ABSTRACT
Introduction Land use in the United States is dynamic, as discussed in Chapter 2, with millions of acres of land shifting uses each year. Many of these land-use changes are the result of market forces in an economy affected by modern technology and policy choices. Changes in land use are the result of choices made by individuals, corporations, nongovernmental organizations, and governments. This chapter considers forces that act at broad scales to affect land-use changes, operating via land markets, where they exist, and evidenced by the behavior of economic agents over a broad geography. The specific foci are the effects of policy and technology on land-use choices. Land Markets Land markets reflect the aggregation of individual decisions by sellers and buyers within the constraints imposed by land-use policies and regulations. The aggregation of these individual decisions determines the type and extent of land-use change. However, market failures exist (see Chapter 6), such that actions of individual buyers and sellers do not result in socially desirable outcomes. Policies designed to address such failures or to accomplish other public policy goals alter land supply and demand conditions. The political system has reacted to failures of land markets and interest in other public policy goals by the passage of legislation affecting land use, e.g., the 2002 Farm Security and Rural Investment Act (‘2002 Farm Act’). Before introducing specific examples of land-use policies, we broadly characterize major drivers in land use among rural uses and then between urban and rural uses. In both cases, a number of factors influence land supply and demand conditions. Examples include changing consumer demand for goods and services produced on the land and for direct consumption of land, e.g., through housing developments. Other factors are increases in population size and personal income levels that lead to an increase in demand for agricultural and forest products (U.S. Department of Agriculture, Forest Service 1988, 1990). Changes in land supply or demand conditions can alter land rents, and landowners may react to
such market signals by deciding to shift land use. The discussion of these drivers of land-use change will take a national perspective. Competition Between Agriculture and Forestry Uses As discussed in Chapter 2, more than 80 per cent of nonfederal land in the United States is in forests, crops, pasture, or range. Where climate and physiography permit, these rural uses can compete for the same land. More than 90 per cent of land-use changes on nonfederal lands in recent decades have been among uses of land for forestry and agriculture, and shifts between these two uses and other uses such as rural residential (U.S. Department of Agriculture, Natural Resources Conservation Service 2001). Competition Between Urban Uses and Agriculture and Forestry Production. Farm and forestry producers are sometimes adversely impacted by sprawling urban development. Areas of urban and other developed uses in the United States have expanded by more than one million acres annually since 1982 (see Chapter 2), as population and personal incomes have increased significantly (U.S. Department of Agriculture, Natural Resources Conservation Service 2001). A major contemporary focus of land-use policies is to manage the direction of this development or conversion of rural lands to other uses. The basic factors of increasing population and real incomes are important drivers for the expansion of developed areas and have significant impacts on land-use change (Alig and Healy 1987; Heimlich and Anderson 2001). They lead to greater direct consumption of ‘open’ land for housing development. At the same time, greater incomes and population size can also lead to an increase in demand for agricultural and forestry products as well as for the environmental, recreational, and aesthetic services of the land (U.S. Department of Agriculture, Forest Service 1988, 1990). Population and income pressures on land uses are not uniform across the nation. For example, shifts in population have occurred from the North to the South and the West in recent decades. The amount of land in urban and special uses increased more than 50 per cent since the 1960s in the South. From 1992 to 1997, six of the top ten states that lost cropland, forests, and other types of rural open space to urban development were in the South: Texas, Georgia, Florida, North Carolina, South Carolina, and Tennessee (U.S. Department of Agriculture, Natural Resources Conservation Service 2001). The rural landscape in these regions has changed with rapid population growth as more land was needed for home sites, roads, airports, schools, commercial and industrial sites, parks, open space, and other uses to satisfy the demands of urbanizing areas. As urban areas expand into rural areas, competition for land in rural areas increases and the value of rural land rises (Reynolds 2001). Consider that for the whole U.S., more than one-quarter of counties are currently classified as metropolitan. That compares with less than one-tenth 50 years ago. Even with constant tastes and preferences, a larger population base with
