What Have We Learned from Over 20 Years of Farmland Amenity Valuation Research in North

29 Pages·2009·0.2 MB·English

ReviewofAgriculturalEconomics—Volume31, Number1—Pages21–49
DOI:10.1111/j.1467-9353.2008.01424.x
What Have We Learned from Over
20 Years of Farmland Amenity
Valuation Research in North
America?
John C. Bergstrom and Richard C. Ready
AtleastthirtystudieshavebeenconductedinNorthAmericaoverthelasttwenty-plus
yearsthatmeasureamenityvaluesgeneratedbyfarmland.Areviewofthesestudiespro-
videsevidencethatestimatedfarmlandamenityvaluesaresensitivetoincreasingacreage,
regionalscarcity,alternativelanduse(s),publicaccessibility,productivityquality,human
foodplants,activefarming,andintensiveagriculture.Farmlandamenityvaluesarealso
sensitive to socio-demographic characteristics of beneficiaries. Inconclusive evidence is
providedwithrespecttotheeffectsofdistance,agriculturallanduse,uniquelandscape
features, property rights, and nonfarmland amenity substitutes. Implications of these
resultsforfuturefarmlandamenityvaluationresearcharediscussed.
Sincetheirinceptioninthe1970s,publicinvestmentinfarmlandprotectionpro-
gramshasbeenjustifiedinthepolicyarenaonthegroundsofprotectingboth
market values and nonmarket amenity values. Market values include agricul-
turalcommodityvalues,jobs,andincomeinthefarmsector.Nonmarketamenity
valuesincludedirectpublicaccessusevaluessuchasfarmandranchtours,in-
directpublicaccessusevaluessuchascountrysidesceneryviewing,culturaland
heritagevalues,andnonusevaluessuchasexistencevaluesofwildlifelivingon
farmandranchland(Irwin,Nickerson,andLibby;NickersonandBarnard;Nick-
ersonandHellerstein).Tolearnmoreaboutthemagnitudeanddeterminantsof
farmlandamenitybenefits,economistsembarkedonaresearchprogramstarting
in the early 1980s to assess these amenity benefits using nonmarket valuation
techniques.
(cid:1) JohnC.BergstromisRichardB.Russell,Jr.ProfessorofPublicPolicyandprofessor
ofagriculturalandappliedeconomics,theUniversityofGeorgia,Athens.
(cid:1) RichardC.Readyisassociateprofessorofagriculturalandenvironmentaleconomics,
ThePennsylvaniaStateUniversity,UniversityPark.
22 ReviewofAgriculturalEconomics
The purpose of this paper is to review previous farmland amenity valuation
studiesandassesswhatthesestudieshavefoundwithrespecttothedeterminants
andmagnitudeoffarmlandamenityvalueestimates.Thenextsectionprovidesa
generalconceptualframeworkfortheassessmentoffarmlandamenityvaluation
studies,focusingonalternativelandusesandnetwillingness-to-pay(WTP)for
farmland protection and amenities. An overview of previous valuation studies
including authors, location, farmland valued, and methods employed is then
presented.
Followingtheoverviewofpreviousstudies,majorempiricalfindingswithre-
spect to the determinants of farmland amenity values (e.g., willingness-to-pay)
arereviewedandsynthesized.Thisreviewandsynthesisprovidesevidencecon-
firming theoretical expectations with respect to general demand determinants
suchasquantityoffarmlandacresprotected,relativescarcityoffarmlandinthe
region,qualityoflandforagriculture(e.g.,soilquality),availabilityofsubstitutes
(e.g.,nonfarmlandthatprovidessimilaramenitybenefits)andsocio-demographic
characteristicsofbeneficiaries.Resultsalsoindicatethatpeoplecareaboutthetype
ofalternativelandusethatwilloccuriffarmlandisnotprotected(e.g.,intensity
ofdevelopment)andthetypeofagriculturethatispracticediffarmlandispro-
tected(e.g.,commodityproducedandintensityofproductionpractices).Results
ofpreviousstudiesalsosuggestthatpreferencesforfarmlandprotectionaresen-
sitivetolocationacrossgeographicspaceincludingpossiblenegativeamenity(or
disamenity) values associated with farmland and farming in close proximity to
residentialhouseholds.
