| Abstract |
The relationship between technological change and land values is investigated for both rainfed and irrigated areas of Pakistan's most important wheat producing province, the Punjab. An attempt is made to link regional differences in the behavior of agricultural land prices and land rents over the past 30 years to the differential diffusion of technological innovations that occurred during the period. The analysis is based 1) on time-series cross-sectional land price data collected through a retrospective survey and 2) on rental data taken from published sources. In both irrigated and rainfed areas productivity Increases have led to greater returns to land in the form of higher real land rents. These have been capitalized into higher real land prices. Based on a comparison of the growth rates of land rents and land prices. It appears that productivity increases have accounted for about 70% of the increase in the price of agricultural land In both areas over the past 30 years. Further analysis suggests that remittances from abroad have been an important nonproductivity factor driving up land prices in the post-Green Revolution period. Judging from the timing of observed increases in prices and rents, it appears that mechanization, improved varieties (wheat HYVs and, in the rice-wheat zone, Basmatl·385 rice), fertilizer (in the irrigated locations), and changes in agronomic practices (in the rainfed locations) have all contributed to increases in real land rents and land prices. Long term appreciation of real returns to land has enhanced the wealth of all landowning agricultural households. The higher rate of growth of both rents and prices in the (poorer) rainfed areas indicates that interregional income gaps have narrowed over time. |
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