Humboldt-Universität zu Berlin - Department of Agricultural Economics


funded 2017-2020 by DFG as research unit FOR 2569:

Agricultural Land Markets - Efficiency and Regulation

Growing food prices and high liquidity in international financial markets have boosted the demand for land. As a result, agricultural land prices have steadily increased over the past decade in many parts of the world. This development has 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. Despite existing research, the current state of knowledge on land-related topics remains fragmented and does not provide clear answers to this debate. The research unit FORLand pursues two overall objectives.

First, we aim to evaluate the outcome of land markets and verify whether they fulfill their societal functions or whether adapted policy interventions are needed. To this end, we take a comprehensive view of recent developments on agricultural land markets and their drivers.

Our second objective is to evaluate existing and proposed policy instruments to inform discussion on the design of optimal regulation. We focus on developed economies (including mature and transition countries) since in many developing and emerging countries land markets have not been completely stablished and face different challenges. The complexity of factors that determine the outcome of land markets calls for a multidisciplinary approach including (agricultural) economics, sociology, ethics, geography and statistics. Apart from direct outcomes such as prices and their spatial and regional patterns, we also consider indirect outcomes such as land use because they affect important societal concerns. To carve out the impact that land market regulation has on land market outcomes we have to control for external factors, particularly urban sprawl and the developments on financial markets. Moreover, the interplay with other policy instruments, particularly agricultural, energy and environmental policies, has to be taken into account. We aim to provide an integrated approach for scientific policy support for the design of future land market regulations. The outcome of this project will be particularly beneficial for transition countries that currently face the task of establishing agricultural land markets.

To meet these objectives an interim goal will be to determine the actual need for stricter or different land market regulations. Apart from empirical measurement, this task requires the adoption of traditional market efficiency concepts to land markets. Complementary to the economic perspective, we discuss equality issues of land ownership from a sociological and ethical perspective and consider environmental outcomes of land market dynamics.

We will simultaneously examine how specific regulations affect the outcome of land markets. This involves an empirical (ex-post) evaluation of existing regulations in conjunction with the development of theoretical (microeconomic) models. Together, these building blocks will enhance the understanding of agricultural land markets, inform the debate, and eventually allow a critical reflection of currently discussed changes to land market regulations taking place across many EU countries.

The expected results of the research unit FORLand are:

  • A spatially explicit empirical assessment of the economic, environmental and distributional effects of agricultural land markets.
  • Empirical models that quantify the impact of market micro-structures on land market outcomes.
  • Theoretical and empirical models to investigate the impact of selected land market regulations and agri-environmental policies on land market outcomes, as well as land quality issues upon which discussion about further regulation could be based.
  • Agent-based and spatial simulation models that provide an ex-ante assessment of the impact of existing and proposed land market regulations on regional structural change and spatial competition for land.
  • Revealing the actual and potential deviations of land market outcomes from ethical norms and principles.
  • Recommendations for agricultural land market regulations in developed and transition countries.