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Thread: Value of agricultural land

  1. #1

    Value of agricultural land

    Hello:
    In Washington state we wrap growth boundaries around a 20 year supply of buildable urban land. This results in a spreadsheet approach to planning that is very quantifiable. Often times, conderation of urbanizing Ag lands is supported by the quantification of the economic benefits (capital investment, sales tax revenue, and other multipliers). I am searching for studies on the value of rural and ag lands. We have lots of great policy language on thew protetcion of rural character and ag lands, but I need numbers. Any advice?
    Thanks
    Derek

    360-397-2375 (4909)

  2. #2
    Cyburbian donk's avatar
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    Not sure of any studies, but can think of how and where to gather the raw data you'd need to do some quick assessments.

    I would start with the tax records for a few different areas that abut one another, some inside an UGB and others outside. I'd then sort for parcel sizes in excess of 50 acres that also have an agricultural tax code associated with them. Then compare assessed values for farm land within the UGB and outside. You might also want to look at places that are completely separated from areas experiencing rapid growth/development pressures to provide a wider context. You may also want to look at different types of farms as well as the capital costs with each varies.

    This suggestion assumes that your tax roles are computerized and linked to a GIS. If they are not too difficult to do, if not time to call a college student.
    Too lazy to beat myself up for being to lazy to beat myself up for being too lazy to... well you get the point....

  3. #3
    Cyburbian Budgie's avatar
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    There are many factors involved in the value of AG land, UGB's and other land use regulations and polices are only one set of determinants. Infrastructure (specially highway interchanged (See DeKalb County, Illinois Study), water and sewer lines are major factors. The American Farmland Trust (AFT) has assisted in several Cost of Services Studies that generally demonstrate that Ag land pays in taxes more than the service costs they generate. I don't know of any single study that accounts for all of the factors (soil productivity, rural development patterns, right-to-farm laws, conservation easements and other factors). The AFT is a good place to start.
    "And all this terrible change had come about because he had ceased to believe himself and had taken to believing others. " - Leo Tolstoy

  4. #4
    Cyburbian Emeritus Chet's avatar
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    If your state values by use, rather than market value, Wisconsin Dept of Revenue might be helpfull

  5. #5

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    You definitely need to look at AFT (and others') COCS studies. But cautiously, a lot of them were done quickly by citizen groups. That doesn't mean they're wrong, but it does mean that a more studied approach (which is reflected in some of the studies) might yield different results in some cases. They do not all turn out the same. My guess is that in suburban WA you will find typical results, but you must understand that COCS is about averages. It doesn't mean that every residential development fails to pay its own way, just because residential development in general is a loser. It is a lot better to do detailed fiscal impact studies, if you have the resources. AFT does have some more sophisticated studies. The one for the Central Valley of CA may be somewhat relevant to your question.

    Doing your own studies is not hard, just time-consuming. I am working though one right now that is going to produce some interesting results regarding the impact of both box stores and rural lands.

  6. #6
    Forums Administrator & Gallery Moderator NHPlanner's avatar
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    Quote Originally posted by Lee Nellis
    I am working though one right now that is going to produce some interesting results regarding the impact of both box stores and rural lands.
    Off-topic:
    That, I would LOVE to see when you're done!
    Last edited by NHPlanner; 24 Feb 2005 at 10:41 AM.
    "Growth is inevitable and desirable, but destruction of community character is not. The question is not whether your part of the world is going to change. The question is how." -- Edward T. McMahon, The Conservation Fund

  7. #7
    Cyburbian SGB's avatar
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    Off-topic:

    Quote Originally posted by Lee Nellis
    I am working though one right now that is going to produce some interesting results regarding the impact of both box stores and rural lands.
    Quote Originally posted by NHPlanner
    That, I would LOVE to see when you're done!
    Me, too! Lee, will your study be posted on the Williston web site once completed?
    All these years the people said he’s actin’ like a kid.
    He did not know he could not fly, so he did.
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  8. #8

    Thanks - further clarification

    I appreciate all of the help. Cyburbia is great.
    While I am familiar with the AFT studies, they mostly speak to comparative costs of servicing areas. I need to quantify the value that the farms provide to the community, through (for example)...
    Food production (including the benefits of local production regarding transportation and safety)
    Rural Character (Quality of Life)
    Clean air and water filtration/ infiltration
    Etc

    Derek

  9. #9
    Cyburbian Budgie's avatar
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    Quote Originally posted by Derek
    ... Rural Character (Quality of Life)
    Clean air and water filtration/ infiltration
    Etc
    Wow, these type of positive externalities are very difficult to quantify. You should also consider the negative externalities as well. I'm sure that if you delve into the agriculture economics literature you can find research on these topics. Now how you apply existing research to the local situation is a whole other problem.
    "And all this terrible change had come about because he had ceased to believe himself and had taken to believing others. " - Leo Tolstoy

  10. #10
    Corn Burning Fool giff57's avatar
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    I was involved with a COCS for Johnson County (Iowa City) Iowa for a grad school project. We didn't have the time to do as good a job as we would have liked, but the results were interesting. The study is on-line here.
    “As soon as public service ceases to be the chief business of the citizens, and they would rather serve with their money than with their persons, the State is not far from its fall”
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  11. #11

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    There will be ag economists at WSU who can help with the direct and indirect value of ag production. Or you can fiddle with Ag Census and REIS data to do your own simple analysis. It will be darned near impossible to assess the other impacts except in a comparative way. i.e. farmlands generate X% less traffic, % stomrwater runoff, etc. And to cover the aesthetic values would require some kind of contingent valuation research.

