ABSTRACT
Introduction Natural amenities are essential features of outdoor recreation, tourism, amenity migration and retirement drivers of local economic development (Bennett 1996; Frederick 1993; Jakus et al. 1995; Keith and Fawson 1995; Keith et al. 1996; Marcouiller 1997; Marcouiller and Clendenning 2005; McDonough et al. 1999). However, many valuable features of the landscape are not easily separable or captured by individual market transactions. Due to the public good features of these desirable attributes, non-rival and non-exclusive features of the rural landscape are underprovided by market-based resource allocations. In addition, features of the landscape are bundled, or jointly produced, with other locational attributes. This creates challenges in discerning the value of each attribute. Finally, they may be relatively location-specific, resulting in a more inelastic demand curve and more residual consumer surplus than for most freely tradable goods and services. In rapidly growing, high natural-amenity communities, the market provides strong incentives to convert working landscapes into higher intensity rural, residential or commercial uses (Seidl 2005; Orens et al. 2006). The long-term effect of market transactions will not result in a socially optimal (welfare maximizing) allocation of land among its potential uses where significant public good attributes of the landscape are found. While the influence of most urban developments on economic returns to the region are quite easily understood through market signals, the potential benefit of not developing the open space may be substantially less easy to detect and analyze. As a result, the potential for crafting welfare-enhancing public policy to better capture the economic value of land use change is clear. Ranch open space, or working landscapes, contributes to the vacation experience of tourists (Ellingson 2007; Rosenberger and Walsh 1997; Orens et al. 2006; Orens and Seidl 2009) and to the quality of life of residents (Magnan and Seidl 2004; Magnan et al. 2005; Rosenberger and Loomis 2001). These public good attributes of working landscapes are provided, without external compensation, through the stewardship of landowners, who also presumably benefit from these features. Tourists and residents, both landowning and non-landowning, can
be viewed as consumers of working landscape attributes. In addition to producing cattle and hay, the landowners are also producers of those non-consumptive use values. The local government represents residents directly and is charged with maximizing their welfare; however, local government policy must also take into account the welfare of visitors. Effectively maximizing tourists’ welfare and then capturing it locally enhances the welfare of the local residents as producers of tourism services. Local government can affect the supply of working landscapes through public policy. The land use policy alternatives available to local governments to discourage land conversion, or encourage rural land stewardship, include regulatory options (e.g. zoning, animal density limits, set-back requirements, rural planned unit development standards), incentives (payment for ecosystem services (PES), purchase – agricultural-conservation-easements, purchase of development rights (PDR), right-to-farm legislation) and disincentives (nuisance laws, technology restrictions, production restrictions). Such public policies can be financed by taxing tourists (lodging tax), residents (property tax/mill levy), both (sales tax), or neither (agricultural zoning). Each policy option is costly in terms of direct costs to stakeholders, in addition to opportunity costs of foregone or restricted land use alternatives. From a social cost – benefit perspective, a policy is potentially justified so long as the total benefits exceed the total costs of the policy and the policy that creates the maximum net benefits is most desirable. However, it may be reasonable or desirable for local government to seek to redistribute the burden and benefits of rural land stewardship through policy such that the incentives to generate public values are more appropriately aligned. Private property rights are strong in the institutional and cultural context of the western United States. As a result, compensatory (incentive-based) programs are typically favored over regulatory programs, and voluntary compliance or participation is often sought over governmental mandates or restrictions. In this chapter, we use the results of two recent surveys to simulate the welfare effects of four potential agricultural land-preservation policies. We define the relevant stakeholder groups as non-landowning residents, landowning residents and summer tourists. Local government is simply considered a conduit through which costs and benefits can be redistributed among the stakeholder groups. In our results section, we first discuss the total annual consumer surplus derived by residents (Magnan 2005) and summer tourists (Ellingson 2007) to Routt County, Colorado. Next, we estimate the total regional and distributional effects of a lodging tax, a mill levy and a sales tax to finance a purchase-ofagricultural-conservation-easement program. We also estimate the total regional and distributional effects of a non-compensatory zoning program. Particular care must be taken in characterizing gains and losses in economic value relative to regional economic impact. Consumer surplus is value that has not been captured in the formal economy and may represent economic opportunity. Policy can capture this value and redistribute it. Total non-market value may remain the same, but economic activity may change due to direct, indirect and induced effects of the policy. Thus, the connections among non-market valuation,
policy and economic development are highlighted. This policy-simulation exercise can inform local decision-making by illustrating the likely total and distributional implications of several classes of policy options local leaders can use to guide land use.
