Testing the Effect of Neighboring Open Space on Development Using Propensity Score Matching

Environmental Economics and Policy,

A Hybrid Land Conversion Model Incorporating Multiple End Uses

The need for models that forecast land use change spans many disciplines and encompasses many approaches. Pattern-based models were the first in which projections of change at specific locations in actual landscapes could be predicted. In contrast, recent economic models have modeled the underlying behavioral process that produces land use change. This paper combines attributes from each approach into a hybrid model using a multiple discrete continuous extreme value formulation that allows for multiple conversion types, while also estimating the intensity of each type of conversion, which is an important but often overlooked dimension. We demonstrate the simulation routine, which successfully predicts a majority of growth by type, time, and location at a disaggregated scale, for a three-county region in Maryland.MDCEV, land conversion, regional planning, urban growth policy, Land Economics/Use,

An Empirical Examination of Real Options and the Timing of Land Conversions

Many studies have examined the effects of land use regulations on land prices and urban spatial form. Increasingly, jurisdictions have adopted incentive based mechanisms, such as purchase of development rights (PDR) programs, to manage the pace and pattern of urban growth and the conversion of agricultural land. PDR programs provide a third option to landowners in urbanizing areas: in addition to deciding whether to develop or not, landowners can decide whether to preserve their land. To our knowledge no studies have explored how the existence of an option to participate in a PDR program affects landowners' development decisions. This research provides empirical evidence of a previously untested prediction of real options theory: that additional options increase the value of waiting to make irreversible decisions. Our paper considers how an additional land use alternative, preservation, conveys a different type of option value and how that option affects the optimal conversion time. We estimate a hazard model and find significant evidence that the option to enter an easement decreases the hazard rate of development by about 40%. The results suggest that PDR programs can provide additional open space and amenity values beyond what is provided on preserved parcels, by delaying development (by at least a few years) of parcels that are not actually preserved.agricultural preservation programs, real options, land conversion, Land Economics/Use,

Credit Access: Implications for Sole-Proprietor Household Production

The objective of this study is to explain the determinants of farm and non-farm sole proprietorship households access to credit as well as the extent their credit constraints impact their value of production. A propensity, kernel-based matching estimator was employed to provide unbiased estimates of the production impacts of being denied credit. Prior research efforts have used inferior methods, including the two-stage Heckman estimator deal with estimation issues (selection bias and endogeneity) inherent in determining impacts of credit access and use. Results suggest that credit constrained sole-proprietorships, farm and non-farm, have a significantly lower value of production, but this drop in production, when aggregated to a national level, is small.farm credit, credit constraint, debt, Agricultural Finance,

Impacts of an Incentive Based Land Use Policy: An Evaluation of Preservation Easements

This dissertation examines the conversion decision of a landowner from an undeveloped or agricultural use to a subdivision in the presence of an active housing market and an active land preservation program. It utilizes a unique panel dataset and incorporates a real options framework to evaluate the impacts of housing market volatility on conversion timing. At the same time, this work evaluates the impact of a preservation program on the timing of conversion. Typical program evaluation of this type focuses on quantity or quality of acres enrolled. This work focuses on the timing of the conversion decision and involves a potential program benefit that is not related to enrollment in the preservation program itself. The benefit of a delayed conversion decision is a desirable outcome for the county even if parcels ultimately convert to a developed state. Hazard models are estimated which account for multiple exit states, i.e. competing risks, of conversion or preservation and correlation among these competing risks is modeled. Results of these models suggest that price volatility, as well as eligibility for the preservation program, significantly delays conversion decisions. The median estimated delay induced by easement eligibility ranges from 7 years to over 20 years depending on parcel size. However, enrollment in a preservation easement may impact neighboring land use decisions in the presence of spillover effects. That is, an enrolled parcel may attract development in the sense that neighboring parcels become more likely to convert. A propensity score matching procedure is utilized to quantify the spillover effect of preservation activity on future surrounding land conversion decisions. The propensity score estimation approach allows a semi-parametric estimate which controls the non-random selection or endogeneity of preservation activity. Results of this model suggest that parcels neighboring recent preservation activity are almost three times more likely to convert than similar parcels without a newly preserved neighbor

PDR programs affect landowners’ conversion decision in Maryland

PDR programs pay farmers to give up their right to convert their farmland to residential and other non-farm uses. Does having the option to enroll in such a program affect the a landowner’s conversion decision? Does it encourage land conversion or delay it? And if a farmer does enroll in a PDR program, will the decisions of neighboring landowners be affected? Dr. Towe at the University of Maryland finds out

Testing the effect of new neighboring open space on development

We examine both the short- and long-term effects of newly preserved open space in an exurban landscape. The open space is secured via voluntary perpetual easements that sever the development right from the land. We find mixed results with significant impacts on developable neighboring parcels, both on their likelihood of subdividing and on their likelihood of entering a preservation easement. We show that subdivision and preservation activity disproportionately locates near past neighboring preservation easement activity. The first outcome is an unintended consequence in contrast to policy objectives while the latter is, in fact, a policy induced effect. The analysis relies on a unique spatially explicit parcel-level dataset documenting residential development and preservation activity for almost 30 years, the primary objective is to test for interaction effects among parcels which would be impossible with any other sort of data and the results are robust across models addressing endogeneity concerns