BUTLER/CUNNINGHAM

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Level 2

AL Ag Facts:

Land Values

Selection of Similar Pages

Please see the sections on Land Values and Land Taxes for US Agricultural Facts (from Home Page on drop-down menu above, go to US Ag Facts). Some of that material is repeated here. Alabama land values and land taxes have to be put in the context of national figures, the the sections on this page are largely similar to the US page. Summary data on land values and land taxes is conveniently presented in a series of maps.

The first map referenced in the cluster at left shows the average value of farm real estage in 1999. It would be easy, but perhaps misleading, to say that Alabama has a reasonably high land value. Land value in Alabama is above what we would expect given productivity and yields on land. Land value in Alabama is not directly determined only by the utility of land for farm enterprise. Probably land value in Alabama is influenced by the potential for development, particulary for retirement, recreation, development, and tourism. Speculation on this kind of use helps keep up land prices, as does the role of government payments (see Ryan paper below). Notice the price of land in Florida. The price of land in Alabama is elevated for similar non-agricultural reasons.

Unusually low land taxes allow land to be held even when it is not currentl productive. See the page on land taxes under AL Ag Facts, from the drop-down menu of similar pages above.

The second map shows the percentage change in farm land value in two periods, from 1987-1999 and from 1998-1999.

The third map shows the elasticities of land value, especially as government payments affect them. Elasticities indicate how rapidly land values are likely to change (or, in contrast, how stable they might be) in response to standard changes in the markets for land or other commodities.

The fourth map shows the net cash return per acre by county. This map is difficult to read but careful attention shows how the cash return might, or might not, underly the land values of other maps. Where cash return does not underly land values, other factors are at work such as proximity to suburban markets or speculation.

The fifth button is to a paper by James T. Ryan of the Economic Research Service (ERS) of the USDA, entitled "Direct Government Payments and Land Values in the South". The title pretty much explains the content. His arguments are clear and fairly convincing as to the role of government payments in keeping up land values.

The sixth button is to 10 slides by Dr. Walter Prevatt of Auburn University, taken from the 2003 BC Conference. It shows clearly that land value is not determined primarily by agricultural productivity but instead is determined by nearby population. The force of nearby population reflects the use of the land for development and recreation, and the buying of land for speculation.