With work like this there is an understandable tendency to focus on the numbers – we estimate that the growers we interviewed spend between $250 and $700 per acre on regulatory compliance each year – but the value of this work is more than just a tabulation of costs. These expenses, such as the time that it takes to maintain records for food safety compliance or to participate in employee safety trainings, rarely make it into widely used enterprise budgets that estimate the profitability of crop and livestock production. Farmers themselves don’t typically have records of their regulatory costs because these expenses get classified as labor, or overhead; or, if the farm owner is doing the work, don’t get recorded at all.
The result is that neither the policy makers (who are working to maximize the public good by protecting the environment, workers, and the public) nor farmers are sure if they are making efficient decisions. My hope is that this article and our outreach efforts help farmers manage regulatory requirements in a cost-effective way that supports their long-term financial sustainability. I also hope that this report provides policy makers with a clearer picture of the costs incurred by Oregon’s agricultural sector to remain in compliance with existing regulation.
There is much more in the full article, so I encourage you to take a look. As always, feel free to reach out with questions or for more discussion.
tim.delbridge@oregonstate.edu
Funding was provided for this project by the Oregon Department of Agriculture through the Specialty Crop Block Grant. ↩︎
The U.S. Department of Agriculture (USDA) recently released its 2025 state-level data on farmland values. These estimates come from a survey in which producers are asked to report how much their land would sell for in a market transaction. As I describe in a recent OSU Extension article, the 2025 estimates indicate a small 0.4% real (inflation-adjusted) decline in farm real estate values overall, which measure the value of land and farm-related buildings combined. This amounts to the lowest annual rate of growth since 2013. Although it might be tempting to read it as evidence that Oregon’s farmland market may be stabilizing, it’s important to emphasize that the USDA’s values capture producer perceptions, or self-assessments, rather than observable market outcomes.
A while back I wrote a post that compared the self-reported USDA survey estimates to observed farmland prices. With newer data now available, this seems like a good opportunity to revisit that analysis and dig a bit deeper into why survey estimates differ from market prices. (Side note: Over the coming month or so, I’m expecting to receive another update that will allow our sales database to reflect sales through most of 2025.)
In general, market prices run considerably higher than survey estimates in a given year. This sometimes leads people to dismiss the USDA estimates as inaccurately capturing land market conditions. The estimates, however, come from surveys of producers, who, if anyone, should be well-informed about current market conditions. And it turns out that producers are actually pretty good at estimating the value of their land once we consider the population the USDA survey aims to capture.
Figure 1 plots the per-acre farm real estate (land and buildings) value from USDA for 2000-2025 against farmland prices over roughly the same period. The price trend, shown in light grey, represents a rolling 12-month average, updated monthly from January 2000 to July 2024 (the most recent month of sales data available). The smoothed black dashed line uses the same price data but makes it easier to distinguish the overall trend from month-to-month noise. This initial price trend uses 18,577 farmland sales at least 10 acres in size.
Figure 1: USDA land value estimates plotted against observed farm real estate sales prices (10+ acres). Total sales sample size = 18,577.
Across the 2000-2024 period, average market prices are $3,700 higher than the corresponding USDA survey estimate. Notably, this gap has widened in recent years, with the average difference being about $4,400 since 2019.
Although there are many small-acreage sales of farmland, involving 10 acres or less, these tend to inflate the overall price level because of the “small parcel premium” I’ve discussed before. When we raise the minimum sale area to 20 acres (Figure 2), we lose about 23% of the sales but the average gap between prices and survey estimates narrows to $2,800. Raising the threshold to 40 acres, which removes another 27% of the original 10+ acre sales sample, narrows the gap further to $1,700.
Figure 2: USDA land value estimates plotted against observed farm real estate sales prices (20+ acres). Total sales sample size = 14,253.
Figure 3: USDA land value estimates plotted against observed farm real estate sales prices (40+ acres). Total sales sample size = 9,450.
With a 100-acre threshold (Figure 4), we’re working with 23% of the initial sales sample, and the farmland price trend closely matches the USDA trend, at least in terms of its scale. On average, market prices are now just $284 greater than the USDA estimate, with several years where the USDA values actually exceed market prices. With the exception of the year or so, where the sales data are still incomplete, both measures of land value paint a consistent picture. I’m reluctant to read too much into the 2024 price spike until we have another year of complete sales data.
Figure 4: USDA land value estimates plotted against observed farm real estate sales prices (100+ acres). Total sales sample size = 4,227.
So why do the USDA values better reflect market prices for larger acreages? The reason is that the survey asks producers to report the market value of all land in their operation, not the market value of an individual 10-, 20-, or 40-acre parcel. According to the most recent USDA Census data from 2022, the average farm size in Oregon is 430 acres, though this varies widely from under 100 acres in some Willamette Valley counties to over 3,000 acres in parts of eastern Oregon. Excluding Clackamas County (38 acres), no other Oregon county has an average farm size under 40 acres. Put differently, although half of all sales involve parcels with a total area between 10 and 40 acres, the total amount of farmland on farms of that size represents a tiny fraction of Oregon’s farmland base, which is what the survey aims to capture.
Thus, the USDA survey estimates are best thought of as capturing, on average, what whole farms would be worth in a single market transaction. Farmland markets are thin to begin with, and there are very few actual sales that involve the types of acreage the USDA survey is designed to capture. In this sense, the survey estimates are hypothetical on two fronts: (1) they capture producer perceptions, as opposed to actual market prices, and (2) they represent sales that occur rarely in practice. It is worth keeping these two points in mind the next time you see what appear to be low land value estimates coming from the USDA survey.
Notes: Farmland price data come from a database of agricultural property transactions I developed using CoreLogic’s proprietary nationwide property transactions database. The 1999-2024 agricultural property sales used in this analysis are: (1) exclusively made up of 10 or fewer agricultural parcels (per CoreLogic’s land use codes), (2) between 10 and 4,000 total acres in size, (3) priced between $100 and $75,000/acre, (4) outside urban growth boundaries, (5) have at least 25% of the parcel area zoned exclusive farm use, farm-forest, marginal farmland, or non-public, and (6) have at least 50% of the parcel area in non-irrigated land capability classes 1-6.
