Land preservation, voluntary programs, and regulatory instruments

Abstract

In the US, urban sprawl and the resulting loss of farmland and habitats to residential and commercial uses have drawn increasing concerns and led to the establishment of both voluntary programs and regulatory instruments. These programs restrict a landowner's right to develop land with or without compensation. My dissertation is a study of the effectiveness and impact of those voluntary programs and regulatory instruments.

In the first essay, I develop and present an empirical test of the impact of Purchase of Development Rights programs in reducing farmland loss. I use a county-level data on the 269 counties in the six Mid-Atlantic States (Virginia, Maryland, Pennsylvania, Delaware, New Jersey, and New York) over a 50-year time period. Using a propensity score matching approach, I find strong evidence that these programs have reduced the rate of farmland loss and the acres lost.

My second essay evaluates the effect of Maryland Rural Legacy (RL) program on farmland preservation by taking into account a predisposition effect, a time effect, and a crowing effect. I use data on agricultural and forest parcels in three Maryland counties (Calvert, Charles, and St. Mary's) and match parcels based on the estimated propensity that the parcels are included in a RL area. I find that 1), the RL program crowds in the preservation effort of other programs and 2), more parcels and more acres are preserved in RL areas than in non-RL areas due to preservation effort from RL program.

My third essay is a theoretical study on land development restriction from the Endangered Species Act and landowners' timing to develop land. I use a two-period framework and assume uncertainty of future land value and irreversibility of land development decisions. I examine the conditions under which it is optimal for regulators to compromise and the optimal strategies that allow them to balance the welfare gain and loss from compromise. Regulators should compromise only if social welfare loss from preemption is sufficiently large. Regulator can improve social welfare and reveal landowners' types through differentiated ex ante fees for differentiated regulation levels.