A comparison of farmland value determinants in Chile between 1978-1998 and 1999-2008
Research on the determinants that influence the price of farmland has found renewed interest in the past decade because agricultural land values are an important source of information for tracing the distribution of benefits generated by agricultural growth. This study's objective is to identify the determinants of the value of agricultural land in Chile for the periods 1978-1998 and 1999-2008 to analyze the evolution of the factors that determined the price of agricultural land between these two periods. The explanatory power of the estimated hedonic land price model is significantly greater for the period 1978-1998 (R²= 67%). The lower explanatory power of the model for the period 1999-2008 (R²= 29%) indicates that factors not accounted for in the model have increased its importance during the past decade. Thus, a different set of factors determines farmland value for each time period. Further research is required to identify the determining factors of farmland value during the last decade. Some variables maintained their relative importance during both time periods. Such is the case of the importance of the distance between the farm and Santiago, which ranked second in both periods, and total farm surface, which ranked fifth. All other variables present changes in their relative importance. The price trend increased from the third to the first rank in the last decade. The price of the most important agricultural product increased 5 positions and was ranked third during the period 1999-2008. The distance of the farm to the regional capital increases from its previous position in 1978-1998 to the fourth position during the last decade. Other factors that increased their importance are the interaction between the distance to Santiago with the time trend and the presence of construction. The variables that reduce their relative importance are the farmland aptitude variables.