This paper examines the influence of distance to biorefinery plants on agricultural land value. The research utilizes micro-level data on characteristics of parcels and the locations of ethanol facilities in Central Nebraska, USA. I employ a theoretical model and an empirical hedonic approach to determine the effect of proximity. To address potential endogeneity, the econometric model adopts an instrumental variable. Estimates from the model provide evidence that land values significantly decrease as the distance from a parcel to a biorefinery plant increases. The results also reveal a non-linearity pattern in the model, with land prices falling at a decreasing rate with distance from ethanol plants.

This paper examines how proximity to an ethanol plant influences land-use and crop choice among producers. We estimated a Tobit model of crop choice within parcels located in Central Nebraska in a 2014 sample period in order to analyze changes in land-use and crop choice. We employed Geographic Information System (GIS) databases to access relevant data on crop choice and other land uses in the study area parcels, in addition to detailed information on the location and capacity of irrigation wells. We utilized an instrumental variable approach to account for the endogeneity of crop choice with ethanol refinery locations in the study area. Our regional model also took into account specific characteristics of the local processing markets for grains, including animal food manufacturers and livestock as well as ethanol plants. Our estimates revealed that ethanol plants alter land-use in several ways. We found that proximity to an ethanol plant increases the share of land allocated to corn cultivation up to a distance of 30 miles and that the portion of land parcels allocated to corn production falls with distance from an ethanol plant in a non-linear pattern. We also find that land allocation to grassland and pasture rises with distance from ethanol plants.