Lost ground, lost value: Investigating the relationship between soil erosion and agricultural land value

Abstract This study examines the impact of soil erosion on agricultural land values in the United States (US) Midwest. Based on a novel county‐level panel data set with information on soil erosion levels and agricultural land values covering five census years (1997, 2002, 2007, 2012, and 2017), we separately investigate the direct effect of two types of soil erosion—water and wind erosion—on county‐level average agricultural land values. Linear panel fixed effects econometric models and a number of robustness checks are used to achieve the study objective. We find that increasing soil erosion levels have a statistically significant negative impact on agricultural land values at the county level. Our findings confirm that damages to the soil from water or wind erosion are capitalized into lower farmland values. The study provides new insights in terms of further understanding the economic damages due to soil erosion and the likely benefits from soil erosion control.