Influence of environmental policies on farmland prices in the Bretagne region of France

The Bretagne region is an agricultural area located in the north-west of France. In addition to urban pressure, the competition for farmland is enhanced by strong environmental regulations and incentives. The objective of this paper is to study the determinants of farmland prices and especially the effects of environmental regulations to explain the spatial disparities observed in Bretagne. This paper mainly focuses on environmental policies which are intended to reduce the agricultural pollution of water with nitrates. Several environmental regulations have been implemented in the Bretagne region, which resulted in a complex zoning system with specific measures. To account for this local characteristic, we use the hedonic pricing model and take into account the potential spatial dependencies between farmland prices. For empirical application, we use a dataset of individual transactions in Bretagne from 2007 to 2010. The estimation results show an increase or a decrease in farmland prices in environmentally sensitive areas depending on the types of regulations applied in these areas. The results also emphasize the importance of spatial interaction in the farmland market