IMPACT OF COMMERCIAL AND UTILITY-SCALE SOLAR ENERGY ON FARMLAND PRICE

The expected rapid development of renewable energy in the United States has raised concerns about its effects on farmland prices, yet there is little empirical evidence on the impact of solar energy development on farmland prices. This study aims to examine the heterogenous impact of commercial and utility-scale solar energy on farmland prices in Indi- ana. Drawing on farmland transactions from 2015 to 2020, we employ quantile and expectile hedonic price regressions to estimate the heterogeneous impact of proximity to solar energy facilities across the conditional price distribution. This study finds an inverse, non-linear relation between the proximity to solar energy and per acre land prices. We find that solar farms provide a premium to neighboring farmland parcels. However, this premium is heterogenous, with higher premiums on parcels with higher conditional prices. As we move across the higher conditional expectiles, we observe a price drop ranging from 0.8% (0.1 expectile) to 1.8% (0.9 expectile) for an additional mile increase from neighboring solar farms. Similarly, price premium for a proximity to solar energy is as high as 2.1% for 99th expectile farmland price. Thus, policymakers should consider the effect of solar energy to avoid potential damage on agricultural production and land price movements.