Managing water resources sustainably is an enormous challenge facing societies today, and groundwater systems are particularly difficult because they are hidden below ground and are thus poorly understood. Many communities worldwide are dependent on groundwater for agricultural, municipal, and domestic uses, and they support aquatic habitats and other groundwater‐dependent ecosystems (GDEs). Yet groundwater systems continue to be depleted, imposing rising costs on rural communities, farmers, the environment, and public welfare generally. This critical resource provides water to 90% of water supply systems in the U.S. and many of these have become depleted in the last few decades (New York Times, 2023). Declining groundwater levels in the western U.S. threaten drinking water, residential wells, agricultural productivity, environmental flows, groundwater-dependent ecosystems, and they have caused land subsidence resulting in damaged infrastructure and losses in property values.
In Oregon there has been an increase in the number of basins experiencing serious groundwater problems, as reflected in their being designated by the state as “areas of concern”, “significant concern”, “yield-limited”, and “groundwater restricted areas,” as in the map below for 2021.
The Groundwater Act of 1955 gives the state the right to control all sources of water supply, and identifies three primary groundwater policy goals: i) to protect existing water rights (according to seniority under the prior appropriations doctrine), ii) to maintain reasonably stable groundwater levels, and iii) to preserve the public welfare, safety and health. Despite these mandates, there are a number of critical groundwater areas in the state where reasonably stable groundwater are not being maintained. For example, in Cow Valley which was the first basin to be designated a critical groundwater area in 1959, groundwater levels have continued to decline. So why is Oregon failing to fulfill its stated groundwater objectives?
Source: B. Scandella and J. Iverson, Oregon Groundwater Resource Concerns Report (2021)
There appear to be four factors that combine to make current approaches to groundwater management in Oregon problematic and ineffective.
The first factor is the long delay that commonly occurs between the time when groundwater pumping has exceeded sustainable rates and the time when the evidence of declining groundwater levels is evident (as much as 20 years later in some cases). This problem is somewhat unavoidable given the complex hydrology of groundwater that it is hidden below ground.
The second factor involves the corrective mechanisms under Oregon water law intended to regulate groundwater use. The seniority system under the prior appropriations doctrine was originally developed for surface water, and that is what Oregon and most western states use to allocate surface water: water users have a seniority ranking or “priority date” which gives senior water rights priority over junior rights when shortages occur. Water use is easily observable, and so too is interference between junior and senior water right holders. When there is not enough water for all users, junior water rights are shutoff in a matter of days or weeks to allow senior water right holders to divert their permitted amounts. The rules trigger timely reductions in water use, and they are transparent, predictable, and enforceable.
But in 1955 Oregon chose to apply this same prior appropriations seniority system for groundwater. The problems with this should be obvious: interference between and among users can take a long time to arise, it is not directly observable, interference in a given basin can involve hundreds or thousands of wells, and the impact of one well on another cannot be proved to a legal standard.
Hence, the system for regulating demand when it exceeds supply is unworkable. There is effectively no enforcement of the groundwater seniority system, and as a result no regular, transparent, predictable means of maintaining stable groundwater levels as required by law.
Third, the mandate to maintain reasonably stable groundwater levels is ambiguously defined. There is no requirement or guidelines about the length of time regulators can take to correct a situation when groundwater levels are observed to be declining, nor about what levels of groundwater stocks need to be maintained. Currently regulators can take decades to stabilize groundwater under the law, and ultimately at levels so low that they deny access to water for many senior water right holders, deplete surface water rights, degrade groundwater-dependent ecosystems, and fail to preserve the public welfare. The rules also provide no clear benchmarks or basis for holding authorities responsible for fulfilling their mandates.
Fourth, given the absence of regular, timely corrective mechanisms like those for surface water rights, the state has created several ad hoc designations for problematic groundwater basins (e.g., critical groundwater areas, groundwater limited areas), an approach that is reactive rather than predictive or proactive. These designations initiate processes that have been described as “arduous, contentious, and costly undertakings.” Moreover, they do not trigger programmed corrections, but can instead create openings for lobbying, negotiation and delays that may prioritize the interests of some water right holders over others in ways unrelated to their seniority.
Taken together these factors leave Oregon’s groundwater systems vulnerable to overappropriation and depletion. Indeed, the current situation in the Harney Basin is an unfortunate example of this, and a cautionary illustration of the harms and injustices that can be inflicted on many parties involved as a result. In the Harney Basin, permitted groundwater pumping rates exceeded sustainable levels in the early 1990s (see figure below), but the impact on groundwater levels was not generally recognized until about 2015 at which point permitted pumping was nearly double sustainable levels. This led to multi-faceted, multilayered efforts to better understand the situation and to find a solution agreeable to stakeholders in the basin.
These efforts included a research project I led over the past five years to develop a hydro-economic computer model of the Harney Basin’s groundwater situation. Collaborating with colleagues at OSU and with US Geological Survey hydrologists, a three dimensional dynamic model simulated different scenarios to better understand the past and current situation and also to evaluate possible future solutions (see this reference listed below). In addition to groundwater decline causing rising costs and lower well yields for irrigators, many domestic wells have gone dry, and springs and lowland flows contribution to the Malheur Wildlife Refuge have declined by one-third. Our study concluded that there are no low-cost ways to stabilize groundwater in the basin. Irrigation pumping needs to be reduced by about 43%.
The basin designations of “serious concern” described as “arduous, contentious, and costly undertakings” have certainly been that in the case of the Harney Basin. As of today, after hundreds of hours of meetings and negotiations, two competing proposals are under review by the Oregon Water Resources Department, both call for a slow, 30-year phase-in of limitations on pumping beginning in 2028 and concluding in 2058. This slow pace will mean years of continued declines in groundwater levels, additional domestic wells going dry, and additional reductions to springs and lowland flows serving groundwater-dependent ecosystems. Many irrigators will suffer reduced well yields, higher pumping costs, and reduced farmland values. And, despite the long phase-in of the regulations, neither proposal will actually stabilize the groundwater system according to our model results.
