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An Empirical Examination of the Timing of Land Conversions in the Presence of Farmland Preservation Programs

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  • Nancy Bockstael

Abstract

Using a panel of parcel-level data we estimate a hazard model and find strong evidence that the mere existence of an option to preserve farmland delays decisions to convert farmland to developed uses by about six years, a reduction in median conversion time of 12 to 43% depending on parcel size. Where such delays allow local governments to improve infrastructure or implement stricter growth control measures, benefits of a preservation option may be even more long term. Also, increases in the variance of returns to development tended to slow conversion for parcels with all but the highest lot capacities. Copyright 2008, Oxford University Press.

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File URL: http://hdl.handle.net/10.1111/j.1467-8276.2007.01131.x
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Bibliographic Info

Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 90 (2008)
Issue (Month): 3 ()
Pages: 613-626

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Handle: RePEc:oup:ajagec:v:90:y:2008:i:3:p:613-626

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Cited by:
  1. Towe, Charles A., 2010. "Testing the Effect of Neighboring Open Space on Development Using Propensity Score Matching," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61512, Agricultural and Applied Economics Association.
  2. Kent Kovacs, 2013. "An empirical examination of the location and timing of non-renewals in a farmland differential assessment program," The Annals of Regional Science, Springer, vol. 50(1), pages 245-263, February.
  3. Robert A. Simons & Ron Throupe, 2012. "Debundling Property Rights for Contaminated Properties: Valuing the Opportunity Cost of the Right to Sell, Using Cumulative Options," International Real Estate Review, Asian Real Estate Society, vol. 15(2), pages 231-252.
  4. Lynch, Lori & Geoghegan, Jacqueline, 2011. "FOREWORD: The Economics of Land Use Change: Advancing the Frontiers," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 40(3), December.
  5. Jeffrey Stokes, 2012. "The value of the option to preserve farm real estate," Journal of Economics and Finance, Springer, vol. 36(1), pages 162-175, January.
  6. Steven Ott & W. Hughen & Dustin Read, 2012. "Optimal Phasing and Inventory Decisions for Large-Scale Residential Development Projects," The Journal of Real Estate Finance and Economics, Springer, vol. 45(4), pages 888-918, November.
  7. Kaza, Nikhil & Towe, Charles A. & Ye, Xin, 2011. "A Hybrid Land Conversion Model Incorporating Multiple End Uses," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 40(3), December.
  8. Wrenn, Douglas H. & Sam, Abdoul G. & Irwin, Elena G., 2012. "Searching for the Urban Fringe: Exploring Spatio-Temporal Variations in the Effect of Distance versus Local Interactions on Residential Land Conversion Using a Conditionally-Parametric Discrete-Time D," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 125007, Agricultural and Applied Economics Association.
  9. Kovacs, Kent F., 2009. "The Timing of Rapid Farmland Conversion Events: Evidence from California's Differential Assessment Program," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49252, Agricultural and Applied Economics Association.
  10. Wrenn, Douglas H. & Sam, Abdoul G., 2014. "Geographically and temporally weighted likelihood regression: Exploring the spatiotemporal determinants of land use change," Regional Science and Urban Economics, Elsevier, vol. 44(C), pages 60-74.
  11. Bell, Kathleen P. & Kline, Jeffrey D., 2009. "Assessing Patterns in the Conversion of Rural Lands to Residential Use," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49530, Agricultural and Applied Economics Association.
  12. Nishihara, Michi, 2012. "Real option valuation of abandoned farmland," Review of Financial Economics, Elsevier, vol. 21(4), pages 188-192.
  13. W. Hughen & Dustin Read, 2014. "Inclusionary Housing Policies, Stigma Effects and Strategic Production Decisions," The Journal of Real Estate Finance and Economics, Springer, vol. 48(4), pages 589-610, May.
  14. Elena G. Irwin & Andrew M. Isserman & Maureen Kilkenny & Mark D. Partridge, 2010. "A Century of Research on Rural Development and Regional Issues," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(2), pages 522-553.
  15. Elena G. Irwin, 2010. "New Directions For Urban Economic Models Of Land Use Change: Incorporating Spatial Dynamics And Heterogeneity," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 65-91.
  16. Xianlei Ma & Justus Wesseler & Nico Heerink & Futian Qu, 2013. "Land Tenure Reforms and Land Conservation Investments in China ┬ĘC What Does Real Option Value Theory Tell Us?," Review of Economics & Finance, Better Advances Press, Canada, vol. 3, pages 19-33, August.

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