Environmental Policies and Agricultural Land Values: Evidence from the Dutch Nutrient Quota System*

Thurman for their comments and suggestions. The information provided by Peter Munters, a senior staff officer with the Ministry of Agriculture, Nature Management and Fisheries, in The Hague is also acknowledged. ABSTRACT The paper analyzes the impact of the phosphate based animal production rights on agricultural land values in the Netherlands. We claim that the existence of mandatory production control program with regional restriction on trading causes a disproportional increase in land prices in the surplus region where the quota is binding relative to the deficit region where the quota is not binding and that the increase in the cost of environmental compliance should generate an eroding effect on the existing gap in land prices. The parameters of an inverse land demand model estimated with panel data support both hypotheses.