Costs of Farmland Fragmentation: Evidence from Farmland Transactions in Eastern Germany

Lars Isenhardt, Stefan Seifert, Theelke Wiltfang and Silke Hüttel

German Journal of Agricultural Economics, 2025, vol. 74 (2025)

Abstract: Farmland fragmentation in use is related to higher operation cost and reduced productivity, while ownership fragmentation increases transaction costs, both leading to inefficient land use and diminished overall farm performance. This paper aims to quantify the costs of farmland ownership fragmentation using a market-based approach. We hypothesize that buyers and sellers in the farmland market have a lower valuation and demand for spatially separated farmland. To test this hypothesis, we analyze a rich dataset of 24,528 arable land transactions from the eastern German Federal State of Brandenburg from 2000 to 2022 that includes information on whether the traded land was spatially fragmented. Using a doubly robust approach combining matching and regression, we find that package transactions of spatially separated parcels achieve on average 6.7% lower prices than transactions of single parcels with the same size and comparable characteristics. The quantified markdown for packages suggests that market participants associate costs with fragmentation and consider these into their valuation for farmland.

Keywords: Farm Management; Industrial Organization; Land Economics/Use; Public Economics; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/366871/files/2537_Isenhardt_et_al.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:gjagec:366871

DOI: 10.22004/ag.econ.366871

Access Statistics for this article

More articles in German Journal of Agricultural Economics from Humboldt-Universitaet zu Berlin, Department for Agricultural Economics Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().