Market Behavior in Land Value According to Water Accessibility - Case Study: Three Rural Properties in México

Water availability is a key factor for rural properties in semiarid areas. Urbanization, industrial, droughts and climate change are reducing water for agriculture. As accessibility declines, water becomes a critical factor defining the price of land. Pricing rural land generally includes several factors. However, water is not considered an explicit factor in the existing valuation methods. The objective of this study was to evaluate the differential cost of rural land due to the availability of water, by considering at different methods that are used to value rural properties in Mexico: valuation of physical mass appraisal, comparable method, profits productivity method, and income capitalization method. The study was carried out in three sites of semiarid Central Mexico: El Toreador, Luz de María and Zamarripa, all located in the State of Guanajuato. The results indicated that the price of land decreased strongly, due the lack of water availability independently of the valuation method used. The decrease in land price is also linked to other factors, such as the market value and location.