1 Impacts of Urbanization and Bio-fuels Production on The Price of Land in the Corn Belt: A Farm-Level Analysis Richard Nehring* Kenneth Erickson* Vince Breneman** Alexandre Vialou* David Nulph** Abstract This study uses hedonic techniques to estimate the impact of urban influence, increased bio-fuels production, and environmental factors on land prices in the Corn Belt. We hypothesize that urban influence and ethanol production increase land prices on Corn Belt farms. Although not all states in the Corn Belt are entirely subject to urban influence and ethanol production impacts, some states are intensely affected. Despite regional variations in urban influence, Corn Belt states have soil types, climate, and crop patterns/rotations that are relatively homogeneous, helping us to isolate the effects of urbanization and bio-fuels. We find that quality-adjusted land prices in the Corn Belt are significantly increased by the presence of urbanization and bio-fuel plants. During 2006, hedonic procedures indicate that in the entire Corn Belt a 10-percent increase in urban influence leads to a close to 2- percent increase in the quality-adjusted land price. Similarly, hedonic procedures indicate that a 10- percent increase in ethanol capacity leads to a greater than 0.3-percent increase in the quality-adjusted land price. We also find that government payments, conservation payments, off-farm income, and corn revenue per acre significantly boost land prices, though to a lesser extent than urbanization and ethanol production. Clearly ethanol production in the Corn Belt is a new and not unimportant phenomenon influencing land prices. The ARMS data set used in this study incorporates the full price impact of ethanol on corn and land prices that occurred in 2006. Hence it captures, preliminarily, the impact of ethanol production as a new and important influence on land prices in the Corn Belt (the average corn price per bushel increased 75 percent in 2006 compared to 2005) along with urban pressure, government payments and other factors. However, this impact appears to be confined to the Western Corn Belt. Key Words: hedonic methods, urban-influence, bio-fuels, Conservation Reserve Program. *Agricultural Economists, Resource and Rural Economics Division, Economic Research Service, U.S. Department of Agriculture, Washington D.C. ** Geographic Information Systems analysts, Information Systems Division, Economic Research Service, U.S. Department of Agriculture, Washington D.C. Contact person--Richard Nehring: Telephone; 202-694-5618; Fax 202-694-5756; e-mail; Rnehring@ers.usda.gov . The authors thank the reviewers at the USDA-ERS for their input. The views expressed here are not necessarily those of the Economic Research Service, U.S. Department of Agriculture.