Promoting Soil Health and the adoption of Soil Health Management Systems (SHMS) to farmers is a key priority for the USDA-NRCS, conservation scientists and NGOs. However, prior research by Delta Institute suggests a lack of economic incentives prevent Illinois farmers from adopting SHMS at scale. Furthermore, Illinois’ land valuation system does not explicitly establish a link between Soil Health and land value. We are exploring these realities in the agricultural sector, so that Soil Health becomes a more standardized metric (and practices) on farms across the Midwest.
Brief Overview of What We’re Doing
Farmers face steep hurdles to successfully transition to conservation-focused, climate-resilient agriculture. Value propositions, ranging from improved drought/flooding resilience, greenhouse gas instruments, land appraisal and rent value increases, and other benefits from improving soil health through the adoption of conservation practices, are unclear to many farmers. Products and services are needed that integrate these practices seamlessly into a farmer’s business and operations decisions. Further, to achieve Illinois’s 2025 nitrogen and phosphorus loading reduction goals (respectively 15% and 25% below historic baselines), we need to obtain wide support and adoption of soil health-focused land management approaches. As soil analysis and data collection methods are improving, creating a land valuation process that incorporates soil health is a useful driver for increasing landowner adoption of soil health practices.
As the importance of land management in addressing climate change becomes more apparent, the Midwestern agricultural community needs to assess and value soil health for sale valuation, loan and investment underwriting, and—quite notably—carbon sequestration and documented water/soil quality improvements. Delta will design a framework for soil health land valuation based on sound science that creates lasting conservation incentives to increase farmers’ resilience to climate change, achieve measurable improvements in soil and water health, and provide economic benefits for landowners.
Federal cost-share programs such as the Environmental Quality Incentive Program (EQIP) and the Conservation Reserve Program (CRP) offer farmers financial assistance to adopt SHMS, but applicants cite a lack of administrative capacity or eligibility to secure funding. Therefore, to create greater financial incentives for Illinois farmers to adopt SHMS, Delta Institute and our many partners, including Compeer Financial and the Soil Health Institute, seek to create a place-based appraisal methodology to incorporate Soil Health into the farmland valuation process. This stems from prior activities and research into land valuation.
Analyzing the Current State of Soil Health in the Marketplace
In prior stages of work, Delta Institute described the institutional friction between Land Value and Soil Health in Farmland Appraisals and outlined costs and procedures of Soil Health Testing. Following feedback and additional input from farmland brokers and appraisers, two novel appraisal interventions were selected for development: a Soil Health Index and an Inventory of Comparable Properties that have adopted SHMS. Now, to support the next stage of work – piloting the two aforementioned interventions among a cohort of 10 Illinois farms within MLRA 108 – Delta offers this analysis of Illinois’ farmland real estate market from 2017—2023. This report synthesizes market signals of farmland real estate in Illinois to uncover driving factors that place value to land.
Delta’s analysis of Illinois’ farmland real estate market from 2017—2023 synthesizes market signals of farmland real estate in Illinois to uncover driving factors that place value to land, which will help us pilot new farmland broker/appraiser-informed Soil Health-focused approaches (a Soil Health Index and an Inventory of Comparable Properties) among a cohort of 10 Illinois farms within the NRCS Major Land Resource Area 108 that spans central Illinois from the north to the east.
Delta’s efforts to link Soil Health and Land Valuation in Illinois have far-reaching implications in the wider Great Lakes and Corn-belt regions. Currently, as part of our project scope Delta is conducting outreach in Indiana and Iowa to raise awareness and engagement among real estate experts and farmland appraisers of the environmental and economic benefits of improved Soil Health, as well as providing resources to support the expansion of Delta’s Soil Health Land Valuation (SHLV) work.
Beyond these efforts, Delta has developed interventions for piloting Soil Health and Land Valuation in Michigan with the support of the Fred and Barbara Erb Family Foundation; this aligned yet distinct scope is providing additional geography and learnings for our overall Midwestern efforts. Indeed, by identifying the economic benefits of investing in Soil Health, Delta is working with farmers and landowners across the Great Lakes and Corn-belt regions to understand the long-term value of adopting sustainable agricultural practices.
Piloting a new Soil Health Appraisal Approach in Illinois
In 2024, Delta and our partners, Compeer Financial and Soil Health Institute, successfully tested a scalable, standardized soil health appraisal methodology for the land appraisal process in Illinois—with direct implications for the broader region. Through this Pilot Program, the we created a replicable soil sampling methodology, including a “soil health index” to be utilized in future appraisals. Following months of collaboration and on-the-ground soil and land management history data collection, Delta and our partners performed formal appraisals and delivered comprehensive soil health testing summaries to 11 subject properties in DeKalb County, Illinois.
The completion and success of this pilot clearly points towards agricultural real estate as a nascent marketplace for soil health to be valued as an asset. We utilized the following modified Sales Comparison appraisal approach, which filtered information into a transferable system that can be replicated in other agricultural real estate markets:
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- Foundational, widely recognized metrics of the subject properties and comparable land sales in the defined market area were collected.
- Soil health data of the subject cohort was collected and analyzed to observe trends specific to soil health indicators. A ranking system was used to make comparisons among “peers”. Land management history data collected via farm owner/tenant interviews was used for qualitative bracketing.
- A simple and replicable “soil health index” score was created specific to each subject to determine the extent of any value influence and form an opinion as to how these ultimately influence property value.
- The subject cohort was analyzed and any trends specific to the soil health indicators were observed. The association between assessed value ($/acre) and soil health was then assessed by regression analysis.
- Finally, appraisers incorporated the soil health index specific to the subject to form an opinion as to how/whether these ultimately influence property value.
Please stay tuned, as we plan expansion of this work in 2025 and in the years ahead!
Our Partners
This project was produced with generous support from the Walton Family Foundation, the Lumpkin Family Foundation, the McDougal Family Foundation, and the Oberweiler Foundation. We extend our appreciation to the many farmers engaging with us, as well as our partners, including Compeer Financial and the Soil Health Institute.