17 Jun 2013

The Empirical Content of the Present Value Model: A survey of the instrumental uses of farmland prices

Jean-Sauveur Ay / Laure Latruffe

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After reviewing the Present Value Model (PVM), in its basic form and with its major extensions, the authors carried out a literature review on the instrumental uses of farm land prices; namely what land prices may reveal in the framework of the PVM. Urban influence, non-market goods and climate change are topics where the PVM used with applied data may reveal farmers’ or landowners’ beliefs or subjective values, which are discussed in this paper. There is also extensive discussion of the topic of public regulations, and how they may affect land price directly, or through its present value.

Laure Latruffe is a Researcher at INRA (French National Institute for Agricultural Research). Jean-Sauveur Ay is a post doctoral researcher in CNRS (French National Centre for Scientific Research).