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The Effect of Eliminating Direct Payments to Farmers on Land Values

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Abstract

This study looks at the effects of the complete elimination of direct government payments to farmers on the U.S. economy in general and the effect on land values in particular. The analytical approach used consists of a computable general equilibrium model composed of 14 producing sectors, 14 consuming sectors, six household categories classified by income, and a government. The results suggest that, with a complete elimination of direct government payments to farmers, there will be a reduction in output by all producing sectors of 0.18% or about $14.5 billion, a decline in output in the agricultural sectors of 4.39% or about $12.0 billion, a fall in the consumption of goods and services by about 0.11% or $4.15 billion, a fall in total utility by 0.47% or $22.0 billion, and a net reduction in expenditures for the government of $13.4 billion. Land values will be adversely affected, falling an average of 14%.

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Authors and Affiliations

  1. Ohio Department on Aging, Columbus, Ohio

    E. Douglas Beach

  2. Department of Economics, Ohio University, Athens, Ohio

    Roy Boyd

  3. Natural Resources and Environment Division, Economic Research Service, U.S. Department of Agriculture, Washington, DC

    Noel D. Uri

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  1. E. Douglas Beach
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  2. Roy Boyd
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  3. Noel D. Uri
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Beach, E.D., Boyd, R. & Uri, N.D. The Effect of Eliminating Direct Payments to Farmers on Land Values. The Journal of Real Estate Finance and Economics 15, 239–260 (1997). https://doi.org/10.1023/A:1007711923094

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