"A premium for organic farmland"

Abstract : The European ”Green Deal” set a target of 25% organically farmed land by 2030 (only 8.5% by 2022). To achieve this objective, we are looking for other sources of income generated by the conversion to organic farming. In this paper we test the existence of a ”premium” for organic farmland. This premium would be justified as payment for the provision of more ecological services. In this study, we compare the sales prices of 569,162 farmlands sold between 2015 and 2021 in France (44,302 of which are organic). The hedonic price method, which controls for Ricardian and residential rent, shows that organic land sells for less than conventional land. To check the robustness of the result, we perform two types of matching (based on propensity score and geographical distance minimization). The results show that organic land sells for even lower prices at slightly lower prices (- 2.4%) than the same conventional land. This can be explained by a spatial mismatch between the supply and demand of organic land. Over the period 2015-2021, an organic farmer seeking for farmland could find a conventional opportunity at a distance about 3.3km from his farm and 8.1km for an organic opportunity (a difference of 4.8km).