When assembling their results, the researchers found, “within a certain distance of the ethanol plant was not significant, suggesting that, after controlling for all the systematic differences of other location characteristics, there was no declining agricultural sales price gradient over the distance to nearest ethanol plant. This is likely due to the fact that the ethanol plants only started in 2008 and suggests that expectations in advance of these openings did not have a significant effect on farmland values.”
After 2007, there was a $419 per acre increase in sales prices attributed to the proximity to an ethanol refining plant. “This increase can at least be attributed to the greater demand for corns induced by the rise of ethanol industry and the constructions of new ethanol plants. Other factors that may also play a role included higher transportation costs due to rising gasoline prices and greater export demands from China.”
Beginning in 2007, residential real estate values declined, but agricultural land values continued an n increase. While land values may also been declining, the explosive growth of ethanol kept pushing values higher due to the demand for corn for refining. The close proximity has been equated to an additional $419 per acre.
Source: FarmGate blog