Organic cultivation and farmland prices: Does certification matter?

Abstract

This paper investigates price differentials between organically and conventionally farmed arable land. Organic commodities offer higher prices and environmental benefits such as improved soil constitution, where land buyers gauge these benefits against lower yields at higher risk, switching and higher production cost compared to conventional production. Combining land transaction and cover data from EU’s Integrated Administrative Control System between 2005–2019, we test the hypothesis of positive valuation of organic cultivation, also for conventional use after sale. Based on a double robust approach, we find on average no effect but markups for conventional and markdowns for organic use post-sale.