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The Effect of Biogas Production on Farmland Rental Prices: Empirical Evidences from Northern Italy

Eugenio Demartini (), Anna Gaviglio (), Marco Gelati () and Daniele Cavicchioli ()
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Eugenio Demartini: Department of Health, Animal Science and Food Safety (VESPA), University of Milan, 20133 Milan, Italy
Anna Gaviglio: Department of Health, Animal Science and Food Safety (VESPA), University of Milan, 20133 Milan, Italy
Marco Gelati: Department of Health, Animal Science and Food Safety (VESPA), University of Milan, 20133 Milan, Italy

Energies, 2016, vol. 9, issue 11, 1-23

Abstract: In the last decade, increased environmental awareness has prompted the adoption of incentives for exploiting renewable energy sources. Among these, biogas production has received a certain attention in developed countries. Nonetheless, the subsidies provided have posed the problem of an activity (the production of bioenergy) that engages in direct competition with food and feed production for limited resources, like agricultural land. Even if this competition may be softened by allocating marginal land and/or using dedicated non-agricultural crops, empirical evidence shows that biogas plants have been developed in highly-productive agricultural areas, using increasing amounts of maize silage as feedstock. Thus, studies aimed at measuring the effect of biogas production on agricultural activities are needed in order to avoid this socially undesirable outcome. The paper presents an econometric estimation of the impact of biogas plants on farmland rental values of a Northern Italian rural area. Results show that biogas has a non-linear effect on rental prices, suggesting that incentive schemes specifically accounting for plants’ dimensions and technologies would improve the social sustainability of the bioenergy sector and its coexistence with agricultural activity.

Keywords: biogas; farmland rental price; farmland value; environmental trilemma; bioenergy; social sustainability; agricultural fixed resource; rent; agricultural land price; land use (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:gam:jeners:v:9:y:2016:i:11:p:965-:d:83221