Xiaorui Qu et al.: Broadband Internet Speed Upgrades and the Farmland Market
In Broadband Internet Speed Upgrades and the Farmland Market: A Shift-Share Instrumental Variable Approach, authors Xiaorui Qu (Economics and Management, China Agricultural University), Qinan Lu (Agricultural Economics and Rural Development, Renmin University of China), Minghao Li (Economics, Applied Statistics, and International Business, New Mexico State University), and Wendong Zhang (Applied Economics and Management, Cornell University) conduct an empirical analysis of the impact of investment in broadband internet on the value of US farmland.
While the high-speed, unlimited internet connectivity of broadband has many benefits, it is particularly beneficial in rural America for economic outcomes, particularly in agricultural contexts. Recent public investments and policy initiatives have aimed to expand broadband to rural areas, where the cost of installation and maintenance is otherwise high. In this study, the authors seek to provide the first empirical analysis addressing the financial impact of these broadband investments on land values, specifically farmland sale prices and cash-rents.
The authors analyzed data from 24,686 farms across 12 Midwestern states, which were listed for auction or sale by the company Growers Edge between 2016 and 2021. The authors employed a “novel application of the Bartik shift-share instrument” to quantify the impact that involves a complex methodology tailored to the authors’ specific goals. Through this framework the authors were able to (1) focus on long-term rather than short-term financial impacts of broadband investment, (2) utilize a novel strategy to solve complex problems with conducting an empirical study in this area, and (3) focus on broadband speed variability rather than just broadband availability. These are unique contributions to the scholarship on broadband access in rural America. Results of the analysis revealed that a 1 MBPS increase in download speeds increased farmland sale price by 0.268% and county-level cash rents by 0.070%.
Through this novel approach, the authors identified a boost in economic value of farmland properties due to improved broadband speeds. They conclude that broadband access is valuable for farm profitability which contributes to the rising value of farmland with greater internet access. The authors recommend further research on broadband development, particularly in areas where upgrades result in significant increases in land value.
