Preserving agricultural and forest land: a TDR approach

Abstract

Purpose -The purpose of this paper is to explore the demand and supply relationship between urban and non-urban land, the latter's diminishing supply, arguments for and against its preservation, methods in which preservation might be achieved and one method in particular, with which the authors have considerable experience, that involves the purchase of development rights and density credits. Design/methodology/approach -The research design involved meetings with farmers, city and county officials and members of several land conservation organizations, bringing together several hundred agricultural and residential real estate transactions, quantitative analysis of the transaction data using descriptive and hedonic methods, developing property attribute values and thereby determining the value of agricultural development rights and urban density credits. Findings -Agricultural development rights were valued, on average, at $9,000 per acre. Commercial development rights were valued, on average, at $9.00 per square foot of floor area (FAR). Practical implications -By acquiring agricultural development rights the process of agricultural land being converted to urban purposes can be slowed or halted. Valuing and selling development rights is a straightforward means of permitting urban density that is understood by developers and easily, objectively and transparently quantified. It is also a good method of raising funds for the acquisition of agricultural development rights. Originality/value -The valuation process developed and employed does away with the need for individual appraisals of rights to be acquired and sold. Therefore this is a very efficient process. Also, it shows how farmers, preservationists and planners can be brought together to solve a common problem.

The Value of Farmland and Its Determinants—The Current State of the Art

“…This often leads to contradictory views by urban planners and policymakers. The process of the demand for the expansion of urban land increases the interest in single-family detached homes, which also require land for household support services (e.g., schools and shopping centers) [28]. Private investments must be channeled transparently and with a long-run vision for the implementation of sustainable urban land development,…”

“…While some researchers mention their effect, others build models to evaluate it. It is also possible to, for instance, measure the amenity benefits of farmland (e.g., [27]) and study the transfer of development rights (e.g., [28]).…”

“…The sale date was included, for example, in Ref. [28], as additional data that could impact selling prices. However, the authors do not mention any direct relation between it and selling prices.…”

“…However, apart from distance, location, and travel times, other characteristics measure immediate and future development potential, which is the reason why there is also a category named after that factor. For example, the per-acre premium related to entitlements: one-home-site entitlement increases the value of an agricultural parcel by 130,000$ [28]. The expectation of future development can go beyond the distance to the closest city or metropolitan area, and that expectation influences the farmland price [40,50].…”