Changing environmental policies impacting farmland values

CHICAGO — Solar farms and changing environmental policies may have an impact on values of farmland in the United States.

“New York has ambitious energy and climate policies that are expected to devote 200,000 acres of New York state farmland to solar development,” said Wendong Zhang, assistant professor of agricultural economics and agribusiness at Cornell University.

“There is some opposition from farmers complaining about taking land away from production,” said Zhang during a presentation at the Midwest Agriculture Conference hosted by the Federal Reserve Bank of Chicago, “Who Owns Midwest Farmland? And Why?”

“So, there is active research looking at whether we can develop new agrivoltaic systems to raise sheep between the rows of solar panels or grow crops.”

Zhang talked about studies that have evaluated the impact of solar infrastructures on residential homes and farmland values.

“For residential homes, they were regarded as visual disadvantages so in general we see residential prices decline if there is a solar farm nearby,” Zhang said.

“Farmland values are a little different. In New York, the general public prefers solar sites are developed on commercial or industrial brownfields as opposed to farmland,” he said.

In North Carolina, there was not a lot of difference between farmland sale prices before or after the solar farm is constructed for nearby parcels, Zhang said.

“Being next to a solar farm doesn’t necessarily give you a premium or decline for farmland values, but if you have a parcel close to a large-scale transmission line so it’s easier to be developed in the future, that increases the development premium,” the assistant professor said.

“In 2015, the governor of New York state announced a policy that allowed easier access by communities for the development of large-scale renewable energy systems,” he said.

“In 2019 to 2020, parcels enjoyed on average a 10% premium after the renewable polices kicked in and currently about 1,000 large-scale solar farms have been constructed in New York state.”

Zhang provided information about how wind turbines impact farmland values.

“In this Kansas data we didn’t find evidence that nearby wind turbines increased land values,” he said. “And being close to the energy infrastructure doesn’t necessarily improve the transaction prices, but if you’re in a high wind potential area, there is a potential that could bring some premium.”

Research that included 12 states in the Midwest focused on the impact of transmission lines on residential homes and farmland values.

“If the transmission line was within 500 meters of a residential home, the housing prices were affected on average at a 5% discount,” Zhang said. “Beyond two kilometers, there was no distinguishable discount.”

For farmland values, the closer the property is to the electricity transmission lines, there is a 10% to 15% premium compared to farmland parcels that are seven to eight miles away, the professor said.

Access to broadband internet connections also impacts farmland prices.

“In general, we see positive evidence that a better internet connection and higher download speeds are reflected in farmland sale prices and to a lesser extent on cash rents, as well,” Zhang said. “All the data that needs to be loaded to your system from your combine benefits from a better access to the broadband.”

A nationwide study of gas pipeline and pipeline accidents showed how they impact residential home prices.

“We generally find if there is an accident nearby related to these pipelines you will see a discount for the housing prices and the more visible these accidents are from news coverage, the higher the discounts,” Zhang said.

Ohio State University researchers completed experimental tests on how pipeline installation impacts crop yields.

“We see corn and soybean yields decline over the pipeline compared to adjacent areas,” Zhang said. “So, the disturbance of the pipeline installation impacted fields and could potentially impact crop yields.”