural Economics and Sociology, Agriculture, Forestry and Veterinary Medicine, Life Sciences

Last updated on 2020-26-08 at 15:10