Land Valuation Systems in Relation to Water Retention

Abstract

This article uses a derived econometric model to estimate the impact of the physical properties of soil on its retention capacity and, subsequently, the impact of retention capacity on production potential. This is an important aspect considering climate change impacts, which are affecting food production across the world. An investigation of academic publications shows that very few studies address opportunities to price rainwater in relation to agricultural production. As such, the objective of the submitted article is to use soil physical property spatial data to create an econometric model. The econometric model itself determines the intensity and direction of action of the soil’s physical properties on the ability of the soil to hold rainwater. The results demonstrate the positive effect of physical properties such as porosity and humus content. Important information for farming practice is the relatively pronounced influence of soil acidity (pH) on its retention capacity, which is mainly the result of its effect on soil biogeochemical processes. The most significant variable in terms of the extent of action is the depth of the soil profile, which is in line with general assumptions. The actual evaluation of soil retention capacity was undertaken using an option with the use of a sensitivity analysis. In order to include the non-production function of the soil (retention capacity), we conclude for individual enhanced quality soil ecological units an increased price of 1–12%. These conclusions are particularly valuable because some soils may have a low production potential while also being highly valuable for their particular location in terms of their non-production potential (typically desirable floodwater retention, etc.). Considering climate change, this is a particularly topical issue. The use of enhanced-quality soil ecological units is reflected in a wide range of fields through legislative processes—determining rural land protection class and, especially in the tax obligations of agricultural entities, farming agricultural land.