THE EFFECT OF ELIMINATING DIRECT PAYMENTS TO FARMERS ON LAND VALUES

This study looks at the effects of the complete elimination of direct government payments to farmers on the U.S. economy in general and the effect on land values in particular. The analytical approach used cons ists of a computable general equilibrium model composed of 14 producin g sectors, 14 consuming sectors, six household categories classified b y income, and a government. The results suggest that, with a complete elimination of direct government payments to farmers, there will be a reduction in output by all producing sectors of 0.18% or about $14.5 b illion, a decline in output in the agricultural sectors of 4.39% or ab out $12.0 billion, a fall in the consumption of goods and services by about 0.11% or $4.15 billion, a fall in total utility by 0.47% or $22. 0 billion, and a net reduction in expenditures for the government of $ 13.4 billion. Land values will be adversely affected, falling an avera ge of 14%.