The situations in the Harney Basin and in other Oregon basins make clear the need for a change in the rules governing groundwater. There are easy-to-describe alternatives that would make timely groundwater management adaptive and predictable so that the objectives of protecting existing water rights, maintaining reasonably stable groundwater levels, and preserving the public welfare, safety and health can be fulfilled. Now would be a good time for Oregon’s leaders to take action.
References
Cook, Emily Cureton, Race to the bottom: how big business took over Oregon’s first protected aquifer. OPB, March 16, 2022.
Jaeger, W. K., Antle, J., Gingerich, S. B., & Bigelow, D. (2024). Advancing sustainable groundwater management with a hydro‐economic system model: Investigations in the Harney Basin, Oregon. Water Resources Research, 60(11).
New York times, America Is Using Up Its Groundwater Like There’s No Tomorrow. August 28, 2023. https://www.nytimes.com/interactive/2023/08/28/climate/groundwater-drying-climate-change.html
Disclaimer: This post presents an updated version of a paper I presented at the 2025 AAEA Conference. The results are preliminary and have not been peer-reviewed.
Wildfires pose environmental, health, and economic threats throughout the United States (US). Their frequency and intensity have grown in recent years, particularly in the western United States. Over the last two decades, the total area damaged by wildfires each year has increased, with western states consistently having the highest percentage of burned acreage. In the context of Oregon, between 1984 to 2024 there were approximately 1,155 fires that burned at least 1,000 acres. Collectively, Oregon’s fires over this period have burned a total area of 16.4 million acres (Figure 1). Wildfire activity increased noticeably after 2000 compared to earlier years, with most of the larger fires occurring after 2011. Most of the wildfires are concentrated in the eastern half of the Oregon due to its relatively dry climate which makes it more susceptible to burning.
Figure 1. Oregon’s wildfires have become larger in recent years Source: Monitoring Trends in Burn Severity (MTBS) database. Note that the MTBS only tracks wildfires that are at least 1,000 acres in size.
Oregon’s diverse agricultural sector offers a unique opportunity to study the impact of wildfires on land value across different agricultural uses. Wildfire impacts have been identified for other land uses, such as forestland and residential property values, while agricultural land markets have received relatively little attention in comparison. In a research paper presented at a recent conference, we examine how wildfires between 2000 and 2021 affected the price of agricultural land in Oregon. To do this, we collect all agricultural sales that took place within five years of a wildfire and compare before/after price changes between parcels that are close to wildfires (within 2km) with those located further away (2-10km). The basic idea is that by examining price changes over time in both areas and controlling for other factors that influence farmland prices (e.g., soil productivity and urban area proximity), we can isolate the impact of recent wildfire proximity on agricultural land values. To the extent that wildfires affect the future income that landowners would expect to earn from the land, they should be reflected in land prices.
The main results indicate that, after a wildfire, farmland located within 2km of a fire tends to sell for 22% to 34% less than land 2-10km away. Based on the sample average price of an acre of farmland sold between 2000 and 2023 ($2,801), this translates to a loss of $616 to $952 per acre. Our statistical models also show that larger wildfires tend to cause more severe negative impacts. Specifically, we find that very large fires, defined as those that burn more than 35,000 or 70,000 acres, reduce farmland prices by about 45% and 54%, respectively, which translates to a loss of up to $1,513 per acre.
When comparing wildfire impacts across different farmland categories, the most pronounced negative impacts are observed for pasture and grassland, where we estimate an average land-price impact of about -27% per acre. The effects we find for cropland are still negative but are smaller and noisier (i.e., have a larger margin of error), which is potentially due to the relatively small number of cropland sales near wildfires. These findings indicate that impacts on land used for grazing are driving the overall statewide results. Grazing land has been highlighted as being susceptible to wildfire in other contexts, such as Texas.
Our findings provide a clearer picture of how wildfires are changing the agricultural land market due to the perceived risks of nearby fires. Wildfires affect agriculture directly and indirectly through downwind and downstream channels (e.g., direct crop burning, livestock harm, reductions in soil health, and health impacts on farm workers). Although we do not isolate these different individual pathways, the land-price impacts we estimate can be thought of as reflecting the total effect of wildfire proximity on future land-related net income.
Of course, wildfires also have severe impacts on human health and communities, among other things. However, to date, impacts on agriculture have received relatively little attention. As wildfires become more prevalent and intense, particularly in the western United States, it is important to evaluate their impacts on different sectors of the economy. The better we understand how wildfire risk affects different aspects of the economy and environment, the more we can develop smarter policies, better land management decisions, and a more resilient future for Oregon agriculture. Our preliminary findings highlight how agricultural land markets in Oregon have responded to wildfire risk perceptions and provide a framework for quantifying the impacts of both future and more recent catastrophic wildfires, such as those that took place in Oregon in 2024.
The rationale behind this payment multiplier is that total economic losses to livestock producers far exceed the direct financial loss of the killed animals. Other impacts facing ranches that are under wolf pressure, such as smaller (and less valuable) calves, reduced pregnancy rates, and added labor costs associated with wolf management and deterrence, are often more significant than the value of animals killed by wolves. Ultimately, the additional funding required to pay for the new compensation structure was not included by the Ways & Means Committee, creating some uncertainty about how compensation will be provided.
Our analysis on the economic impact of wolf depredation supports the idea that indirect costs faced by livestock producers are significantly higher than the value of confirmed and probable livestock kills. The novel aspect of this Extension publication is that we conducted an electronic survey of livestock producers who were asked to pinpoint the location of their grazing land and answer questions about wolf impact for that specific site. This allowed us to tie producer responses about wolf pressure and economic impact to the spatial wolf activity maps that are maintained by the Oregon Department of Fish and Wildlife (ODFW).
Figure 1. Areas of known wolf activity (red) and approximate location of survey responses (blue).
We found that producers managing livestock within ODFW-defined “Area of Known Wolf Activity” (AKWA) tended to report more significant wolf pressure, and that the financial impact was also higher in these areas. On grazing lands further away from ODFW AKWAs, producers reported fewer problems with wolves and lower financial costs. Although some livestock producers have been frustrated by the process that ODFW uses to officially confirm wolf presence in an area, and some argue that the true number of wolves is significantly higher than the ODFW minimum wolf populations, the strong correlation between ODFW wolf-activity maps and producer reports of wolf pressure shows the value of ODFW data collection and monitoring work.
