; Barriers to Monetizing Soil Health | Conferences | AgRisk Library


Conference Name Barriers to Monetizing Soil Health

Alejandro Plastina


Cover crops (CC) and no-till/reduced till (NT) are two practices with great potential to reduce nitrate and phosphorus leaching to Iowa’s waterways. However, their actual scale of adoption is low. In part, this is due to the fact that water quality is a public good and the overall private benefits to farmers are not fully understood. One critical aspect currently missing from the literature on the private benefits from CC and NT is the potential increase in farmland value due to improved soil health resulting from those practices. The key challenge is that farmland value, measured either by sale prices or appraised value, does not reflect long-term productivity or soil improvements due to conservation practices, but is overwhelmingly determined by its soil type or CSR2 index, comparable farm sales in the area, capitalization rates, and other factors. In particular, since the dollar value suggested by a rural appraiser typically anchors the negotiation between seller and buyer around the appraised value, rural appraisers play a critical role in the determination of farmland prices. Furthermore, although all certified appraisers must follow strict guidelines, a substantial portion of each appraisal is subjective. This project focuses on evaluating the impact of training rural appraisers in the linkages between productivity, soil health and conservation practices, on their (subjective) appraised farmland value. We hired 9 certified rural appraisers to appraise 3 farms with different long-term CC and NT practices, in 2019 and 2020. In October 2019, 3 appraisers received training on soil fertility, 3 appraisers received training on soil fertility and soil health and their interaction with CC and NT, and 3 appraisers did not receive training. We found that structural barriers in the rural appraisal business impede the monetization of soil health and provide guidance on a path forward to tie land values to soil health.