    RE the fiscal impact work for Williston. I will figure out how to make the results available after the analysis is done. Don't expect anything before the end of March.

  12. #12
    Member japrovo's avatar
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    look "south"

    Along Portland's fringe high-value agriculture (nursery products, wine) have replaced traditional row crops in the decades following the creation of the UGB. The difference in value is huge ($1,000s/per acre rather than pennies). That's correlation not causation of course, but talk to your state ag folks about market trends, perhaps you could make the case for a shift to some sort of value-added on the urban fringe. Certainly for nursery products the fringe of metropolitan areas is a pretty characteristic location choice.

    On the positive externalities---think about quality of life/amenity issues. There was a Lincoln Institute paper a few years ago (abstracted at this link http://www.rlua.pdx.edu/ ) that may have some help for you. But that is a tough area to quantify.

  13. #13
    Member JLA's avatar
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    Quote Originally posted by Derek
    Hello:
    In Washington state we wrap growth boundaries around a 20 year supply of buildable urban land. This results in a spreadsheet approach to planning that is very quantifiable. Often times, conderation of urbanizing Ag lands is supported by the quantification of the economic benefits (capital investment, sales tax revenue, and other multipliers). I am searching for studies on the value of rural and ag lands. We have lots of great policy language on thew protetcion of rural character and ag lands, but I need numbers. Any advice?
    Thanks
    Derek

    360-397-2375 (4909)
    Whenever a landowner donates a conservation/ag easement, the value of the land must be appraised for tax purposes. I haven't looked into this specifically, but I imagine there must be substantial appraisal literature on this. One place to start would be the Land Trust Alliance web site at www.lta.org.

    Good luck!

  14. #14
    Member Groovy Iguana's avatar
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    Quote Originally posted by Derek
    Hello:
    In Washington state we wrap growth boundaries around a 20 year supply of buildable urban land. This results in a spreadsheet approach to planning that is very quantifiable. Often times, conderation of urbanizing Ag lands is supported by the quantification of the economic benefits (capital investment, sales tax revenue, and other multipliers). I am searching for studies on the value of rural and ag lands. We have lots of great policy language on thew protetcion of rural character and ag lands, but I need numbers. Any advice?
    Thanks
    Derek

    360-397-2375 (4909)
    Try the Journal of Land Economics, although their stuff is geared toward economists and may not be all that accessible. Other than that, I'd talk to someone at the Ag Extension (does UDub have one)?

    -Groovy

  15. #15
    Member Groovy Iguana's avatar
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    Pay Dirt!

    Just did a quick search, out of curiosity. I can get you the articles if you want them .

    Title: Measuring the Contributions of Site Characteristics to the Value of Agricultural Land
    Source: Land Economics v69, n4 (November 1993): 356-69
    Standard No: ISSN: 0023-7639
    Available From: Publisher's URL
    Abstract: This study examines the effects of different combinations and qualities of selected site characteristics on the value of agricultural land in six substate regions in the state of Washington. The analysis follows the general hedonic regression form but incorporates nonnegativity constraints on the models. This, coupled with an adaptation of H. Bierens's (1990) conditional moment test, yields consistent results showing (1) land value is a function of site characteristics, (2) land markets in the state of Washington are highly regional, (3) parsimonious empirical models can provide adequate representations of expected land values, and (4) nonnegative truncation is a valuable procedure in hedonic models.

    and:

    The Value of Agricultural Land in the United States: A Report on Research
    Source: Agricultural Economics Research v35, n2 (April 1983): 39-44

  16. #16
    Cyburbian Cardinal's avatar
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    Quote Originally posted by Groovy Iguana
    ...and (4) nonnegative truncation is a valuable procedure in hedonic models....
    A nonnegative truncation is may surficially appear to be consistent with land markets, but I when I think it through I wonder if that is a mistaken conclusion. There are, of course, negative values attributable to phenomena such as excessive debt, environmental characteristcs, tax liens, and other conditions. Artificially screening those admitted outliers can be a source of error in the regression analysis.
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  17. #17
    Member Groovy Iguana's avatar
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    Quote Originally posted by Cardinal
    A nonnegative truncation is may surficially appear to be consistent with land markets, but I when I think it through I wonder if that is a mistaken conclusion. There are, of course, negative values attributable to phenomena such as excessive debt, environmental characteristcs, tax liens, and other conditions. Artificially screening those admitted outliers can be a source of error in the regression analysis.
    Good point. I haven't actually read the article, myself, so I can't say.

  18. #18
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    ecosystem benefits

    This is great stuff... I will check out all the links people posted. Same issues in NV. Trying to increase incentives to preserve ag land/open space in face of development pressures (economic incentives to subdivide and sell 20 acre parcels). Currently, development rights through TDR program are used as comps to appraise value of ag land for conservation easements. Limits to growth, however, depress demand for development rights. Looking to other ways to value land, esp. in relation to ecosystem benefits provided:

    Flood control - Drainage ditches maintained for flood control by private land owners. What would cost to County be to provide this service? If conveyance fee is paid to land owner, do they accept liability? Looking into flowage easements (Tennessee Valley Authority) to establish system to value flood control benefits, but this is a slightly different application (they use value of ag production lost due to constant flooding).

    Groundwater recharge

    Wildlife habitat

    Any ideas/questions welcome...

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