Table 1. Response options for the survey question ‘How severe is the wolf pressure at this grazing location?’
Survey question text
Number of respondents
Average distance to nearest AKWA* (miles)
Average reported wolf management cost per cow
“There are no wolves that affect this area.”
5
10.8
$0.00
“There are wolves, but they don’t impact us much.”
4
1.9
$0.07
“Moderately heavy”
11
2.2
$13.75
“Heavy pressure, but not as bad as some ranchers deal with”
7
3.0
$20.52
“Extremely heavy”
6
0.2
$111.85
In terms of dollar values, the survey results indicated significant additional management costs and revenue reductions among Oregon ranches that experience wolf pressure. Cattle producers that reported “Extremely heavy” wolf pressure cited increased management costs of roughly $100 per cow, mostly related to additional labor time. These producers tended to be located in the defined AKWAs or just outside the boundaries. The increased management costs tend to fall off sharply within a couple of miles from defined AKWA boundaries.
Based on survey responses and existing literature on the physiological effects of wolf pressure on cattle, we estimate that revenue losses range between $135 and $200 per cow for producers experiencing heavy wolf pressure. This range would be even higher under the record-high prices for beef in today’s market.
Please explore the full publication for additional detail and narrative case studies on specific livestock producer experiences with wolves. This is an area of continuing work with active research projects across the Western US and within Oregon.
In this post, I’m going to present an overview of a recently published paper on the relationship between farmland conservation easements and farm investment. Before I dive into the paper, I first want to provide a brief overview of how conservation easements work.
Farmland conservation easements
Conservation easements provide a way for private landowners to permanently prevent their land from being developed. Under an easement, landowners voluntarily forego the right to put their land to certain uses (typically development for housing and similar uses) in exchange for compensation. An easement represents property rights that are permanently given up by the landowner. Once the easement is put in place, the surrendered property rights are usually held by a land trust. The details vary, but easements on farmland typically allow the land to continue to be used for agricultural production.
The value of the easement determines how much landowners are compensated for giving up their development rights. The easement value is determined by an outside appraiser, who will compare recent sales of similarly productive land parcels that are subject to different degrees of urban influence (or parcels that already have conservation easements). This can be thought of as the hypothetical difference in sale price for the same parcel with and without the easement. Essentially, the easement value is the price associated with the right to develop the land if that could be sold separately from the land itself.
Landowner compensation generally takes one of two forms. First, the easement can be purchased outright, with landowners receiving full cash compensation for permanently relinquishing their development rights. In acquiring an easement this way, land trusts can sometimes leverage matching funds from the U.S. Department of Agriculture’s Agricultural Land Easement (ALE) program. However, acquiring easements this way is not always feasible because most land trusts are relatively small entities constrained by limited budgets.
For most landowners, an outright purchase is the preferred form of compensation. The main alternative comes from the US income tax code. As a result of rules passed in 1976, conservation easements are considered charitable donations, meaning that the value of an easement can be deducted from the landowner’s federal income taxes. A more recent tweak to this rule in 2006 allows qualifying farm producers to deduct up to 100% of the easement value over a carryover period of 15 years. For example, if the easement is worth $1.5 million and the landowner earns $100,000 per year, they will effectively pay no federal income tax for 15 years. In addition, some states offer additional incentives through state income tax deductions (e.g., Oregon) or credits (e.g., Colorado).
Why would landowners put an easement on their land?
There are different motivations landowners might have for using easements. One reason is that they may simply want to prevent their land from being developed in the future. Easements provide a permanent guarantee that this type of land-use conversion won’t happen. Farm succession planning can also come into play, especially concerning estate taxes levied by state governments, as the easement reduces the property’s market value and hence the tax responsibilities of any heirs. The same generally doesn’t apply to federal estate taxes because of rules that limit estate taxes on land that will remain in agricultural production.
In a recently published paper (ungated version), Conner McCollum (a former graduate student I worked with at Montana State) and I explore a third potential motivation. Specifically, we study if easements might be used to finance farm-related investments. The underlying premise of our analysis revolves around the way that modern agricultural lending institutions operate.
Producers often use their land as collateral to obtain loans for farm-related investments. However, land collateral is generally not appraised at its full market value. Due to concerns about default risk, lenders typically exclude the land’s non-agricultural (e.g., development) value from appraisals. If this weren’t the case, using an easement to finance farm investments would be harder to justify from an investment standpoint. Why would a landowner permanently give up a property right through an easement when they could just borrow against its value to make the same investment? In this sense, future development returns that are capitalized into the value of farmland are not “liquid” because the only way they can be accessed by the landowner is if they sell the land. Importantly, the idea that easements are used to finance farm investment has been found in a number of smaller-scale surveys but had not been borne out with observational data.
In the paper, we first document a negative county-level correlation between the fraction of agricultural market value borrowed against and different measures of development pressure (past land conversion and population density). This means that landowners in areas where future development is more likely borrow less, relative to the market value of their land, than those in more rural areas.
We then turn to our main objective of measuring the county-level correlation between past easement activity and current farm investment. In line with the survey work referenced above, we document precise statistical relationships between easement activity and:
an increase in land ownership by producers, alongside a decrease in total land rent expenses,
greater use of machinery (tractors), and
a weaker but positive association with increased labor use.
These relationships hold up under a variety of tweaks to our research design (e.g., removing potential outliers and controlling for different factors that might affect investment).
Of course, the paper has its limitations. First, we rely on imperfect observational data sources (including the Census of Agriculture and the National Conservation Easement Database). We also cannot attach causality to the relationships we estimate. That is, we can’t say with certainty that the easements themselves are the reason why counties with more easements see greater investment.
Policy implications
When it comes to conservation easements, Oregon tends to lag behind other states. This is generally chalked up to our state’s strong system of land use regulations that potentially limit how future development potential is priced into land outside of urban growth boundaries. However, that is not to say that development outside of UGBs doesn’t happen. Recent efforts to promote easements in Oregon have been bolstered by the Oregon Agricultural Heritage Program (OAHP), which provides state funds that can be used to leverage matching funds from the USDA’s ALE program. The first two rounds of the program funded 9 easements covering 12,252 acres of farmland across the state. Although the $2 million in OAHP funding recently approved by the legislature falls well short of the $17.3 million requested, the program seems to be growing in popularity and has broad statewide support.
