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Hedonic Price Analysis Of Easement Payments In Agricultural Land Preservation Programs

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Author Info

  • Lovell, Sabrina J.
  • Lynch, Lori

Abstract

More than 110 state, county, and local governments have implemented agricultural land preservation programs to permanently preserve farmland. Assigning a value to the development is difficult and can be costly. Data was collected on 409 preservation transactions from 3 Maryland counties and supplemented with farm level spatial data via GIS. A hedonic price analysis is conducted to determine the marginal return to different farm characteristics using a spatial econometric model to correct for spatial correlation. Parcel characteristics such as distance to city and town, number of acres, prime soils and current land-use explain eighty percent of the variation in easement values. As expected, characteristics perform least well in explaining easement values in transfer of development right programs. This information can help formulate policy decisions and selection criteria to maximize the preservation of the agricultural economy and/or maximize public preferences. A supply curve is constructed using simulations that determine non-participant parcels' easement values. To preserve the remaining eligible acres in these three counties, $167 million would be needed. This method can support programs choosing to use a point system rather than the more costly and difficult to apply standard appraisal methods.

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Bibliographic Info

Paper provided by University of Maryland, Department of Agricultural and Resource Economics in its series Working Papers with number 28564.

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Date of creation: 2002
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Handle: RePEc:ags:umdrwp:28564

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Related research

Keywords: Land Economics/Use;

References

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  1. Brunstad, R.J. & Gaasland, I. & Vardal, E., 1999. "Agricultural Production and the Optimal Level of Landscape Preservation," Norway; Department of Economics, University of Bergen 205, Department of Economics, University of Bergen.
  2. Bromley, Daniel W & Hodge, Ian, 1990. "Private Property Rights and Presumptive Policy Entitlements: Reconsidering the Premises of Rural Policy," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 17(2), pages 197-214.
  3. 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, vol. 17(01), July.
  4. Rigoberto A. Lopez & Farhed A. Shah & Marilyn A. Altobello, 1994. "Amenity Benefits and the Optimal Allocation of Land," Land Economics, University of Wisconsin Press, vol. 70(1), pages 53-62.
  5. McConnell, Kenneth E., 1989. "The Optimal Quantity Of Land In Agriculture," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 18(2), October.
  6. 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, vol. 13(1:), April.
  7. 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, vol. 22(2), pages 173-90.
  8. Lynch, Lori & Lovell, Sabrina J., 2001. "Factors Influencing Participation In Agricultural Land Preservation Programs," 2001 Annual meeting, August 5-8, Chicago, IL 20714, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  9. Lynch, Lori & Musser, Wesley N., 1999. "A Relative Efficiency Analysis Of Farmland Preservation Programs," 1999 Annual meeting, August 8-11, Nashville, TN 21639, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  10. Yue Jin Shi & Timothy T. Phipps & Dale Colyer, 1997. "Agricultural Land Values under Urbanizing Influences," Land Economics, University of Wisconsin Press, vol. 73(1), pages 90-100.
  11. Jeffrey Kline & Dennis Wichelns, 1996. "Public Preferences Regarding the Goals of Farmland Preservation Programs," Land Economics, University of Wisconsin Press, vol. 72(4), pages 538-549.
  12. 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, vol. 83(2), pages 341-351.
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Cited by:
  1. Ma, Shan & Swinton, Scott M., 2011. "Valuation of ecosystem services from rural landscapes using agricultural land prices," Ecological Economics, Elsevier, vol. 70(9), pages 1649-1659, July.
  2. Anna Alberini & Alberto Longo, 2006. "The Effects of Contamination and Cleanup on Commercial and Industrial Properties: A Hedonic Pricing Model of Maryland and Baltimore City," ERSA conference papers ersa06p413, European Regional Science Association.
  3. 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, vol. 32(1), April.
  4. Mashour, Terri & Alavalapati, Janaki & Matta, Rao & Larkin, Sherry & Carter, Doug, 2005. "A hedonic analysis of the effect of natural attributes and deed restrictions on the value of conservation easements," Forest Policy and Economics, Elsevier, vol. 7(5), pages 771-781, August.

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