Distance to Biorefinery Plants and Its Influence on Agricultural Land Value: Evidence from the United States Midwest Region

Abstract

This paper examines the influence of distance to biorefinery plants on agricultural land value. The research utilizes micro-level data on characteristics of parcels and the locations of ethanol facilities in Central Nebraska, USA. I employ a theoretical model and an empirical hedonic approach to determine the effect of proximity. To address potential endogeneity, the econometric model adopts an instrumental variable. Estimates from the model provide evidence that land values significantly decrease as the distance from a parcel to a biorefinery plant increases. The results also reveal a non-linearity pattern in the model, with land prices falling at a decreasing rate with distance from ethanol plants.