I think this line of research is important because it highlights how conservation policy can be a win-win for both environmental conservation organizations and farming advocates, two groups that are not always on the same page. Environmental groups are often concerned with long-term land conservation goals. Farm advocates, on the other hand, are often concerned with property rights being stripped away without just compensation. If agricultural conservation easements actually promote farm investment, they have the dual benefits of conserving land and improving the resilience and vitality of farming communities in urbanizing areas.
During last week’s hearing for the Oregon Senate Committee on Natural Resources and Wildfire, Kelly Howsley-Glover (President, The Association of County Planning Directors) cited some of my blog posts concerning how to interpret the decrease in Oregon’s farmland reported in the 2022 USDA Census of Agriculture. The 2022 Census numbers show a decrease in farmland of 667 thousand acres between 2017 and 2022. On the surface, this seems like an alarming change, as it represents a loss of 4.18% of the 2017 farmland area. Although this most states lost farmland since the prior Census, the rate of farmland loss for Oregon is about double the national rate. Upon its release, the national Census statistics were cited as a cause for concern by some of the most influential people in US farm policy, including former Ag Secretary Tom Vilsack and American Farm Bureau Foundation President Zippy Duvall.
To be sure, a 4% loss in farmland over a five-year period is an alarming change. Farmland loss tends to be taken as a synonym for farmland conversion, where agricultural land is irreversibly developed for things like housing. It’s easy to read too much into these trends, and the widespread media coverage they receive doesn’t help, but the fact is that the loss of farmland accounted for in the Census is not the same as that land actually being lost forever to development. Instead, it’s a statistical loss pertaining to the land that’s tracked by the Census, which has been subject to declining response rates over the past decade. More importantly, it doesn’t match the pattern revealed in any other data source I’m aware of. On a more practical level, Oregon has a severe shortage of housing, which seems hard to square with the idea that we’ve been losing farmland at a rate of over 100 thousand acres per year.
Figure 1 shows the total amount of new land developed in Oregon in five-year increments from several different data sources. Although each measure comes from an entirely different source, they collectively paint a picture that should put to rest any notion that the Census farmland trend is indicative of land development. Below the figure I explain how each source is measured, along with its high-level pros and cons for this type of analysis.
First, note that I put Oregon’s Census-reported farmland loss (in thousands of acres) in parentheses under the years on the x-axis. Large farmland losses have been reported for Oregon in each of the past five Census years. The loss of 667,000 acres in 2022 is actually the second-highest loss reported over the past 25 years, with 681,000 acres in 2007 being the largest. In all but a few cases, the total amount of land developed in Oregon is less than 20% of the of the reported farmland loss. When we account for the fact that most land development in Oregon occurs on forestland, the fraction of farmland lost to development would be even smaller.
Note: The HISDAC-US periods are 1995-00, 2000-05, etc., and were matched to the nearest Ag Census period.
NRI (National Resources Inventory): The NRI is conducted by the USDA’s Natural Resources Conservation Service in cooperation with Iowa State University. It is based on a stratified sample of over 300,000 land segments (representing over 800,000 individual sample points) throughout the United States. Land use information comes from a combination of detailed satellite and aerial imagery and local knowledge from county NRCS and Farm Service Agency offices. Importantly, the NRI is designed to capture land use (as opposed to land cover) and has tracked the same plots of land since 1982. I’ve shown this elsewhere, but the NRI indicates a steady decline in land conversion throughout Oregon since 1997. The 2022 version is supposed to be released in Fall of 2025.
NLCD (National Land Cover Database): The NLCD is a produced by the U.S. Geological Survey’s Earth Resources Observation and Science Center. USGS personnel use NASA’s Landsat (Land Satellite) images to develop annual maps of the US divided into 30m-resolution pixels (about 0.22 acres in size). As the name indicates, the NLCD tracks land cover, which does not always correspond with how land is used. For example, there may be houses that are obscured by surrounding trees and thus won’t be picked up in the satellite image. Similarly, forests that are harvested will appear from space as grassland or shrubland, which obviously misses how the land is actually used. The general trend shown in in the figure is similar in direction to the NRI, but less extreme and with a higher total area of development.
HISDAC-US (Historical Settlement Data Compilation): HISDAC-US is a relatively new database developed a few years ago by geographers at the University of Colorado. It divides the US into a 250m grid (about 15 acres per grid cell) and then consults local county assessment records (and other supplemental records) for the year when individual buildings were constructed across the US. The HISDAC-US data can also be thought of as representing land use, as they represent actual buildings that have been constructed. A downside is that not all buildings have recorded construction years, especially older ones. This limitation should be minimized by focusing on a relatively recent period, but it is worth keeping in mind. In 2020, the most recent year available, about 57% of all buildings in Oregon have construction year information.
The plot is showing the HISDAC built-up area (BUA), which is the area of Oregon covered by 15-acre grid cells where at least one building is present, so if there’s one building in the cell (even if it’s a barn), the entire 15 acres is considered developed, which might exaggerate the total amount of development in more rural, low-density areas. That likely contributes to the large amounts of development shown earlier in the figure, which still represent at most 25% of Census-reported farmland loss, but the rate falls off dramatically in more recent periods.
Despite the large differences in how total land development is measured across these three sources, which again includes all land developed (not just farmland), they collectively suggest that farmland loss reported in the Ag Census should not be confused with land development.
So, what did happen to farmland between 2017 and 2022? Ideally, we could look to something like the NRI, but that isn’t currently available for 2022. Between 2012 and 2017 (Figure 2), when the Census showed Oregon losing 339 thousand acres of farmland, the NRI shows that most of the actual land-use change for agricultural land was due to moving between cropland, pasture, and range, with about 0.4% (63 thousand acres) being converted out of these three categories. Most of the agricultural land that changed use went into forest or “other” rural land, like farmsteads and farm buildings, and about 11 thousand acres were developed.