Afterdiscussingthedeterminantsofvaluesforfarmlandprotectionandameni-
ties,peracrevalueestimatesoffarmlandamenitiesarepresentedanddiscussed.
Per-acreestimatesarerelativelyconsistentacrossthosestudiesthatemploystated
preferencemethods(e.g.,contingentvaluation[CV],conjointanalysis[CA])and
across studies that employ revealed preference methods (e.g., hedonic price
method [HPM]). Larger differences in per acre value estimates exist between
statedandrevealedpreferencestudiesthatcanbeexplainedbydifferencesinthe
natureoftheamenityservicesbeingvaluedandbydifferencesinthepopulations
affectedbytheseamenityservices.Asummaryandconclusionsareprovidedin
thefinalsection.
Conceptual Background: Competing Land Uses and Net WTP
Inordertoprovideatheoreticalbasisforunderstandingandinterpretingthe
valuationmethodsandresultsreportedinpreviousempiricalstudiesdiscussed
laterinthispaper,weconceptuallydefineandillustrateWTPforfarmlandameni-
ties in this section. Competition for scarce land resources, especially along the
urban/ruralfringe,resultsintheconversionoffarmlandtoalternativeusessuch
as residential, industrial, and commercial development. In many places across
theUnitedStateswhereurbangrowthisrapidlyincreasing,thelossoffarmland
and the amenities it provides to development has been of high concern to the
publicandpolicy-makers.Thus,protectingfarmlandfromdevelopmentisama-
jorgoalandmotivationbehindfarmlandprotectionprograms(Irwin,Nickerson,
andLibby;NickersonandHellerstein).
FarmlandAmenityValuationResearchinNorthAmerica 23
Figure1. Allocationbetweencompetinglanduses
Marginal •Net_WTP for farmland=MWTP - MWTP
Farmland Developed
WTP
and
Net Net_MWTPFarmland
Marginal
WTP
MWTPFarmland MWTP Developed
Q1 Q2
0 ACRES in Farmland All
All ACRES Developed 0
When farmland is protected, opportunities for the public to enjoy farmland
amenitiesarepreserved.Thus,demandandWTPforfarmlandprotectionandthe
amenitiesitprovidesrepresentpreferencesandvaluesformaintainingopportu-
nities to enjoy farmland amenities; for example, paying to protect farmland so
thatopportunitiestovisitfarmsforrecreationandtourismrelatedactivities(e.g.,
agritourism,agritainment)orsimplyviewingcountrysidesceneryarepreserved.
Once farmland is preserved, a person may end up paying additional money to
visitafarm(e.g.,parkingfees,activityfees)ortoviewcountrysidescenery(e.g.,
travelcosts).
Demand and WTP for farmland protection and the amenities it provides, ac-
countingforcompetinglanduses,areillustratedinfigure1.Thehorizontalaxis
in figure 1 measures the proportion of land in a community in less-developed
usessuchasfarmland,whichisalsoequaltooneminustheproportionindevel-
opeduses.ThedemandormarginalWTPforfarmlandisillustratedinfigure1by
thecurvelabeled“MWTP .”Inareaswherefarmlandisrelativelyscarce,
Farmland
marginalWTPforfarmlandishigh.Asacresoffarmlandprotectedincreases(left
to right on the horizontal axis in figure 1), marginal WTP to protect additional
farmlanddecreases.Higheramountsoffarmlandimplylessdevelopedland.At
thesametime,developedlandalsogeneratesurbanamenitybenefitstoresidents
such as employment opportunities, shopping, and entertainment. Demand or
marginalWTPfordevelopedlandisillustratedinfigure1bythecurvelabeled
“MWTP .”
