A Mexican Ricardian analysis: land rental prices or net revenues?

This paper examines two specifications of the Ricardian Hedonic Model (RHM) in order to identify divergences between implicit values of land attributes. The main goal of this research is to compare these values obtained from ex-ante and ex-post indicators of land productivity. To the best of our knowledge, there is no similar work on the existing literature. Our argument is that these values differ due to the former depends upon farmers' expectations formed at the beginning of the crop year while actual prices and annual weather determine the later. We combine information on 2,524 farms in Mexico with climate normals, soil types, and a set of controls, using Geographic Information System (GIS) tools. The main findings indicate that these values globally differ. Moreover, most of the significant coefficients are individually different across both equations. According to the rental price model, the annual implicit value of an extra degree Celsius is $130 Mexican pesos (2.03% of the average rental price) and $154 (2.38%) of an additional mm. of rainfall. However, exploring the results from the net revenues specification, an extra degree C modifies the net revenue by $-518 (-8.89%) and $351 (6.03%) an additional mm. of rainfall.


Issue Date:
2016-04
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/236362
Total Pages:
23
JEL Codes:
Q510




 Record created 2017-04-01, last modified 2017-08-29

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