If we look at the 2017-22 change in the satellite-based NLCD land cover data (Figure 3), 95% of the 2017 cropland remained that way in 2022, as did 91% of pasture/hay. Most of the land-cover changes for two categories were movements to and from each other or movements into grassland or shrubland. Agricultural land, especially in eastern Oregon, is sometimes misclassified in the NLCD as grassland or shrubland. These categories also retained 88 and 92% of their 2017 area, with most of the remainder representing changes across the two categories or, in the case of shrubland, movements into forest cover.
As I’ve said before, the Census is a valuable resource when it is used correctly. The statistics that come out of the Census are cited widely and can inform policymaking at all levels. It provides important information on all sorts of things about farms and ranches throughout the US, but it is not a definitive source of land use information. The main issue is that it does not provide repeated information on the same farms over time, which contributes to misleadingly large statistics concerning farmland loss. To that end, it would be helpful if the USDA were to provide supplemental information on the same farms that responded to the previous Census. This would give both policymakers and the general public some context on how to square the data with reality.
A large proportion of Oregon’s land is forested. Based on a 2024 Oregon Department of Forestry estimate, forestland covers 10.4-11.3 million acres (about 39%) of the state’s non-federal land. Oregon’s forest products sector is nationally significant, as we consistently lead the United States in softwood and plywood production. In 2021, the forestry sector accounted for about 3% of all jobs in the state, employing roughly 62,000 people.
This post gives an overview of recent trends in the market for western Oregon’s privately-owned timberland. I specify “privately-owned” because an important piece of the forestry sector’s modern history concerns the role of timber harvests on federal land. Until the late 1980s, private and federal forestland (mostly National Forests managed by the US Forest Service (USFS)) each supplied 40-60% of the timber harvested in Oregon. Between 1989 and 1995, following the listing of the northern spotted owl under the Endangered Species Act and other policy changes, timber harvests on federal lands fell by roughly 90%. Although total harvests remain about 50% lower than they were in the 1970s and 1980s, private lands have supplied about 75-80% of harvested volume in recent decades.
The timberland price data I’m using cover 3,789 transactions in western Oregon over the period 1999-2024. (See the end of the post for details on how I constructed the sample.) To define western Oregon, I use the US Forest Service’s Resource Area regions and focus on land in the Northwest and Southwest regions, which includes all counties west of the crest of the Cascades. The northern boundary of Lane County divides the Northwest and Southwest regions. Western Oregon is responsible for the vast majority of logging and standing timber volume in the state. Eastern Oregon, containing the USFS-defined Central and Blue Mountain regions, is omitted because its forestry sector is particularly dependent on federal timber harvests. As a result, its private timberland market is relatively inactive, with only 378 sales occurring since 1999.
Figure 1 plots the acreage-weighted average price of timberland in western Oregon between 2000 and 2024, with the centered 3-year average (which includes 1999 prices in the value for 2000) shown in gray to smooth out some of the year-to-year movement. The average price of timberland increased by about 50% from 2000 to 2007 but gave back most of the gain over the next five years during the Great Recession and its aftermath, with the market bottoming out in 2012. The reason is straightforward. US timberland is a primary source of the raw timber used in domestic residential construction. When the housing market crashed, so did the demand for lumber and the land from which it is sourced. Everything else being equal, this demand contraction reduced timberland prices. Note that this contrasts with what happened to agricultural land markets during the 2007-2009 recession, when farmland prices remained fairly stable.
Figure 1. Timberland price per acre (weighted by sale acres), western Oregon, 2000-2024
Between 2012 and 2017, timberland prices regained all of the lost value, increasing to around $12-13,000 per acre, and holding at around that level today. Over the past couple years, Oregon’s private timberland market has become more erratic. To understand why, consider what’s occurred with lumber prices, or the price of processed timber used in things like housing construction. Lumber prices in the Pacific Northwest generally correlate reasonably well with log prices (or pond prices, the price of logs delivered to a mill) and stumpage prices (the price that would be paid to the landowner for the standing timber on their land). Stumpage prices are most relevant for understanding movement in timberland prices, but stumpage price data, particularly for private timberland, are not easily accessible.
After peaking in 2017-18, Pacific Northwest log and lumber prices declined and remained low through the start of the pandemic. The decline in lumber prices has been attributed to perceptions that the pandemic would bring about a prolonged weakening of lumber demand from the construction industry. However, the demand for new housing, as well as remodels of existing homes, remained strong, leading to a lumber shortage. The shortage was created by several factors, including supply-chain bottlenecks and mill capacity constraints, culminating with a spike in softwood lumber prices in 2021. Similar increases in log prices have been reported by OSU Extension’s Lauren Grand in Lane County and for Douglas-fir stumpage prices from National Forests in the PNW. Lumber, log, and stumpage prices eventually came down as housing starts slowed, coinciding with the dip in timberland prices between 2021 and 2023, but have since increased and remained relatively stable.
I’m not showing the regional breakdown but note that both the Northwest and Southwest have followed similar trends over time, with timberland in the Northwest being worth about $4,000 more per acre on average since 1999. Over the past five years, the gap has widened, with average per-acre timberland prices of $15,586 in the Northwest and $10,573 in the Southwest.
Looking ahead forward, several key factors could shape Oregon’s timberland market. For one, President Trump issued an executive order in March that outlined a strategy to boost federal logging by 25%. The intent of the executive order goes hand in hand with another ongoing issue affecting the sector – trade with Canada, which supplies about 30% of the softwood lumber used in the US. Since August, Canadian lumber has been subject to a 14.5% tariff, a rate that was originally set to rise to 39.5% under Trump’s tariff plan. Although the tariff increase was scrapped amid industry push-back, ongoing federal investigations could result in increased tariffs in the near-term. On balance, greater tariffs would work against the softening of lumber prices that would result from a federal supply increase. These changes could lead to a more erratic land market, as we’ve seen in the past few years, but with minimal effect on long-term land price trends. In Oregon, Governor Kotek specifically mentioned the importance of lumber imports in light of her ambitious aims to address our housing shortage, so the way this all plays out could have rippling effects that are felt throughout the broader state economy.
