A Purdue Agricultural Economics Report finds that the Indiana Economic Development Corporation’s land acquisitions in Boone County substantially raised local farmland values and affected nearby counties. IEDC land purchases served as highly visible transactions that reset price expectations in the market, according to the study. The analysis isolates the price effects of public entry into the farmland market and quantifies how those effects spread beyond the parcels the state acquired.
The authors analyze transaction-level farmland sales for Indiana using data from a commercial land-trade platform and compare Boone County to two control groups: adjacent counties and the rest of the state. Their models use county and year fixed effects and cluster standard errors at the county level to account for local conditions and common shocks. This design enables a comparison between observed post-purchase price changes and counterfactual trends in similar areas.
The empirical strategy relies on difference-in-differences estimates supplemented by event-study specifications to trace price dynamics before and after the state’s market entry. The event-study tests show no systematic pre-existing divergence between Boone County and neighboring counties, supporting the identification strategy. Multiple model specifications check robustness to alternative control groups and fixed-effect choices.
Across specifications the report finds a large localized price response: farmland in Boone County increased markedly relative to counterfactual trends after the state purchases, a result robust to controls and alternative samples. The authors quantify this localized effect as about a ~40% price increase for farmland in the treated county, consistent with markets repricing land that now carries development potential beyond agriculture.
The study also detects measurable spillovers into neighboring counties, though smaller and more transient than the Boone County effect. The estimated spillover is roughly ~7% spillover in bordering counties compared with the rest of the state, and event-study patterns show these spillovers emerge with a lag and then gradually fade.
The report attributes the price shifts to three linked mechanisms: a large, resourceful public buyer setting new visible price benchmarks; publicly announced development plans and infrastructure commitments that alter expected future land use; and changed bargaining dynamics that raise sellers’ reservation prices. Each channel can revalue land even when individual parcels are not directly acquired by the state.
These market effects carry practical consequences for farmers, local governments, and planners. Higher farmland prices raise the cost of land entry and expansion for agricultural producers and increase the price tag for any future public or private site assembly. The study finds persistent price increases in Boone County of roughly 40% and measurable, though smaller, effects of about 7% in neighboring counties.
Photo - ag.purdue.edu
