Farmland Retention Techniques: Gauging Support

1. Farmland Retention Techniques: Gauging Support Josh Duke & Lori Lynch UDel & UMD

2. Why new techniques? • PDR too expensive – budget crisis • TDR not effective –Although there are 50 TDR programs, only 15 of them have protected farmland • Use value not permanent- slows conversion • Incongruence between techniques employed (Duke and Lynch (2006))

3. Technique Design and Effectiveness • Effectiveness Criteria: • Farmland owners must participate • farmers think they are better off preserving than retaining development rights. • Preserved farms have desirable characteristics • Society is preserving the farms that benefit people the most – i.e. most likely to satisfy goals • Maintain viable agricultural economy • Retain open space • Limit Sprawl development- decrease farmland consumption • Stakeholder approval (political feasibility) • Willing to finance (taxes, bonds, etc) and willing to implement

7. Four Types of Preservation Techniques • Regulatory – (creates market institutions and thus value) • Agricultural zoning: self financed; public has right; temporary duration; some credibility • Incentive-based – (alters the relative costs within a market) • Use value assessment; taxpayer financed; temp duration; easily redefined • Government Participatory – (adds a new market participant) • Fee-simple purchase: taxpayer financed; landowners has right; permanent; persistent • Hybrid – (combination of all or two of above) • Transfer of development rights: self financed; landowner has rights; permanent; persistent; prevent conversion

8. Gauging Support for 4 of the 29 Techniques • Term conservation easements (participatory) Annual rental fee for non-conversion for set period • Land preservation tontines (incentive-based) Contract among landowners, lose right if convert • Rights of first refusal (participatory) Match offers made by developers, sell land with easement attached • Ag. conservation pension with PACE (hybrid) Finance retirement for farmers in exchange for easement; resell land Qualities of these four: • lower the costs of preservation activities, • increase participation, and/or • increase the acceptability/political feasibility of preservation techniques

11. Interviewed 3 Stakeholder Groups • Farmland owners • Lawmakers • Program administrators • Do any aspects of program X appeal to you? • Do you find any aspects of program X to be not appealing (or objectionable)?

12. Results • Right of first refusal most appealing to all three groups • No group liked term easements – not permanent • Land tontine – interesting but too unusual • Conservation pension – attractive but needs more details to determine acceptability

13. Conclusions • Budget crisis for participatory programs • Many desired goals of program thus multiple policies/techniques may be needed • Combination of techniques to succeed in farmland preservation must be congruent • Support highest for right of first refusal • Limited support for tontine and pension plan – people need more details to decide • No support for term easements due to lack of permanent preservation. Also not perceived to save $ or administrative burden by all.

14. Where to get the reports • Gauging Support for Innovative Farmland Preservation Techniques, Agricultural and Resource Economics, University of Maryland, WP 06-02, http://www.arec.umd.edu/Publications/Papers/Working-Papers-PDF-files/06-02.pdf • “Farmland Retention Techniques: Property Rights Implications and Comparative Evaluation,” Land Economics, 82(2) (May 2006) 189-213. • Gauging Support for Innovative Farmland Preservation Techniques, Food and Resource Economics Research Report 05-04, October 2005. http://dspace.udel.edu:8080/dspace/bitstream/19716/1891/1/RR05-04.pdf • Farmland Preservation Techniques: Identifying New Options, Food and Resource Economics Research Report 03-02, June 2003. http://www.udel.edu/FREC/PUBS/RR03-02.pdf

15. What is the value of preserved farmland and how is it influenced by the means of preservation? Joshua M. Duke Department of Food and Resource Economics University of Delaware Robert J. Johnston Department of Agricultural and Resource Economics University of Connecticut Presented for the American Farmland Trust National Conference, November 14, 2006 Supported by the National Research Initiative of the Cooperative State Research, Education and Extension Service, USDA, Grant # 2003-35400-13875, by the University of Delaware Agricultural Experiment Station, and by the W-1133 Multi-State and Regional Project. Experimental design by Univ. of Delaware STATLAB (Lydia Rejto and Diccon Bancroft).

