Does the extent of time in drought affect the rate of farm ownership change in a local government area? A sixteen-year assessment of rural land ownership change in New South Wales, Australia

Abstract

Droughts are significant catalysts of financial and emotional hardship for farming communities. However, does the extent of time an area has been in drought impact upon the rate at which agricultural land changes hands? Does it encourage more land to change ownership, as stressed farmers depart at faster rates, or does its negative impacts on farm production dampen demand for rural land? This study addresses this question through a unique, longitudinal (2004–2020) dataset of property transactions in 96 rural Local Government Areas (LGAs) in New South Wales, Australia. We measure the proportion of time each LGA has been in drought during the previous 1, 2, 5 and 10 years, and correlate this against the rate of agricultural land ownership change. Results indicate that in the short-term (<5 years), the proportion of time in drought is not a major influence on the extent of agricultural land ownership change. However, over a 10-year timespan, there is a statistically significant negative correlation between the two for non-irrigated agricultural land, grazing land and land owned by individuals (as opposed to companies). These findings suggest these agricultural land markets are sensitive to the long-term effects of drought. The take-home message seems to be that the persistence of drought saps the vitality of these agricultural land markets, leaving farmers with reduced prospects to capitalise on their land assets. This finding has resonance given that climate change models suggest an intensification of the frequency and severity of drought in much of rural NSW.