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Quantifying The Economic Value of Greenway Benefits: Leveling The Budget Playing Field

Quantifying The Economic Value of Greenway Benefits: Leveling The Budget Playing Field. Richard Hartman, AICP, CNU-a St. Petersburg, FL Based on preliminary paper, A Review of Methodologies to Determine the Economic Value of Greenways Texas State University, San Marcos Presented at:

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Quantifying The Economic Value of Greenway Benefits: Leveling The Budget Playing Field

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  1. Quantifying The Economic Value of Greenway Benefits: Leveling The Budget Playing Field Richard Hartman, AICP, CNU-a St. Petersburg, FL Based on preliminary paper, A Review of Methodologies to Determine the Economic Value of Greenways Texas State University, San Marcos Presented at: Texas Trails and Active Transportation Conference Fort Worth, Texas March 26, 2014

  2. In the beginning: Frederick Law Olmsted • Central Park • Economic impact of parks and open spaces on property values

  3. Distinct analysis: greenways are not linear parks • Parks and Open Space Large contiguous space Single responsibility Passive use • Greenways are not linear parks • Linear; connected • Multi-jurisdictional • Incremental proximity • Different benefits

  4. Why measure economic value of greenways? Scarce resources • Budgets • Cost-Benefit Analysis One-sided Validity • Public perceptions • Public support Make the budget fair by accounting for economic return from greenways in the ‘Plus’ column of a Cost-Benefit Analysis • Construction • Maintenance • Lack of care = lack of use = loss of economic advantage

  5. Budget impacts from greenways • Long-range Transportation Plans • Capital Improvement Elements • 5-year Capital Improvement Plans Open Space and Parks Master Plans Levels of Service

  6. Two distinct problems • Study limitations The most commonly mentioned problem of earlier studies was that almost all findings were based on anecdotal evidence and not on market data. Benefits omitted

  7. What defines a greenway: Traverse or not? Trail not required: “A greenway is defined here as a linear open space that connects parks, improves recreational opportunities, or aids in the protection of wildlife, natural areas, and scenic places.” (Lindsey and Knaap, 2005)

  8. Ability to traverse A greenway is a…”linear open space established along a natural corridor such as a riverfront or stream valley, and abandoned railroad right-of-way, a canal, a scenic road or some other linear route.” (Little, 1990) 8

  9. Greenway benefits • Monetary Economic Health Hazard management Safety Transportation Ecological Equity • Non-monetary • Cultural and Historic preservation • Quality of Life

  10. Benefits: Provide Choices Residents are 65% more likely to walk in a neighborhood with sidewalks. Cities with more bike lanes per square mile have higher levels of bicycle commuting.

  11. Americans want choices of Americans want more transportation options so they have the freedom to choose how to get where they need to go. 66% 73% currently feel they have no choice but to drive as much as they do. 57% would like to spend less time in the car. Future of Transportation National Survey (2010)

  12. The Tremendous Potential Of all trips: 47% are driven 39% are less than 3 miles 17% are less than 1 mile of these trips… National Household Travel Survey (2009)

  13. Benefits: Environment Transportation accounts for nearly 1/3 of all greenhouse gas emissions. Switching to walking or bicycling for short trips = reduce CO2 emissions by 12 to 22 million tons/year.

  14. Benefits: Reduce Infrastructure Costs Lee County, Florida Re-examined 5 road-widening projects Found widenings unnecessary = $58.5 million savings Use Greenways as ROW retainers for future use

  15. Greenways Benefit Children, Parents, and Schools • Enable and encourage children, including those with disabilities, to walk and bike to school • Reduce # of car trips to schools, miles driven and time (grid reduces gridlock) • Improve health, safety, socialization, and school performance.

  16. Benefits: Health 17% of kids and teens are obese. Limited physical activity contributes to the obesity epidemic. Dedicated, safe space for bicycling and walking help kids be active and gain independence.

