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Do Conservation Easements Reduce Land Prices? The Case of South Central Wisconsin

Author

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  • Kathryn Anderson

    (UNDP)

  • Diana Weinhold

    (London School of Economics)

Abstract

While theory strongly suggests that restricting development rights should reduce land prices, empirical evidence of this effect has been notoriously hard to obtain. Indeed, largely based on this difficulty a Congressional committee has recently recommended that tax benefits for such restrictions be severely curtailed. 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 (2001), 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

  • Kathryn Anderson & Diana Weinhold, 2005. "Do Conservation Easements Reduce Land Prices? The Case of South Central Wisconsin," Urban/Regional 0506001, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpur:0506001
    Note: Type of Document - pdf; pages: 26. In this paper we use hedonic land price models to estimate the value of development rights.
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/urb/papers/0506/0506001.pdf
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    References listed on IDEAS

    as
    1. Heimlich, Ralph E. & Anderson, William D., 2001. "Development At The Urban Fringe And Beyond: Impacts On Agriculture And Rural Land," Agricultural Economics Reports 33943, United States Department of Agriculture, Economic Research Service.
    2. Lori Lynch & Wesley N. Musser, 2001. "A Relative Efficiency Analysis of Farmland Preservation Programs," Land Economics, University of Wisconsin Press, vol. 77(4), pages 577-594.
    3. David M. Henneberry & Richard L. Barrows, 1990. "Capitalization of Exclusive Agricultural Zoning into Farmland Prices," Land Economics, University of Wisconsin Press, vol. 66(3), pages 249-258.
    4. Andrew J. Plantinga & Douglas J. Miller, 2001. "Agricultural Land Values and the Value of Rights to Future Land Development," Land Economics, University of Wisconsin Press, vol. 77(1), pages 56-67.
    5. 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. 0(Number 1), pages 1-13, April.
    6. Bergstrom, John C. & Dillman, B. L. & Stoll, John R., 1985. "Public Environmental Amenity Benefits of Private Land: The Case of Prime Agricultural Land," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 17(01), pages 139-149, July.
    7. 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.
    8. Plantinga, Andrew J. & Lubowski, Ruben N. & Stavins, Robert N., 2002. "The effects of potential land development on agricultural land prices," Journal of Urban Economics, Elsevier, vol. 52(3), pages 561-581, November.
    9. Jonathan R. King & Christopher M. Anderson, 2004. "Marginal Property Tax Effects of Conservation Easements: A Vermont Case Study," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 919-932.
    10. 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. 0(Number 1), pages 1-8, April.
    11. repec:ags:nareaj:159272 is not listed on IDEAS
    12. Elena G. Irwin & Nancy E. Bockstael, 2001. "The Problem of Identifying Land Use Spillovers: Measuring the Effects of Open Space on Residential Property Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 698-704.
    13. 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.
    14. Boyd, James & Simpson, R. David & Caballero, Kathryn, 1999. "The Law and Economics of Habitat Conservation: Lessons from an Analysis of Easement Acquisitions," Discussion Papers dp-99-32, Resources For the Future.
    15. Christopher M. Anderson & Jonathan R. King, 2004. "Equilibrium Behavior in the Conservation Easement Game," Land Economics, University of Wisconsin Press, vol. 80(3), pages 355-374.
    16. Kline, Jeffrey & Wichelns, Dennis, 1996. "Measuring Public Preferences for the Environmental Amenities Provided by Farmland," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 23(4), pages 421-436.
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    Cited by:

    1. Lynch, Lori & Gray, Wayne & Geoghegan, Jacqueline, 2007. "An Evaluation of Working Land and Open Space Preservation Programs in Maryland: Are They Paying Too Much?," Working Papers 6887, University of Maryland, Department of Agricultural and Resource Economics.
    2. Kim, Taeyoung & Cho, Seong-Hoon & Larson, Eric R. & Armsworth, Paul R., 2014. "Protected area acquisition costs show economies of scale with area," Ecological Economics, Elsevier, vol. 107(C), pages 122-132.

    More about this item

    Keywords

    land use; valuation of development rights; conservation easements; hedonic regression;

    JEL classification:

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

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