Assessing the Impact of Urban Centres on Farmland Values and Farmland Rental Rates in Southwestern Ontario: a Hedonic Approach

More and more farmland is being rented. In Ontario, from 1976 to 2011, the farmland area owned decreased by 25 percent while the farmland area rented or leased increased by 25 percent. However, research to date has focused primarily on factors affecting farmland values. One body of research shows that farmland values decrease moving away from urban centres due to the decreasing development potential of the land. Very little research has assessed the spatial relationship between farmland rental rates and urban centres. This research empirically assesses the impact of urban centres on farmland values and farmland rental rates in Southwestern Ontario. I use a hedonic regression approach to motivate important factors affecting these products. Among these is a novel farm variable, tile drainage, constructed for Southwestern Ontario using Geographical Information Systems. I find that farmland values and farmland rental rates increase with proximity to urban centres.