  17. Benefits: Community Cohesion Greenways increase and improve the quantity and quality of interactions among community residents. They can increase mental and physical health by increasing friendships and by improving community security.

  18. Lindsey’s taxonomy of methods

  19. Methodologies reviewed • Hedonic Pricing method • Contingent Valuation • Willingness to Pay • Travel or Time Cost Valuation • Collective methods analysis • Property values • Value of public good • How much would user pay for amenity • Value from costs of use or time committed • Combining methods to capture more of total value

  20. Property Values – Hedonic Pricing Method • Proximity Principle (1/4 to ½ mile typically) • The value of an amenity is at least partially related to the price of residential properties in relation to their location relative to an amenity. • Hedonic Pricing • Used to determine value of a non-marketable good. • Allows capture of the true value of multiple characteristics • Separates out small incremental values that become significant when aggregated from large number of benefactors • Beneficial impacts may come from view, aesthetics, proximity, accessibility.

  21. Hedonic pricing - Limitations • Proximity limit omits significant amounts of incremental benefit • Overlapping benefits • Benefits fall outside of single jurisdiction • Context of greenway and neighborhood – topography, view? • Other concerns • Benefits fall outside single jurisdiction

  22. Contingent Valuation (CV) • CV provides an indication of overall economic value in terms of public good. • Assessment through use of general population surveys • Effective tool for quantifying large-scale public projects • Often relies upon subjective Willingness to Pay (WTP) to extrapolate how much public values a conservation or environmental project

  23. Contingent Valuation - Limitations • Findings lack level of validity specific to public expenditures • Amount willing to pay typically overstated, especially in relation to an immediate solicitation. • Surveys do not have immediate consequences • People tend to value losses more than gains; leads to WTP more to prevent loss of a public good than pay for creation of a new good.

  24. Travel / Time Cost Model • Determines economic value of greenway by assessing the amount of money or time users spend to use the greenway. • Extrapolates findings to total number of trail users to determine full economic impact. • Example: Study of impact of greenways on Lindsey et al. 2004

  25. Travel / Time Cost - Limitations • Unreliability of extrapolating use of particular location and/or day to determine total usage. • Omission of many greenway benefits • Difficulty aggregating different categories of benefits

  26. Collective Analysis Approach • Use of two or more methodologies to present a more complete analysis of economic impact of greenway. • Lindsey et al. (2004) combined findings of hedonic pricing method on property values and travel cost method for recreational values in study of Indianapolis, IN, greenways, including the Monon Trail.

  27. Collective Analysis - Limitations • Complementary, not combinable; Different method findings have different confidence levels in data. • Overlapping benefits, may lead to double counting • Some benefits are not counted • Constrain use for policy-making and budget justification.

  28. Suggestions - Public Side Inputs Budget for more of the benefits

  29. Sustainable Communities • Federal grant program under HUD, DOT, and EPA • Application requires monetary benefit analysis of multiple impacts from proposed greenway • Model to combine studies of multiple benefits to capture reliable data for many benefits usually omitted • Example: Houston Bayou Greenways 2020 -proposal to construct or complete 13 greenways

  30. Sustainable Communities criteriaCypress Creek Greenway Case Study, Appendix A • Benefit Projections: Proximate Population Recreation benefits Health benefits Vehicle Operating cost savings Congestion relief Crash reduction • Air Quality • Carbon Sequestration • Ecosystem Services benefits • Property Value • Total annual benefits (aggregated) • Average benefit per person

  31. Ways to Quantify the Benefits of Greenways — 1 (Litman 2013; Complete Streets)

  32. Ways to Quantify the Benefits of Greenways — 2

  33. Ways to Quantify the Benefits of Greenways — 3

  34. Take Advantage of What We KnowIncrease the Impact of the Benefit and Increase the Number of People Who Benefit

  35. Public support and property values • Public intuition No harm Some benefit, maybe Negative impacts EDUCATION WITH THE FACTS • Reality • Stabilization or increased values even with significant lack of knowledge and little, if any, marketing

