ABSTRACT
Land and water share a set of conceptual and empirical issues related to commodity costs of production (COP). Markets for both land and water are thin, and in the case of water rights, are sometimes nonexistent. This chapter discusses the perspective that if a land charge is to be included in COP estimates, then are the merits and problems associated with several estimation procedures, and are the caveats that must surround the interpretation of estimates produced by those procedures. The absence of a market generated price for the owned inputs means that the residual must be divided among various fixed inputs. A land purchase is a market transaction in which full ownership rights are purchased. In the case of peanuts, for instance, domestic marketing quotas are often included in the rent paid. If COP budgets include separate cash expenses for such allotments then double counting may result.
