The incidence of biogas feed-in tariffs on farmland rental rates - Evidence from northern Germany

Abstract

This paper investigates the effects of biogas production on farmland rental rates. We clarify the mechanisms by which biogas subsidies can inflate land rents and how regional livestock density may reinforce this effect. We use spatial econometrics to explain arable land rents in northern Germany based on 2010 agricultural census data. The results indicate that increasing biogas density is associated with a significant rise in the rental rates of arable land only in regions with high livestock densities. In biogas-intensive regions, biogas production is estimated to inflate land rents by €61 to €141 per hectare, depending on regional livestock densities.