The effects of use values, amenities and payments for public goods on farmland prices: Evidence from Poland

Abstract

The article contributes to the debate on how land prices are affected by production values, by farming subsidies and by environmental amenities. The authors carried out a comprehensive review of the literature on the actual determinants of land value and made an attempt to classify different approaches to this matter. Then they performed an empirical case study of the drivers of agricultural land values in a leading agricultural region of Poland. The aim of the study is to establish how the use values of land, amenities and policy payments contribute to land values in the Single Area Payment Scheme (SAPS), which operates in Poland. The study is based on a sample of 653 transactions during the years 2010–2013. A hierarchical regression (ML-IGLS method) was used, where the unobserved heterogeneity is attributed to the location-specific factors at different levels of analysis. Results indicate that the policy payments for public goods decapitalise the value of land, whereas the environmental amenities have a relatively strong influence on farmland prices.