Finally, wildfires have and will continue to pose a large risk to the forestry sector, not to mention the people and communities they affect. A recent analysis indicates that the combined effect of the post-2000 increase in the occurrence of large wildfires and climate change (namely increased drought) have already reduced timberland prices by 10% relative to what they would have been had pre-2000 wildfire and climate conditions remained.
Note: Timberland price data come from a database of property transactions I developed using CoreLogic’s proprietary nationwide property transactions database. The 1999-2024 timberland property sales used in this analysis are: (1) exclusively made up of forested parcels (per CoreLogic’s land use codes), (2) at least 10 acres in size and made up of fewer than 10 individual parcels, (3) priced between $100 and $60,000/acre, (4) at least 2 miles outside urban growth boundaries, (5) have a majority of land classified as privately owned based on a recent Oregon Department of Forestry GIS shapefile, and (6) have a majority of the sold area in forest cover at least once between 1985 and 2023 per the Annual National Land Cover Database. All prices are adjusted for inflation to the year 2024 using the Bureau of Economic Analysis’s Gross Domestic Product Implicit Price Deflator.
In agricultural economics, we typically think of the value of farmland as representing the discounted stream of net income (or profit) that accrues to the landowner. This is sometimes referred to as the “fundamental market value of farmland.” Future net income is discounted because money earned in the future is worth less than the same amount earned today. The further into the future the income is earned, the more it is discounted. If we earned the income today, we could make an investment and reap some positive return from it. This hypothetical positive return represents the discount rate – i.e., what we give up in exchange for earning income later rather than sooner.
Importantly, the source of the income capitalized into the value of farmland can change when we think about the future profit from owning land. Because the income a landowner would receive from converting the land to a developed use (e.g., housing) is typically much higher than the income that could be earned from farming, discounting explains why land located close to cities commands a much higher price than comparable land with the same productivity located further away. Specifically, because development is generally viewed as being more imminent for lands close to cities, the future income from that potential future land-use change is discounted less steeply, which raises the land’s value.
A natural measure of the net income from farming is annual profit from producing and selling agricultural commodities. Profit, however, is hard to measure directly and is not well captured in any regularly updated data sources. As an alternative to profit, cash rent, the price a landowner charges to a tenant who farms the land, is often used to approximate the net income that a farmland owner would expect to receive in a given year. I’ve noted in previous posts how inflation-adjusted cash rents in Oregon have remained flat over the past 15 years or so.
In contrast, land values have mostly trended upward. The figure below shows the average per-acre price of irrigated and non-irrigated cropland in Oregon over the period 1999-2024 as a three-year moving average. (See the note at the end of the post for how I’m classifying land as irrigated or non-irrigated.) Irrigated land prices have more than doubled, from under $6,000 to almost $12,000 over the past 25 years, but the trend has flattened since 2022. Non-irrigated prices show more volatility, but despite a drop in recent years current prices are still up by about $2,000 (50%) over the 1999 three-year average. Both trends are generally in line with the annual land value estimates from USDA surveys. It is worth noting, however, that the sample size for non-irrigated cropland sales (1,956) is a lot smaller than that for irrigated cropland (8,467).
Rolling three-year average of irrigated and non-irrigated land prices in Oregon, 1999-2024
The profitability of a farmland investment is commonly measured using the rent-to-value ratio, which is just the rent divided by the land price (multiplied by 100). This is also referred to as the capitalization rate (or cap rate). It can be thought of as the rate of return to someone who buys and rents out farmland. The figure below shows the three-year rolling average cap rates for irrigated and non-irrigated farmland in Oregon for 1999-2024. Since the 2007-09 recession, both cap rates show a general decline, in line with what has been observed other regions of the US (see here and here).
Along with the cap rates, I’m also plotting the market yield on 10-year U.S. Treasury notes. These are typically considered a benchmark investment asset, representing a safe (or risk-free) way to earn interest income. Treasury yields are also used as the basis for mortgage rates, including farm mortgages. From a farmland investment perspective, the Treasury yield can be thought of as the return on a competing, safe interest-bearing investment.
Rolling three-year average irrigated and non-irrigated rent-to-value ratios (cap rates), 1999-2024
Overall, the trend non-irrigated cap rates appear to be more closely linked with Treasury rates. Because the non-irrigated cap rate lies below the Treasury yield for most of this period, it suggests the net income from farming alone (measured by cash rent) is not sufficient to justify the current prices of non-irrigated land. Another interpretation is that additional sources of land-related profit, or expectations of changes in future profit, would be needed to make purchasing non-irrigated cropland worthwhile. The low cap rate may also explain the relatively small number of non-irrigated cropland sales over this period, which itself suggests the non-irrigated cropland trends presented here should be taken with a grain of salt.
Up until the last couple of years, the downward trend in irrigated cap rates tracked fairly well with Treasury yields from 2012-2019. The fact that the irrigated cap rate lies above the treasury yield for most of the past 15 years indicates that the net farm income from irrigated crop production generally justifies its relatively high price. That’s not to say that current farm profitability is the only factor driving the demand for irrigated cropland, just that it alone is sufficient to justify its current price.
Of course, the analysis presented here should not be interpreted as investment advice, but rather as a general overview of how well trends in Oregon’s cropland prices reflect farm profitability. Given how diverse Oregon’s farm sector is, an important caveat is that the profitability of investing in farmland is likely going to vary considerably across the state, which I’ll leave for a future post. Additionally, Oregon’s farmland rental market is less fluid than those in other states (e.g., in the Midwest), which potentially makes cash rent a less reliable approximation of farm profit.
In terms of how cropland cap rates might change in the future, rents have been fairly stable across the board over the past 15 years. One thing that might change this is trade policy, which could affect commodity prices, and, in turn, farm profits and rents. Producers were at least partly compensated for the losses they suffered during the last trade war with China, so it is hard to say what will happen as things continue to escalate in the current round of tit-for-tat tariffs.
For farmland prices, the broad macroeconomic factor to keep in mind will be further changes in the Federal Reserve’s benchmark interest rate. Because higher interest rates cause future income to be discounted more steeply, farmland prices tend to have an inverse relationship with interest rates. The federal funds rate has gone up in recent years and although this seems to have cooled Oregon’s farmland market somewhat, it is worth keeping in mind that changes to the Fed’s benchmark rate can take a decade or more to be fully reflected in farmland values.