higher income levels will add up to greater consumption and demands for developed space. For example, consumers may demand more shopping space, as demonstrated by the 27 per cent increase in U.S. shopping area, and the 24 per cent increase in the number of shopping centers, between 1990 and 2000 (U.S. Department of Commerce, Bureau of the Census 2001). The amount of urban land added per additional person is higher for nonmetropolitan than for metropolitan counties (Reynolds 2001; Zeimetz et a1. 1976). Many Americans have a strong preference for the spreading out of development. They prefer to live in less-congested areas and will commute additional minutes or hours to realize their goals, a choice made possible by our excellent road system. Moreover, an increasing population of retirees has augmented out-migration from central cities and suburbs to rural areas that offer aesthetic amenities. Natural amenities may be a more important determinant of population growth than nearness to metropolitan centers or type of local economy (McGranahan 1999). The market price of land can be decomposed into different sources of value, such as its current use in production and its expected use in alternative enterprises. In many areas adjacent to urban centers, the expectation of urban development has a greater influence on the value of land its current use in farm or forestry production (Alig and Healy 1987). For example, the market value of more than 15 per cent of farmland is significantly influenced by urban development. For those urban-influenced acres, urban development pressures account for two-thirds of their market value (Barnard 2000). Of course, many landowners welcome this urbanizing influence, as it greatly increases their net worth. This marked appreciation allows them to borrow more and perhaps expand their operations, or it allows them to sell their land and realize capital gains. Although individual producers may be better off when they sell their land to developers, the checkerboard pattern of developed land and farm and forest production can have a variety of negative impacts on producers who choose to stay. Impacts include complaints by new residents about the noise and pollution associated with farm and forestry production, loss of local farm infrastructure, such as input suppliers, and difficulty in expanding for those producers who would like to purchase nearby parcels of land. For those who want to stay in agriculture or forest production, low profit margins do not allow producers to compete with developers for additional land as land prices are bid up by residential and other types of development encroachment. The checkerboard pattern of development can also have substantial ecological ramifications for wildlife species dependent on large blocks of forested or grassland habitat (Alig, Butler, and Swenson 2000). Some producers have seen the urban sprawl trend as a business opportunity for staying in farm production. They have shifted their commodity mix to satisfy the nearby market demand for perishable fruits and vegetables, as well as other fresh commodities. Other producers have adjusted by catering to the demand by local residents for farm visits. In 2000, 28 per cent of sightseers surveyed indicated that a motivation for their trip was to visit a farm or agricultural setting (U.S. Department of Agriculture, Forest Service 2000-2002). These include visits to purchase farm products or visits to learn about farming and to enjoy the view on
the farm. Pumpkin patches and you-pick operations are common in many urban areas. In addition, adjacent urban development has meant that farm operator household members have off-farm job opportunities. The average farm household earns more off-farm than on the farm (Ahearn, Perry, and El-Osta 1993). Off-farm opportunities in nearby urban areas have been key to the survival of many farms. Technological Changes Technological innovation is a major driver in land-use change. Technological change affects all sectors of the economy, including agricultural and forest production. At the same time, technological innovations in transportation, as discussed in Chapter 4, affect a broad set of economic activities and thereby influence land uses by reducing transportation time and costs. Innovations in Agriculture and Forestry Agriculture is a highly productive industry in the U.S. economy. Agricultural output grew at an annual average rate of nearly two per cent over the past 50 years. During this period, the use of land was relatively constant, while relative use of labor declined and use of intermediate inputs and capital increased (Figure 3.1). A major factor in this high level of productivity is the payoff from research in the form of new technologies. Studies have shown that the social rate of return on investment in public agricultural research ranges from 40 to 60 per cent. Rates of return on research investments in some forest products industries exceed 100 per cent annually, while others, such as in southern softwood growth and management research, do not begin to approach this range of results or those for the agricultural sector (Hyde, Newman, and Seldon 1992). Public and private research investments have led to the adoption of ‘labor-saving’ technologies. Other inputs, such as capital and farm chemicals, have been substituted for land and labor on the farm as part of this process (Ahearn et al. 1998). Significant advances in agricultural technologies affect land use in a variety of ways. First, new technologies have allowed the relatively fixed agricultural land base to be farmed more intensively. New mechanical technologies have generally affected producers’ cost structures and led to increasing economies of size. A constant feature of U.S. farm structure is a dwindling number of operations, and an increasing average farm size, although the number of small, primarily rural residence farms is stable. Although the total acres in agricultural uses has changed little since 1935, when the number of farms was greatest, the number of farms has fallen from 6.8 million to about two million in 1997 (U.S. Department of Agriculture, Economic Research Service 2002). There are significantly more private landowners in forestry than in agriculture (about 10 million in total), with less than 10 per cent of forestland owners possessing three-quarters of all forestland (Birch 1994). Between 1978 and
Figure 3.1 Index of farm input use in the United States (1948=100)
