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How Well Can Markets for Development Rights Work? Evaluating a Farmland Preservation Program

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  • McConnell, Virginia D.
  • Kopits, Elizabeth
  • Walls, Margaret

Abstract

Transferable development rights (TDRs) can be used as a local planning tool to preserve land for particular uses. TDRs separate ownership of the right to develop land from ownership of the land itself, creating a market in which the development rights can be bought and sold. Landowners who sell TDRs permanently preserve their land in an undeveloped state; those TDRs are then used to increase the density of development elsewhere. In this paper, we evaluate a TDR program for preserving farmland in Calvert County, Maryland. We evaluate the performance of the TDR market over the 23-year life of the program by looking at the number of transactions and TDRs sold and the level and dispersion of prices over time. We also look closely at the influence of the county government as a participant in the market. We locate the properties that have been preserved in the county as well as the subdivisions that have used TDRs to increase the density of development. We find that the program is achieving Calvert's farmland preservation goals and the TDR market appears to have operated efficiently, at least since 1993 when the county increased its role in the TDR market. At that time, the county began purchasing a small number of development rights each year at a fixed and known price and also began publishing a newsletter providing information about the program. These actions stabilized prices and appear to have bolstered participants' faith in the longevity of the program. Most of the agricultural properties preserved in the program are in areas less profitable for development. The demand for TDRs to increase density is greatest in subdivisions in the northern part of the county, closer to the major urban cities, and interestingly, in relatively rural areas with low-density zoning. There appears to be little demand for TDRs and the associated higher density in town centers or areas zoned with residential zoning.

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  • McConnell, Virginia D. & Kopits, Elizabeth & Walls, Margaret, 2003. "How Well Can Markets for Development Rights Work? Evaluating a Farmland Preservation Program," Discussion Papers 10659, Resources for the Future.
    • Handle: RePEc:ags:rffdps:10659
    DOI: 10.22004/ag.econ.10659
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    1. McConnell, Virginia D. & Kopits, Elizabeth & Walls, Margaret, 2005. "Farmland Preservation and Residential Density: Can Development Rights Markets Affect Land Use?," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 34(2), pages 1-14, October.
    2. Bento, Antonio M. & Franco, Sofia F. & Kaffine, Daniel, 2006. "The efficiency and distributional impacts of alternative anti-sprawl policies," Journal of Urban Economics, Elsevier, vol. 59(1), pages 121-141, January.
    3. Elizabeth Kopits & Virginia McConnell & Margaret Walls, 2008. "Making Markets for Development Rights Work: What Determines Demand?," Land Economics, University of Wisconsin Press, vol. 84(1), pages 1-16.
    4. Virginia McConnell & Elizabeth Kopits & Margaret Walls, 2006. "Using markets for land preservation: Results of a TDR program," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 49(5), pages 631-651.
    5. McConnell, Virginia & Walls, Margaret & Kopits, Elizabeth, 2006. "Zoning, TDRs and the density of development," Journal of Urban Economics, Elsevier, vol. 59(3), pages 440-457, May.
    6. Brenda Brito, 2017. "Potential trajectories of the upcoming forest trading mechanism in Pará State, Brazilian Amazon," PLOS ONE, Public Library of Science, vol. 12(4), pages 1-21, April.
    7. Ben Harman & Darryl Low Choy, 2011. "Perspectives on tradable development rights for ecosystem service protection: lessons from an Australian peri-urban region," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 54(5), pages 617-635.
    8. Walls, Margaret & McConnell, Virginia, 2004. "Incentive-Based Land Use Policies and Water Quality in the Chesapeake Bay," RFF Working Paper Series dp-04-20, Resources for the Future.
    9. Cheng, Long & Brown, Gregory & Liu, Yan & Searle, Glen, 2020. "An evaluation of contemporary China’s land use policy – The Link Policy: A case study from Ezhou, Hubei Province," Land Use Policy, Elsevier, vol. 91(C).
    10. Yidi Wang & Ying Fan & Zan Yang, 2022. "Challenges, Experience, and Prospects of Urban Renewal in High-Density Cities: A Review for Hong Kong," Land, MDPI, vol. 11(12), pages 1-20, December.
    11. Janmaat, John, 2008. "Playing monopoly in the creek: Imperfect competition, development, and in-stream flows," Resource and Energy Economics, Elsevier, vol. 30(3), pages 455-473, August.
    12. Xiaojing Liu & Xiao Zhang & Mingsheng Wang & Zhongxing Guo, 2022. "Is Urban and Rural Construction Land Quota Trading “Chicken Ribs”? An Empirical Study on Chongqing, China," Land, MDPI, vol. 11(11), pages 1-19, November.

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    More about this item

    Keywords

    Land Economics/Use;

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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