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