Determination and forecast of agricultural land prices

The aim of this study is to discuss and apply hedonic methodology for the determination and forecast of land prices in specific markets. This is important due to the fact that there is no official or reliable information in Brazil on current prices in land market transactions. This hedonic price methodology uses a multiple regression model which has, as an explanatory variable, the price per hectare and independent variables related to physical attributes (soil, climate and terrain), production (systems of production, location, access), infrastructure of the property and expectations (regional scenario, local investments). Application of the methodology to a Homogeneous Zone of the state of Maranhão, in Brazil, generated a parsimonious model, in which five independent variables were responsible for 70% of the variance in the price of agricultural land.