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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.

Suggested Citation

  • Anderson, Kathryn & Weinhold, Diana, 2008. "Valuing future development rights: The costs of conservation easements," Ecological Economics, Elsevier, vol. 68(1-2), pages 437-446, December.
    • Handle: RePEc:eee:ecolec:v:68:y:2008:i:1-2:p:437-446
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    References listed on IDEAS

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    7. 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. 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), December.

    More about this item

    Keywords

    Q24 Q51 R52 Land use Land price Conservation easements;

    JEL classification:

    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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