Developed
Inareaswheredevelopedlandisscarce(closetotheright-handverticalaxis),
marginal WTP for additional developed land could well be positive, reflecting
thedesirebyhouseholdsforurbanamenitybenefits.Astheamountofdeveloped
landincreases(movingfromrighttoleftonthehorizontalaxisinfigure1),how-
ever, marginal WTP for additional developed land falls. The negative portion
24 ReviewofAgriculturalEconomics
Figure 2. Allocation between competing land uses with alternative
developmentintensity
•Net WTP for farmland=MWTP -MWTP
Farmland Developed
Marginal
WTP
Net_MWTP HI
and Net_MWTP LI Farmland
Farmland
Net
Marginal
WTP MWTP
Low Intensity
MWTP Developed
Farmland
MWTP
HighIntensity
Developed
Q1 Q2 Q3 Q4
0 ACRES in Farmland All
All ACRES Developed 0
of the “MWTP ” curve in figure 1 would be associated with perceived
Developed
disamenitiesfromover-development(e.g.,congestion,pollution).Thelandallo-
cationthatyieldsthehighesttotalamenitybenefitsispointQ2infigure1,where
Q2 units of farmland are protected in the community and the remaining units
aredeveloped.Thisisnotnecessarilythesociallyefficientsolution,however.The
private(market)valuesofthecompetinglanduseswouldalsohavetobetaken
intoaccount.
When the amenity value of farmland is measured (e.g. through a stated-
preferencesurvey),itisnotMWTP thatismeasured.Rather,themarginal
Farmland
willingness to pay to protect farmland reported by respondents will be a net
marginalWTP,equaltothedifferencebetweenMWTP andMWTP .
Farmland Developed
This net marginal WTP is shown as the dashed “Net MWTP ” curve in
Farmland
figure 1. At the point where “MWTP ” equals “MWTP ” (Q2 acres
Farmland Developed
of farmland protected in figure 1), “Net MWTP ” is equal to zero. At the
Farmland
marginwhere“MWTP ”becomeszero(Q1acresoffarmlandprotectedin
Developed
figure1),“NetMWTP ”equals“MWTP .”
Farmland Farmland
Figure 2 modifies figure 1 to illustrate how alternative development of dif-
ferent intensities may affect the amount of farmland protected in a commu-
nity and an individual’s net marginal WTP for farmland protection. From
the perspective of an individual household, conventional high-intensity de-
velopment (e.g., high-density housing, strip malls, industrial development) is
typically considered less attractive as a neighbor than low-intensity develop-
ment (e.g., large lot residential development, golf courses). In figure 2, the
curve labeled “MWTPHigh-IntensityDeveloped” represents an individual’s marginal
value or WTP for land used for high-intensity development. The curve labeled
“MWTPLow-IntensityDeveloped”representsanindividual’smarginalvalueorWTPfor
landusedforlow-intensitydevelopment.
FarmlandAmenityValuationResearchinNorthAmerica 25
Asillustratedinfigure2,marginalvalueorWTPforlow-intensitydevelopment
land lies above marginal value or WTP for high-intensity development land,
indicatingthatindividualsprefermoreofthistypeofdevelopment.Consequently,
infigure2,thepreferredleveloffarmlandprotectionislowerwhenthealternative
landuseislow-intensitydevelopment(Q2)ascomparedtowhenthealternative
land use is high-intensity development (Q4). As illustrated in figure 2, it is also
expectedtheoreticallythatnetmarginalWTPforfarmlandprotectionwhenthe
alternativelanduseislow-intensitydevelopment(Net MWTP LI)willbe
Farmland
lowerthannetmarginalWTPforfarmlandprotectionwhenthealternativeland
useishigh-intensitydevelopment(Net MWTP HI).Inaddition,itfollows
Farmland
theoreticallythatWTPforanonmarginalincrementinfarmlandacresprotected
is expected to increase as the intensity of alternative development conversion
increases.Wethereforeexpectthatmeasuredvaluesforfarmlandprotectionwill
behigherorlowerdependingonthedesirabilityofthealternativelanduse.