1994, there was a significant increase in forest ownership of plots smaller than 50 acres. With the continued pace of development into forestland documented in the 1997 National Resources Inventory, the average size of forest ownership is expected to decline (Sampson 2000). Part of the reason is that an increasing number of smaller forest properties (less than 25 acres) are used primarily for residential purposes; the number of larger-sized properties is more stable. In spite of a relatively stable number of U.S. cropland acres, the innovations that have spurred production intensification have influenced land in two important ways. First, the scenic look of farmland has gradually changed over time. For example, confinement livestock operations have reduced the extent of livestock pasturing. Second, the production intensification permitted by some technologies has likely had a negative impact on soil quality (Batie 1993). However, other innovations, such as conservation tillage technologies or variable rate technologies, are believed to reduce the degradation of soil quality relative to conventional technologies. One technological advance that may greatly affect both the agricultural and forest sectors is the use of genetically modified material. Yields per acre could be significantly increased under certain scenarios, and the use of environmentally degrading inputs could be reduced. While societal concerns may limit use of genetically modified organisms in some cases, adoption of these technologies in the land-intensive industries of agriculture and forestry could influence land exchanges between the two sectors if relative productivities shift. One example of genetically modified material that affects the competition for land between agriculture and forestry involves the production of short-rotation woody crops (SRWCs), such as hybrid poplars. A national-scale analysis by Alig et al. (2000) showed that growing demand for wood fiber and tightening supply
could mean that introduction of SRWCs could act to temper market price rises and bolster reliable aggregate supplies of woody fiber. Expanded fiber farming could reduce management pressures on existing forest resources, while resulting in the conversion of farmland to SRWC production. Even without SRWCs, timber management intensification on private lands over the years has generated a significant increase in the share of the U.S. timber harvest produced on plantations (Alig et al. 1999b; Alig, Mills, and Butler 2002). Although the total SRWC area projected will be a modest portion of the total agricultural land base, expanded SWRC supply could reduce forest plantation area in the United States and lead to lower forestland values. Innovations in Communication Innovations in communication have been a driver behind changing land rents and uses because they have reduced the transactions costs of locating outside of central cities for some businesses and households. Before the current suite of telecommunication innovations existed, most businesses were required to operate in urban areas. The impact of the dispersion of businesses into less developed regions of the country is multiplied by the relocation of downstream industries and associated housing developments. For example, telecommunication-dependent firms, such as catalog retail operations, can successfully function in rural communities. In addition, though not large in numbers, some individuals are able to successfully conduct private consulting and other business pursuits from any location through telecommunication. Major communication innovations affecting population dispersion are personal computers and the internet. Although nonmetropolitan use of computers on the job has lagged that for metropolitan areas, 40 per cent of non-metropolitan job holders used computers on the job in 1997, as compare to 18 per cent in 1964. In addition, there is a wage premium of ten per cent associated with using computers on the job (Kusming 2002). Policies The U.S. has a long and varied history of influencing private land use through policies at the national, state, and local levels. These land-use policies include land-use taxes or subsidies, transfer of development rights, easements, and regulations, such as zoning and growth control. In addition, many other policies that are not primarily targeted to land-use management sometimes impact land use. These include agriculture and forest production policies, public policies governing investment in public infrastructure, tax policies (e.g., property taxes for school funding), and trade policies. Land-use policies guide how land will be used, usually to achieve some stated or implicit objective. Early land-use policies in the United States extend back to the ‘Broad Arrow Policy.’ In 1691, this was when a shortage of ship masts
in Europe led England to blaze pine trees 24 inches or more in diameter within three miles of water in the northeastern U.S. with the mark of a broad arrow; these trees were to be reserved for use by the Royal Navy. Later milestones include the disposal and retention of public lands. Contemporary land-use policies as a whole are multi-objective in nature. This is evident in a 1983 policy directive of the U.S. Department of Agriculture (USDA):
It is the USDA’s policy to promote land use objectives that are responsive to current and long-term economic, social, and environmental needs. This policy recognizes the rights and responsibilities of State and local governments for regulating the uses of land under their jurisdiction. It also reflects the USDA’s responsibility to (a) assure that the United States retains a farm, range, and forest land base sufficient to produce adequate supplies, at reasonable production costs, of high quality food, fiber, wood, and other agricultural products that may be needed; (b) assist individual landholders and State and local governments in defining and meeting needs for growth and development in such ways that the most productive farm, range, and forest lands are protected from unwarranted conversion to other uses; and (c) assure appropriate levels of environmental quality (U.S. Department of Agriculture, 1983).
