Resource information
The proportions of land values generated by farm program payments and farm returns areexamined using an extended income capitalization model. The extended income capitalizationmodel addresses the identification issue introduced by the counter-cyclical nature of farmprogram payments and farm returns. Procedures are presented that allow the estimation ofagriculture land value shares without requiring explicit knowledge or assumptions with respect tothe net land rental shares of farm returns or farm program payments. Results from the panelrecursive or triangular-structure simultaneous equation model applied to 48 states in the U.S. forthe period 1938 to 2006 indicate on average 41-45.6 percent and 54.4-59 percent of theagricultural land values can be identified with farm program payments and farm returnsrespectively. Spatially, at the resource regional level the contribution of farm program paymentswas as low as 16.8 percent in Eastern Upland region compared to a high of 51 percent in theSouthern Plains region.
