Factors Causing Farmland Price-Value Distortion and Their Implications for Peri-Urban Growth Management

Abstract

Taiwan’s Agricultural Development Act (ADA) of 2000 relaxed farmland ownership criteria and allowed non-farmers to own farms. Although this opened up the market and induced a growth in farmland trading, relaxing these criteria without proper monitoring resulted in rapid development of farmhouses that fragmented farmlands, adversely affecting agricultural production and the quality of peri-urban environments, and increased management difficulties. Relaxing farmland ownership criteria also provided opportunities for speculation, which pushed up farmland prices, causing farmland price to deviate from its production value. We used a price:value ratio as an index of price-value distortion to explore farmland price-value distortion spatially using a geographical information system (GIS). Yilan County was used as a case study since its agricultural lands suffer high development pressure due to ready accessibility from the Taipei metropolitan area. Ordinary least square and quantile regression were used to identify factors driving distortion in Yilan County. Finally, we discuss the distortion and key factors for specific sites in Yilan to assess the urban sprawl and propose a preliminary course of action for peri-urban growth management. Our findings suggest that residential activities stimulate farmland price-value distortion but do not enhance farmland value. Designation of a land parcel as agricultural within an urban area allows for speculation and increases distortion. The land parcel’s association with infrastructure such as road and irrigation systems, and the price of agricultural products, are significantly correlated with distortion. Most of these identified factors increased farmland price because of the potential for non-agricultural land-use. We propose that to resolve farmland price-value distortion in Yilan, multi-functional values, in addition to agriculture, must be envisioned.