THE FARMLAND VALUATION REVISITED
Empirical research is scarce concerning the dynamics of farmland markets which inspire the decision to sell farmlands. This paper explores the real option to postpone the sale of land in farmland valuation. In this article, a real options approach is used to analyze farmland prices behavior using...
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International Journal of Food and Agricultural Economics
2016-04-01
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| Series: | International Journal of Food and Agricultural Economics |
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| Online Access: | http://www.foodandagriculturejournal.com/vol4.no2.pp11.pdf |
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doaj-3b8ec48b7c4e448cbd4a5177cccd465c2020-11-24T23:35:30ZengInternational Journal of Food and Agricultural EconomicsInternational Journal of Food and Agricultural Economics2147-89882147-89882016-04-01421124THE FARMLAND VALUATION REVISITEDXin Li0Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, USAEmpirical research is scarce concerning the dynamics of farmland markets which inspire the decision to sell farmlands. This paper explores the real option to postpone the sale of land in farmland valuation. In this article, a real options approach is used to analyze farmland prices behavior using historical cash flow and land price information for Illinois. In general, rising farmland values are primarily dependent on agricultural commodity prices and interest rates. Results suggest that uncertainty about future growth and capital gains is a significant component of farmland market value. Furthermore, this research examines several shift factors of the option value of the state’s farmland by taking into account of uncertainty to improve the analysis of farmland market values. http://www.foodandagriculturejournal.com/vol4.no2.pp11.pdfCash rentfarmland valuepresent valuereal optionsuncertainty |
| collection |
DOAJ |
| language |
English |
| format |
Article |
| sources |
DOAJ |
| author |
Xin Li |
| spellingShingle |
Xin Li THE FARMLAND VALUATION REVISITED International Journal of Food and Agricultural Economics Cash rent farmland value present value real options uncertainty |
| author_facet |
Xin Li |
| author_sort |
Xin Li |
| title |
THE FARMLAND VALUATION REVISITED |
| title_short |
THE FARMLAND VALUATION REVISITED |
| title_full |
THE FARMLAND VALUATION REVISITED |
| title_fullStr |
THE FARMLAND VALUATION REVISITED |
| title_full_unstemmed |
THE FARMLAND VALUATION REVISITED |
| title_sort |
farmland valuation revisited |
| publisher |
International Journal of Food and Agricultural Economics |
| series |
International Journal of Food and Agricultural Economics |
| issn |
2147-8988 2147-8988 |
| publishDate |
2016-04-01 |
| description |
Empirical research is scarce concerning the dynamics of farmland markets which inspire
the decision to sell farmlands. This paper explores the real option to postpone the sale of
land in farmland valuation. In this article, a real options approach is used to analyze
farmland prices behavior using historical cash flow and land price information for Illinois.
In general, rising farmland values are primarily dependent on agricultural commodity prices
and interest rates. Results suggest that uncertainty about future growth and capital gains is a
significant component of farmland market value. Furthermore, this research examines
several shift factors of the option value of the state’s farmland by taking into account of
uncertainty to improve the analysis of farmland market values.
|
| topic |
Cash rent farmland value present value real options uncertainty |
| url |
http://www.foodandagriculturejournal.com/vol4.no2.pp11.pdf |
| work_keys_str_mv |
AT xinli thefarmlandvaluationrevisited AT xinli farmlandvaluationrevisited |
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