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The effects of site characteristics on agricultural land values are examined. Conventional theory states that expected net return is the most important determinant of land values, but both its monetary and psychic components are nor readily available for use in testing. Instead, the hedonic regression approach is proposed, wherein a combination of variables such as gross income, soil productivity, parcel size, irrigation and other site characteristics is used as a proxy for net returns. This approach combines Bieren's conditional moment test and nonnegativity constraints and is applied to six areas in Washington state. The results indicate that land values are indeed determined by site characteristics and that the sample land markets are highly regioinal. In addition, both nonnegative truncation and parsimonious model specifications are valuable tools.