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Humboldt-Universität zu Berlin - Faculty of Life Sciences - Department of Agricultural Economics

FORLAND

funded 2017-2023 by DFG as research unit FOR 2569:

Agricultural Land Markets - Efficiency and Regulation

The research unit FORLand is motivated by the observation of a pronounced price surge in agricultural land markets in many parts of the world in the aftermath of the financial crisis. It has been conjectured that the high liquidity in financial markets increased the demand for land by financial investors. At the same time, the share of farmland owned by farmers is constantly decreasing in most developed economies. This raises concerns by policy makers and other stakeholders worrying about an “unsound” or “unfair” concentration of land property rights and “unhealthy” farming structures. These developments have fueled public debates on whether land markets as an allocation device work efficiently and whether current legislation is in line with political objectives and societal needs.

Against this backdrop, FORLand takes a fresh look at agricultural land markets from different angles using refined and innovative theoretical models and simulation models, as well as innovative econometric methods in conjunction with detailed and disaggregated data. FORLand pursues two overall objectives.

First, we aim to evaluate a broad set of outcomes of land markets and verify whether they fulfill their societal functions. To this end, we take a comprehensive view of recent developments in agricultural land markets and their drivers. Apart from direct market outcomes, such as prices and their spatial and regional patterns, we consider other outcomes, such as changes in land use, farming structure and environmental indicators, because they affect important societal concerns and expectations.

Our second objective is to evaluate existing and proposed policy instruments to inform discussion on the design of optimal regulation. A necessary condition for land market regulations, which go beyond a general institutional framework, is a kind of “market failure”. The reasoning is that this failure could result in: the non-attainment of societal goals, such as an inefficient allocation of land and inefficient agrarian structure, foster the emergence and exercise of market power, market intransparency and high and/or asymmetrically distributed and informational transaction costs, and lead to an unequal distribution of wealth, ownership and/or negative (or positive) externalities.

The aim of the coordination project is to: foster an environment for knowledge generation; ensure FAIR research data handling; ease transfer of knowledge, methods and results to stakeholders; support a family-friendly working environment; promote young researchers in their career; and support activities fostering diversity and gender balance. We will facilitate cooperation among subprojects through holding regular meetings, supporting guest stays, and encouraging young researchers to use specific offers for exchange and development. We will provide the infrastructure for sustainable data documentation, storage, and transfer of jointly used data within the group as well as to external researchers.