The economics of property rights in digital farming data: Implications for farmland markets

Abstract

AbstractThe emergence of precision farming technologies has increased the amount and detail of farming data collected by producers. Data increases farm profitability by complementing digitally connected equipment and improving on‐farm decision making. The value generated by farm data may be capitalized into the underlying farmland asset, potentially raising sale and rental prices. However, the absence of clear property rights over farmland and farm operating practice data limits the ability to capture this value. We explore the issue of farm data through a property rights and transaction costs lens, and propose a conceptual framework of farm data valuation to identify conditions under which landowners and tenant‐operators can engage in mutually beneficial negotiation over farm data. We conclude that establishing property rights to farm data within the farmland lease can facilitate welfare‐improving exchange, allowing farm data records to be allocated to their highest valued use.