Land prices with urban sprawl: a model for Spain

Esther Decimavilla Herrero, Carlos San Juan Mesonada y Stefan Sperlic

ABSTRACT The paper describes the agricultural land price to identify the explanatory variables of the recent cycle in Spain. The key variables in our panel data model are location and expected farm rents as fundamentals and the housing prices and increases in the irrigated area as non fundamentals dependant variables. The demographic growth is also a relevant explanatory variable in the regions. The price cycle is also related with the specialization path of the regions and the impact of the integration in the CAP.

The novelty of the paper relay on use of panel data models to identify fundamental factors related with agricultural productivity (expected agricultural rents) and location and no fundamental factors or speculative like (housing price, the irrigate area and the population) using regional data by type of land. The fundamental and non fundamental dependant variables are identify and the results are related with the regional and county specialization.

Key words: Land prices, land competing, urban pressure, panel data, agricultural productivity, irrigated land, regional specialization, housing prices, land use patterns. JEL: Q15, Q18, R14, R31, R52