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Valuing future development rights: The costs of conservation easements

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  • Anderson, Kathryn
  • Weinhold, Diana

Abstract

While theory strongly suggests that restricting development rights should reduce land prices, empirical evidence of this effect has been hard to obtain. Largely based on this difficulty, legislation governing the tax benefits that easement donors may receive is periodically challenged. We collect data on 131 land transactions in South Central Wisconsin, including 19 cases of development-restricted parcels. When we use the whole sample to estimate the impact of conservation easements, we replicate the results of Nickerson and Lynch [Nickerson, C.J., Lynch, 2001. The effect of farmland preservation programs on farmland prices. American Journal of Agricultural Economics 83(2):341-351], finding a negative but statistically insignificant effect. However we then show that when the sample is appropriately restricted to a more homogenous group of land parcels, our ability to detect an effect increases dramatically. In particular, for vacant agricultural land we find a statistically significant negative impact of conservation easements that ranges up to 50% of land values.

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Bibliographic Info

Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 68 (2008)
Issue (Month): 1-2 (December)
Pages: 437-446

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Handle: RePEc:eee:ecolec:v:68:y:2008:i:1-2:p:437-446

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Web page: http://www.elsevier.com/locate/ecolecon

Related research

Keywords: Q24 Q51 R52 Land use Land price Conservation easements;

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References

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  1. Plantinga, Andrew J. & Lubowski, Ruben N. & Stavins, Robert N., 2002. "The effects of potential land development on agricultural land prices," Journal of Urban Economics, Elsevier, vol. 52(3), pages 561-581, November.
  2. Andrew J. Plantinga & Douglas J. Miller, 2001. "Agricultural Land Values and the Value of Rights to Future Land Development," Land Economics, University of Wisconsin Press, vol. 77(1), pages 56-67.
  3. Halstead, John M., 1984. "Measuring the Nonmarket Value of Massachusetts Agricultural Land: A Case Study," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, Northeastern Agricultural and Resource Economics Association, vol. 13(1:), April.
  4. Elena G. Irwin & Nancy E. Bockstael, 2001. "The Problem of Identifying Land Use Spillovers: Measuring the Effects of Open Space on Residential Property Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 83(3), pages 698-704.
  5. Farja, Yanay & Rausser, Gordon C., 2007. "Land Trusts Policy: Is It Socially Optimal?," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 9892, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  6. Pruckner, Gerald J, 1995. "Agricultural Landscape Cultivation in Austria: An Application of the CVM," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 22(2), pages 173-90.
  7. Boyd, James & Simpson, R. David & Caballero, Kathryn, 1999. "The Law and Economics of Habitat Conservation: Lessons from an Analysis of Easement Acquisitions," Discussion Papers, Resources For the Future dp-99-32, Resources For the Future.
  8. Heimlich, Ralph E. & Anderson, William D., 2001. "Development At The Urban Fringe And Beyond: Impacts On Agriculture And Rural Land," Agricultural Economics Reports, United States Department of Agriculture, Economic Research Service 33943, United States Department of Agriculture, Economic Research Service.
  9. Bergstrom, John C. & Dillman, B.L. & Stoll, John R., 1985. "Public Environmental Amenity Benefits Of Private Land: The Case Of Prime Agricultural Land," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, Southern Agricultural Economics Association, vol. 17(01), July.
  10. Kennedy, Peter E, 1981. "Estimation with Correctly Interpreted Dummy Variables in Semilogarithmic Equations [The Interpretation of Dummy Variables in Semilogarithmic Equations]," American Economic Review, American Economic Association, American Economic Association, vol. 71(4), pages 801, September.
  11. Cynthia J. Nickerson & Lori Lynch, 2001. "The Effect of Farmland Preservation Programs on Farmland Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 83(2), pages 341-351.
  12. David M. Henneberry & Richard L. Barrows, 1990. "Capitalization of Exclusive Agricultural Zoning into Farmland Prices," Land Economics, University of Wisconsin Press, vol. 66(3), pages 249-258.
  13. Bucholtz, Shawn & Geoghegan, Jacqueline & Lynch, Lori, 2003. "Capitalization of Open Spaces into Housing Values and the Residential Property Tax Revenue Impacts of Agricultural Easement Programs," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, Northeastern Agricultural and Resource Economics Association, vol. 32(1), April.
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Cited by:
  1. Schilling, Brian J. & Sullivan, Kevin P. & Duke, Joshua M., 2013. "Do Residual Development Options Increase Preserved Farmland Values?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, Western Agricultural Economics Association, vol. 38(3), December.

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