Summary
Recent empirical studies have found that traditional present value models do not adequately represent the process that underlies changes in farmland market prices. We briefly review the existing economic literature on land pricing and then develop a more specific analysis of land prices under uncertainty using a real option approach to valuation. Using the model, we illustrate the effects on farmland prices of factors that represent the major sources of investor uncertainty.
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Pederson, G.D., Khitarishvili, T. (2002). Analysis of Land Prices under Uncertainty: A Real Option Valuation Approach. In: Canavari, M., Caggiati, P., Easter, K.W. (eds) Economic Studies on Food, Agriculture, and the Environment. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-0609-6_9
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DOI: https://doi.org/10.1007/978-1-4615-0609-6_9
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