  36. Planning initiatives that complement Greenways Trail-oriented Design and Development Sustainable Development Smart Growth Multi-modal planning Context Sensitive Design Street Connectivity Manage Transportation Demand Fix-It-First Least-cost planning Road Diets and Traffic Calming

  37. Public inputs to enhance economic value; now and future • Adopt trail-friendly Future Land Uses and zoning Trail-oriented Development (TrOD) • Trail design to max return • Direct benefits Trail businesses Tourist-oriented biz • Indirect benefits • Services, businesses • Community marketing • Competitive Advantage • Branding • Wayfinding

  38. Public inputs to enhance economic value; now and future • Integrate into transportation plan • Connected to other trails, streets, and transit • Ease of accessibility is key Connected to business district Main Street Clear directionals to key nodes

  39. Plan for different types of Greenways Rural Barton Creek, TX Exurbs Austin, TX Industrial corridor Midtown Greenway, MN Multifamily suburb Barton Creek, TX

  40. Develop Performance Measures and Outcomes • Proposed Trails Existing Trails

  41. Suggestions Private inputs

  42. Private opportunities (market inefficiencies) • Land developers Assessing price of land • Homebuilders Pricing homes: Design/location Competitive analysis Amenities Resale • Business community ID & location of profitable services; maximizing profits

  43. Developers, Homebuilders, and Real Estate Agents • Land acquisition and pricing Pro-forma IRR • Comparative advantage • Marketable amenity • Subdivision and community branding

  44. DISCUSSION What engineering, education, and encouragement would you recommend? What are the expected outcomes? What benefits would you measure? How could you measure those benefits? Monetary Non-monetary What are some anticipated costs? Would Typology by Transects help? What are we overlooking?

  45. Readings Crompton, John L. 2001(a). Perceptions of How the Presence of Greenway Trails Affects the Value of Proximate Properties. Journal of Park and Recreation Administration Volume 19, Number 3 Fall 2001 pp.114-132. _____. 2001(b). The Impact of Parks on Property Values: A Review of the Empirical Evidence. Texas A & M University, Dept. of Recreation, Park and Tourism Services. Vol. 33, 1:1-31. _____ and Nicholls. 2006. An Assessment of Tax Revenues Generated by Homes Proximate to a Greenway. Jnl of Park and Rec Administration, Fall 24:3 103-108. _____ and Marsh Darcy Partners, Inc. 2011. Bayou Greenways – A Key to a Healthy Houston. Houston Parks Board, August. Danzer. R. (2006) “Trails and tourism.” Rails to Trails Magazine, Summer.

  46. Readings (CONT.)  Fields, Billy. 2009. From Green Dots to Greenways: Planning in the Age of Climate Change in Post-Katrina New Orleans, Journal of Urban Design 14:3 325-344. Lindsey, Greg. 1999. Willingness to Pay for Urban Greenway Projects, APA Journal, Summer. _____, G., Payton, S., Man, J., and J. Ottensmann. (2003) Public choices and property values: Evidence from greenways in Indianapolis. The Center for Urban Policy and the Environment. _____, et al., 2004. Property Values, Recreational Values, and Urban Greenways. Journal of Park and Recreation Administration, Fall.  _____, et al. 2006. Neighborhood Correlates of Urban Trail Use. Journal of Physical Activity and Health. Supp 1:139-157.

  47. Readings (CONT.) Litman, Todd. 2013. Evaluating Complete Streets: The Value of Designing Roads For Diverse Modes, Users and Activities, Victoria Transport Policy Institute, 6 June 2013 Nicholls, Sarah and John L. Crompton. 2005. The Impact of Greenways on Property Values: Evidence from Austin, Texas. Journal of Leisure Research V. 37, 3:321-341 Rails to Trails. -----. “From Trail Towns to TrOD: Trails and Economic Development.” Magazine, --------

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