Another general farmland protection and valuation issue relates to possible
negativepreferencesandvaluesgeneratedbyfarmland.Atractoffarmlandbeing
used for active agriculture may generate both positive externalities (amenities)
and negative externalities (disamenities) such as noise, dust, and odor. If the
total value of farmland disamenities is greater than the total value of farmland
amenities,netWTPtoprotectorlivenearbythetractoffarmlandwillbenegative.
ThelikelihoodofatractoffarmlandgeneratingnetnegativeWTPisexpected
to increase with the intensity of agricultural practices on the land (Ready and
Abdalla).Forexample,supposeaparticulartractoflandisusedtogrowcropsand
raisechickenswithanumberofhighlyintensivepoultryhouses.Thesolidcurve
on the top of figure 3 represents the marginal benefits of positive externalities
(amenities) associated with cropland including open and green space benefits.
Figure3. Agriculturaluseattributewithintensiveagriculture
Net
Marginal
WTP
WTP(Q2-Q1)Intensive Farmland = Area A –Area B < 0
A
Cropland
Q1 Q2
0
B ACRES
Intensive Agriculture
26 ReviewofAgriculturalEconomics
The dashed curve on the bottom of figure 3 represents the marginal damages
ofnegativeexternalities(disamenities)associatedwithhighlyintensivepoultry
houses including odors and undesirable views.1 Consider a discrete change in
the quantity of farmland from Q1 to Q2. In the case illustrated by figure 3, the
total value of disamenities (Area B) is greater than the total value of amenities
(AreaA)resultinginnetnegativeWTPforprotectingthistractoffarmland.We
thereforeexpectthatmeasuredvaluesforfarmlandprotectionwillbehigheror
lowerdependingontheintensityandtypeoffarmingpracticeinvolved.
Overview of Previous Studies
General background information on previous farmland amenity valuation
studiesinNorthAmericaisshownintable1.Theoverallpurposeofthesepre-
viousstudieswastoexaminethedeterminantsandmagnitudeoffarmlandpro-
tectionandamenityvalues.Valuesmeasuredinthesepreviousstudiesrepresent
net marginal WTP for farmland protection and amenities (e.g., a point on the
Net MWTP curve in figure 1) or net WTP for a nonmarginal change in
Farmland
farmlandprotectionandamenities(e.g.,areaundertheNet MWTP curve
Farmland
infigure1betweentwopoints).
Fourdifferentvaluationmethodshavebeenemployedinthesepreviousstud-
ies,CV,CAbroadlydefinedtoincludechoiceexperiments,theHPM,andacom-
bined travel cost method (TCM)/contingent behavior (CB) approach. CV, CA,
andCBareexamplesofstatedpreferencemethods.HPMandTCMareexamples
ofrevealedpreferencemethods.Allofthesevaluationmethodshavebeentested
andvalidatedthroughyearsofresearchandarewidelyacceptedbyfederal,state,
andlocalgovernmentagenciesandtheU.S.courtsasreliabletechniquesfores-
timating nonmarket values such as the amenity benefits of farmland protection
(Champ,Boyle,andBrown;Freeman;NOAA).Thissectionprovidesanoverview
ofthesestudies,organizedbyvaluationmethod.
ContingentValuationStudies
All of the early farmland amenity valuation studies conducted in the 1980s
used CV to estimate WTP for the amenity values of farmland protection at the
town, county, or state level. CV is a stated preference valuation technique that
asksrespondentsinasurveysettingtheirWTPtoprotectfarmland.Thestudies
thathaveusedthismethodtodescribetotherespondenttheamountoffarmland
thatwillbepreserved,howpreservationwillbeaccomplished,andusuallythe
typeofdevelopmentthatwilloccurifthefarmlandisnotprotected.Withineach
study,thedescriptionofthequantity,attributes,orlocationofthefarmlandmay
be varied across respondents, allowing tests of the influence of these factors on
WTP.
