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Do Residual Development Options Increase Preserved Farmland Values?

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  • Schilling, Brian J.
  • Sullivan, Kevin P.
  • Duke, Joshua M.

Abstract

Previous research has reached inconsistent, if not paradoxical, conclusions regarding the impact of conservation easements on farmland prices. Expectations of price reductions, strongly grounded in economic theory, are not always observed.We develop a hedonic model to examine the sale prices of 325 New Jersey preserved farms. We find strong evidence that residual development options retained under farmland deeds of easement have significant and positive effects on preserved farmland prices. This suggests that appraisals are undervaluing deed-restricted farmland, resulting in possible overpayment for conservation easements. This may explain the limited price differentials researchers have observed between preserved and unpreserved farmland.

Suggested Citation

  • 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, vol. 38(3), pages 1-17.
    • Handle: RePEc:ags:jlaare:165931
    DOI: 10.22004/ag.econ.165931
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    Cited by:

    1. Pinto, Allan & Griffin, Terry W., 2022. "Detecting bubbles via single time-series variable: applying spatial specification tests to farmland values," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322534, Agricultural and Applied Economics Association.
    2. Joshua M. Duke & Brian J. Schilling & Kevin P. Sullivan & J. Dixon Esseks & Paul D. Gottlieb & Lori Lynch, 2016. "Illiquid Capital: Are Conservation Easement Payments Reinvested in Farms?," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(3), pages 449-473.

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