An Assessment of the Effect on Land Values of Eliminating Direct Payments to Farmers in the United States

This study examines the consequences of the complete elimination of direct government payments to farmers on the U.S. economy in general and land values in particular. The analytical approach used consists of a computable general equilibrium model composed of 14 producing sectors, 14 consuming sectors, six household categories classified by income and a government. The results suggest that, with a complete elimination of direct government payments to farmers, there will be a reduction in output by all producing sectors of 0.18 percent or about $14.5 billion, a decline in output in the agricultural sectors of 4.39 percent or about $12.0 billion, a fall in total utility by 0.47 percent or $22.0 billion and a net reduction in expenditures for the government of $13.4 billion. Land values will be adversely affected, falling an average of 14 percent.

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