The Impact of Irrigation on Agricultural Land Values in the United States Southeast and an Analysis of Farmland Prices in South Carolina

Land is a key component of the agriculture industry in the United States. According to the United States Department of Agriculture, farm real estate (land and buildings) accounted for 82.8% of total US farm sector assets in 2022, consequently making land the largest source of wealth in a farmer’s investment portfolio and the primary source of collateral used for farm operating loans. The Southeastern region of the United States has seen rapid farmland appreciation and intense population growth in recent years. This research investigates the rising farmland prices across the Southeast from both a regional and state-level perspective. Chapter Two estimates the impact of irrigation adoption on agricultural land values in the Southeast using a linear fixed effects hedonic price model. Results reveal that the benefits of irrigation adoption are positively capitalized into higher farmland prices in the Southeast. We also find that population growth exerts tremendous upward pressure on farmland prices across the region. Chapter Three analyzes farmland market transactions in South Carolina using a novel data set consisting of land sales records from county tax assessor offices. Results reveal that farmland prices in South Carolina differ substantially across crop types and parcel size. We similarly find that population density is a key driver of farmland prices in South Carolina, with parcels proximate to urban areas exhibiting much higher prices than those in rural areas. Collectively, these studies provide insights into agricultural land valuation in the Southeast and farmland market transactions in a state experiencing rapid population growth.