Asshownintable1,previousCVstudiesoffarmlandamenitiesincludemajor
geographic regions across the U.S. and Canada. Only the U.S. continental west
coastisnotrepresented.Asindicatedinthepreviousconceptualsection,alterna-
tivelandusesintheabsenceoffarmlandprotectionareexpectedtoinfluenceWTP
forfarmlandprotectionandamenities.Halstead;Bergstrom,Dillman,andStoll;
Beasley,Workman,andWilliams;andRosenbergerandWalshvaluedprotection
FarmlandAmenityValuationResearchinNorthAmerica 27
d
America SamplePopulation Randomsampleofborough=Nhouseholds(119) Randomsampleofcountyhouseholds=N(127)Randomsampleofcountyresidents=Nandnonresidents(472)Randomsampleofhouseholdsinthree=Ncounties(93) InterceptsampleatallfourDelawareDept.ofMotorVehicleslocations=N(199)Randomsampleofcountyhouseholds=N(491)Residentialpropertysaletransactions=Ninthreecounties(10,135) Randomsamplehouseholdsinthree=Ntowns(85) Continue
h
t
r
o
N
iesin WTPperaAcre $0.0327 $0.0004 $0.0001 $0.0021 $0.0468 $0.2599 −$5,026 $7.57
d
u
t
s
n n
o od M
aluati ValuatiMetho CV CV CV CV CA CA HP CV
v
reviousfarmlandprotection FarmlandValued OldColonyandHomesteadfarmlandintheMatanuska-SusitnaBorough,AlaskaFarmlandinGreenvilleCounty,SouthCarolinaFarmlandandranchlandinMoffatCounty,ColoradoFarmlandintheMonctonregionofKent,AlbertandWestmorlandCounties,NewBrunswick,CanadaFarmsintheStateofDelaware FarmlandinSussexCounty,DelawareContributionofnearbyfarmlandtoresidentialpropertyvaluesinCalvert,CarrollandHowardCounties,MarylandFarmlandneararespondent’shomeinTownsofEastLongmeadow,GreenfieldandDeerfield,Massachusetts
p
f
o
k
y u
r h
a c
able1.Summ udy Beasleyetal. Bergstrometal. Bittneretal. BowkerandDidy DukeandIlvento Dukeetal. Geogheganetal. Halstead
T St 1. 2. 3. 4. 5. 6. 7. 8.
28 ReviewofAgriculturalEconomics
SamplePopulation Residentialpropertysalestransactions=Ninfourcounties(55,799) Countyresidentialpropertysales=Ntransactions(5,449) HPM:Residentialpropertysale=NtransactionsinSouthhold(374)CA:RandominterceptsampleofSoutholdresidentsatvariouspublic=Nvenues(1,123)RandomsampleofresidentsinfourCT=NandDEcommunities(3,309) RandomsampleofMansfieldresidents=N(356)RandomsampleofPrestonresidents=N(289)Randomsampleofstateresidents=N(288)RandomsampleofMuskegoproperty=Nowners(630) Continued
e
WTPperaAcre $769.54 NotAvailabl −$37,541(HPM)$0.1945(CA) Reportedinrows6,13,14,15$0.6876 $0.1458 $0.0171 $0.0130
A
C
ationhod PM PM PM/ A A A A V
uet H H H C C C C C
alM
V
FarmlandValued ontributionofpasturelandtoresidentialpropertyvaluesinAnneArundel,Howard,CalvertandCharlesCounties,MarylandontributionofnearbyfarmlandtoresidentialpropertyvaluesinDelawareCounty,OhioontributionofadjacentfarmlandtoresidentialpropertyvaluesinSouthholdcommunity,SuffolkCounty,NewYork armlandintheTownsofMansfieldandPrestoninConnecticutandinSussexCounty,DelawarearmlandintheTownofMansfield,ConnecticutarmlandintheTownofPreston,ConnecticutarmlandintheStateofConnecticut armlandintheCityofMuskego,Wisconsin
