The Shadow Values of Soil Hydrological Properties in the Production Potential of Climatic Regionalization of the Czech Republic

Abstract

The Czech Republic uses a dual system of agricultural land prices, namely the formal/official price—for tax purposes—and the market price in the case of a standard sale or purchase of farmland. This paper focuses on the construction of an econometric model to quantify the influence of soil hydrological characteristics on the production potential in a given climatic region. It also focuses on the use of this model for the determination of the official price of agricultural land, which is expressed on the basis of the code of the evaluated soil-ecological unit (ESEU) and based on defined soil characteristics. The pricing itself is based on the production potential of the land, which in practice is very important for spatial planning, as it determines the classes of agricultural land protection with regard to the possibility of setting aside agricultural land for non-productive purposes or for drawing subsidies for less favourable areas. In this context, the non-productive functions of agricultural land are also frequently discussed, especially its retention, which plays a very important role in the currently changing climatic conditions. There are a number of studies on soil retention, and numerous approaches to measuring it, but none of them address its impact on production potential and thus on the price of land. For this reason, this paper focuses on defining the influence of the retention of the main soil units (defined for the conditions of the Czech Republic) on production potential. For this definition, SUR models are used, where the endogenous variable is expressed as production potential and the exogenous variables include the basic soil characteristics such as grain size, porosity, hydrological component of the soil, and retention. The obtained outputs show both the high explanatory power of the model and the adequate parametric significance of most variables, which provides sufficient support for the use of the results in practice. In addition, the estimated models across all climatic regions are consistent with substantively logical assumptions about the link between production potential and soil hydrological properties, which secondarily demonstrates their applicability in practice, especially for state administration, but also for local government in the sense of municipalities, cities, and other organizational units.