Friday, May 11, 2012

Rent and distance from railway station

I am still working on the Railways Paper, trying to quantify the difference that an extra kilometre of railway track had on agricultural rents. The draft is very nearly finished, and I am hoping I can get the article into a journal such as Economic Geography.

So far I have found a significant relationship using two measures of the availability of railway track. One method is what I call the 'nearest station' method, which involves the measuring of the distance from the farm to the nearest railway station on an annual basis. As the railway was being built, it approached the farm. This meant that the farmer could put his animals into wagons for transport to market. He saved on the costs involved in droving the animals along roads (loss of weight, expenses and risk). So a reduction in distance to nearest station increased the rent...which is what we found. The other measure is the 'buffer' measure, which involves counting the total kilometres of railway track within a 40km radius of the farm. More track nearby raises the rent---it is easier to get your stuff to market. Greater "connectivity" in modern parlance.

Here are a couple of interesting graphs:

We have the rent rolls for 31 large estates. The graph shows the average rent and distance from nearest station. As theory predicts, rent is a declining function of distance. Now take a look at this one:
This is the distance between estate and nearest station over time. By 1860 or so, all the estates were within 10km of the nearest station. That accounts for the clustering around the 10 km mark in the first graph.

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