16. Willingness to Pay for Land Preservation • What value do DE and CT residents hold for land preservation? • Local, community values • Not statewide nonuse values • How is this value affected by • What is preserved (outcomes)? • How it is preserved (techniques)? • Who does the preservation (implementation)?

17. Community SurveysSmyrna, Georgetown, Mansfield, and Preston • Dillman tailored design method, 10/05 – 1/06 • Developed over two years • 14 focus groups and organized pretests • 3000 surveys mailed (750 per community) • Response Rate: 41.1% of deliverable surveys • Total of 1136 surveys

18. Likert Scale Questions

19. Moderately Important Moderately Important Moderately Important Moderately Important Very Important Very Important Very Important Very Important Not at all Important Not at all Important Not at all Important Not at all Important General Preferences: Community Surveys How important is it to you that methods of farm and forest preservation: Do not increase taxes X 3.69 Have widespread community support X 3.77 Allow for public access X 3.71 Are guaranteed to be permanent X 4.19

20. Moderately Important Moderately Important Moderately Important Moderately Important Very Important Very Important Very Important Very Important Not at all Important Not at all Important Not at all Important Not at all Important General Preferences: Community Surveys How important is it to you that methods of farm and forest preservation: Focus on areas at high risk of development X 4.05 Do not restrict the availability of affordable housing X 3.06 Are not likely to increase real estate prices X 3.12 Promote ecological benefits and wildlife habitat X 4.22

21. Research Methods: Choice Experiments • Carefully designed questions: individuals “vote” for or against hypothetical land preservation programs • Mimics voting behavior (referenda) • Individuals offered a variety of options for land preservation • Analysis of votes over many different types of policies allows calculations of tradeoffs and values • Model analyzed using mixed logit • Little evidence of heterogeneity across communities. Pooled results illustrated.

22. Land outcomes • Land type • Forest, idle farmland, dairy/livestock, crop, nursery • Acres preserved • 40 – 250 acre parcels • Public access provisions (not for zoning) • None, walking/biking, hunting • Development risk if not preserved • Likely in 10 years, 10-30, 30+ • Techniques • Fee simple, PACE, conservation zoning • Organization implementing policy (not zoning) • State, trusts • Annual household cost • Taxes and fees

23. Sample ChoiceExperiment Question 1500 different versions of the basic question shown here…

24. Model Results • Willing to pay significant amounts for preservation in communities • Median per household value for each additional acre of farm/forest preservation: $0.21 per year • Given 5,278 households in Smyrna/Clayton, total WTP per year, per acre is $1,108 • Total capitalized value (5% discount rate) • $22,168 per acre • Higher, if more households • Georgetown (19947) has 4,736 HHs; main Middletown zip code has 6,808 HHs

25. Example • Per household value for: • FIVE 100-acre farms of any type • No public access • Area at high risk of development • Preserved by state PACE • Estimated Value: $70.50 per household per year • For 5,278 households • Total Value of perpetuity = $7,441,980 • If 10,000 households in relevant community, then $14,100,000

26. What Factors Influence Value? • Residents prefer public access • Walking/biking is preferred to hunting • Hunting is preferred to no access • Residents prefer local preservation of parcels at high risk • Method of preservation matters (holding costs constant) • Most preferred: state PACE • Trust PACE and all fee simple are indistinguishable • Therefore, PACE dominates fee simple • Least: zoning (but…) • Significant heterogeneity: For 37%, trust PACE was preferred to state PACE

27. What About Land Type? • Interestingly, residents do not appear to care what type of farmland is preserved (forest, dairy/livestock, food crops, nursery, idle). • Residents value preservation equally for all types of farmland

28. Results Matrix for Parcel Preservation Value/Prioritization *But still may be of considerable value **Any land type (dairy, food crop, nursery, etc.)

29. Conclusions • DE and CT residents have well-developed preferences for land preservation • Value of preserved land can be substantial • Depends on what is preserved and how preservation is accomplished • If given the clear choice, many residents would vote for programs to preserve farm and forest • Choice experiments can provide significant information regarding residents values and preferences for farm and forest preservation • More analysis of state vs. local support • Follow up studies in 4 CT communities