C C C F F F F F
e
d r
inue Duke 2007a 2007b 2007c kidmo
Cont etal. etal. and etal. etal. etal. andS
Table1. Study 9.Irwin 10.Jauregui 11.Johnston 12.Johnston 13.Johnston 14.Johnston 15.Johnston 16.Kashian
FarmlandAmenityValuationResearchinNorthAmerica 29
d d
s n ue
SamplePopulation Randomsampleofhouseholdsin=Nthreecounties(1,800)Countyresidentialpropertysale=Ntransactions(1,464) Randomsampleofcountyresident=Nandnonresidents(196)Randomsampleofstateresidents=N(162)RandomsampleofU.S.residentsa=Nresidentsinthreestates(802)HPM:Residentialpropertyowners=Nandrentersinstate(3,414)CV:Randomsampleofstate=Nhouseholds(194)Countyresidentialpropertysale=Ntransactions(8,090) Randomsampleofcounty=Nhouseholds(776)InterceptsampleofSteamboatSprings,RouttCountyvisitorsatvariousvenues Contin
ble n29PM) V)
WTPperaAcre $.0036 Notavaila $0.0001 $0.0010 Reportedirows20,$0.0052(H $0.0262(C $342.13 $1.87 $0.0405
d
dn
ea
aluationMethod CV HPM CV CA CA HPM CV HPM CA CombinTCMCB
V
FarmlandValued FarmlandinKane,McHenryandDekalbCounties,IllinoisContributionoffarmlandatvaryingdistancestoresidentialpropertyvaluesinDakotaCounty,MinnesotaFarmlandandranchlandinSheridanCounty,WyomingFarmlandinStateofMaine FarmlandintheUnitedStates,Georgia,MaineandOhioHorsefarmsinKentuckycounties ContributionofnearbyfarmlandtoresidentialpropertyvaluesinBerksCounty,PennsylvaniaCroplandinFranklinCounty,Ohio FarmlandandranchlandinRouttCounty,Colorado
d
e
nu alla d
i er d n
ble1.Cont dy Krieger LakeandEast McLeodetal. Ozdemir Ozdemiretal. Readyetal. ReadyandAb Roeetal. RosenbergeraLoomis
Ta Stu 17. 18. 19. 20. 21. 22. 23. 24. 25.
30 ReviewofAgriculturalEconomics
SamplePopulation andomsampleofcountyresidents=N(171)ountyresidentialpropertysale=Ntransactions(5,250) andomsampleoftownresidents=N(258)andomsampleofstatehouseholds=N(195)andomsampleofresidentsinthree=Ncounties(512) andBergstromstudieswhichreportedheWTPvaluesinthiscolumnrepresentAformoredetail).
R C R R R Volinskiymostoftppendix
datA
nhe
WTPperaAcre $0.0161 $1,930 $0.4420 $0.0002 $0.0013 eRoeetal.auldbenotedtheauthors(se
hot
thy
ValuationMethod CV HPM CA CA CV householdexceptforedin2007dollars.Itsandwerecalculatedb
FarmlandValued FarmlandandranchlandinRouttCounty,ColoradoContributionofadjacentfarmlandtoresidentialpropertyvaluesinDelawareCounty,OhioFarmlandinTownofRichmond,RhodeIslandFarmlandintheStateofGeorgia Farmlandinrespondent’shomecountyofBerks,LehighorNorthamptoncounties,Pennsylvania ressedinmeanannualWTPperacreperperhousehold.AllWTPvaluesarereportmultipleWTPvaluesreportedinastudy
ed eexpacreesof
Table1.Continu Study 26.RosenbergerandWalsh27.Sohngenetal. 28.Swallow 29.VolinskiyandBergstrom30.Waddington aWTPperacrevaluesarmedianannualWTPperaggregationsandaverag