Notes: Farmland price data come from a database of agricultural property transactions I developed using CoreLogic’s proprietary nationwide property transactions database. The 1997-2024 agricultural property sales used in this analysis are: (1) exclusively made up of agricultural parcels (per CoreLogic’s land use codes), (2) between 10 and 2,000 total acres in size, (3) priced between $100 and $75,000/acre, (4) outside urban growth boundaries, (5) have at least 25% of the parcel area zoned exclusive farm use, farm-forest, marginal farmland, or non-public, and (6) have at least 25% of the sold area in crop production between 2009-2023 per USDA’s Cropland Data Layer.
Irrigated cropland is defined as land satisfying the above criteria and also having (1) 50% of the sold area covered by a primary irrigation water right per the Oregon Water Resources Department (OWRD) or (2) 50% of the sold area irrigated between 1997 and 2020 according to an updated version of the LANID data developed by Xie and Lark (2021). The latter is used because OWRD does not comprehensively account for water rights attached to land in irrigation districts. Non-irrigated cropland has no more than 10% of the sold area in both of these two categories.
Note: This post has been updated to reflect a coding error that affected the numbers in the previous version. None of the overall conclusions regarding the differences in land prices between small and large parcels are affected, but it does affect the scale of the land prices shown in the table and figures. Apologies for the error. In addition, this post reflects an updated and more accurate version of the sales price data that runs through 2024.
A recurring feature of farmland markets throughout the US and other parts of the world is that smaller parcels of land tend to sell for higher per-acre prices. What explains this so-called “small parcel premium”? More importantly, how prevalent is this pattern in Oregon’s farmland market?
A popular theory is that the price premium attached to smaller parcels of land is driven by demand-side factors concerning the potential for non-agricultural uses. For example, a land developer looking to buy farmland is unlikely to be interested in purchasing 100 acres of land. Even at a relatively low housing density of 5 units per acre (0.2 acres per home), 500 residential homes could be built on 100 acres, which would be a massive housing development in most parts of Oregon. Of course, even less land would be needed to build a 500-unit apartment or condo complex. Similarly, smaller parcels of land are often sought by non-commercial producers (e.g., hobby farms, retirement farms), who may be willing and able to pay a price above the land’s value solely attributable to agricultural use.
Farmland price data: To look at the parcel size-land price relationship in Oregon, I assembled a database of farmland transactions using property transaction data from CoreLogic. This analysis focuses on transactions involving exclusively agricultural land parcels between 2000 and 2024, where agricultural land is identified based on CoreLogic’s property codes. To refine the sample, I only include land meeting the following criteria:
Located outside of urban growth boundaries
Zoned Exclusive Farm Use, Mixed Farm-Forest, or Non-public
Total area between 5 and 2,000 acres
Sells for a price of $100-$75,000 per acre
These restrictions yield a sample of 20,661 properties that could be reasonably considered to be in an agricultural use at the time of sale.
Two different ways to calculate an average price: To provide a high-level summary of the small parcel premium in Oregon, consider two ways of calculating the average price of land. One approach is to take the simple average per-acre price across all 20,661 sales, which I refer to as the unweighted average price. Alternatively, we can take the same average but weight each sale by its acreage, which puts more emphasis on larger sales and gives the average price of an acre of land as opposed to the average sale price.
To make the difference more concrete, suppose we have two sales with total sale prices of $100,000: (1) $10,000 per acre (10 acres) and (2) $1,000 per acre (100 acres). The unweighted average price would be ($10,000 + $1,000)/2 = $5,500 per acre, while the weighted average would be $10,000*(10/110) + $1,000*(100/110) = $1,818 per acre. To the extent that smaller parcels of land sell for a higher price, we would expect the weighted average to be lower than the unweighted average.
The table below summarizes the two different versions of the average per-acre price (adjusted for inflation to 2024 dollars) and the average sale area (in acres) for the state as a whole and by region. As you can see in the first row, the statewide weighted average price ($6,457) is dramatically smaller than the unweighted average price ($18,883). Naturally, the average acreage and price varies across regions due to differences agricultural production (e.g., eastern Oregon tends to have about 4x larger acreages compared to the Willamette Valley), and this is all mixed together in the statewide averages.
However, the same general pattern of differences in the two average prices holds in all regions. At most, the weighted average price is just over half of the unweighted price (Willamette Valley, OR Coast, and Southeastern OR). Northeastern OR and Central OR/Mid-Columbia have the biggest small parcel premiums by this measure, where weighted averages are less than one-third of the unweighted average.
Binned scatter plots: To break this down further, I summarize the weighted average price by region and acreage bin using binned scatter plots. These plots help illustrate patterns in data that are harder to detect with a scatter plot of raw data, which, with more than 20,000 observations, would look like something from a Rorschach test.
With the binned scatter plots, a clear pattern emerges showing that an acre of land in the smallest acreage category sells for the highest price. The pattern is most pronounced in the more populated parts of Oregon. In the Willamette Valley, an acre of land sold in a sale containing 5-10 acres sells for about $10,000 more than an acre of land in the next-largest bin (10-20 acres), and over $30,000 more than an acre in a 100+ acre sale. The small parcel premium remains clear in the less populated parts of the state. In Northeast and Southeast Oregon, which both have average sale acreages of over 100 acres, the smallest-acreage sales have prices that are about 20x and 10x the price of a normal sale in the 100+ acreage category.
Wrapping up: Overall, without digging in further and going beyond the scope of this blog post, it is harder to say much more about what is driving the small price premium in Oregon beyond the general factors I referenced at the start (demand from development potential and small hobby/retirement farms). I didn’t include it in the post to save space, but the same general pattern emerges if we look at different chunks of time (e.g., the 2000s versus the 2010s) or within counties instead of larger regions. From the fact that we have urban growth boundaries to the wide variety of agricultural outputs produced here, Oregon’s farmland sector is unique in a lot of ways. As far as the small parcel premium goes, this is one area where it fits in with the crowd.
