An Empirical Examination of the Timing of Land Conversions in the Presence of Farmland Preservation Programs |
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Authors: | Charles A. Towe Cynthia J. Nickerson Nancy Bockstael |
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Affiliation: | Charles A. Towe, PhD, and Cindy Nickerson, PhD, are economists with the Economic Research Service. Nancy Bockstael is professor in the Department of Agricultural and Resource Economics, University of Maryland, College Park, MD. |
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Abstract: | Using a panel of parcel-level data we estimate a hazard model and find strong evidence that the mere existence of an option to preserve farmland delays decisions to convert farmland to developed uses by about six years, a reduction in median conversion time of 12 to 43% depending on parcel size. Where such delays allow local governments to improve infrastructure or implement stricter growth control measures, benefits of a preservation option may be even more long term. Also, increases in the variance of returns to development tended to slow conversion for parcels with all but the highest lot capacities. |
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Keywords: | easement land conversion proportional hazard model purchase of development rights real options semiparametric duration analysis |
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