ABSTRACT
There is a growing body of research evaluating farmland preservation programs. Research has asked a broad range of questions related to the programs. Are enough acres enrolled? What types of farms are enrolled – hobby or productive? Does contiguity matter and is it achieved? Do certain programs work better than others (PDR versus TDR)? Do programs impact farmland loss or development patterns? Do preserved lands provide the amenity benefits people desire? Do the programs have spillover impacts? (Brabec and Smith 2002; Lynch and Lovell 2003; Duke and Ilvento 2004; Liu and Lynch 2006; Lynch and Carpenter 2003; Duncan 1984; Pfeffer and Lapping 1994; Feather and Barnard 2003; McConnell et al. 2006; Zollinger and Krannich 2001; Rilla and Sokolow 2000; Nelson 1992; Feitshans 2003). In Maryland’s recent Smart Growth legislation, the Rural Legacy program set out to prioritize preserving contiguous farms to make orderly and fiscally responsible development more achievable and to create large agricultural zones (Lynch and Liu 2007). These papers provide some sense of how agricultural land preservation programs may be altered or formulated to improve social welfare. Yet these papers and others continue to suggest that too much farmland is being lost2 in part because PDR programs can be very expensive. To further complicate matters, preservation efforts can generate positive amenities for adjacent homeowners and may increase demand for housing near preserved parcels, which makes achieving the goals of preservation even more costly and thus more difficult (Geoghegan et al. 2003; Ready and Abdalla 2005; Irwin 2002). One of the underlying motivations for farmland preservation programs is that the programs keep agricultural land affordable, because farms with conservation easements attached should sell at a discount. The lower-priced land should be more easily purchased by new and expanding farmers and thus help retain a viable agricultural sector (Gale 1993). Evaluating whether farmland preservation programs are facilitating the purchase of land for agricultural producers therefore requires an analysis of how much the easement restrictions decrease the selling price of preserved farms, compared to similar properties without easements. Determining the optimal budget for a farmland preservation program is a related policy challenge. A recent Maryland report suggests that to achieve the current preservation goal (686,000 more acres/278,000 more hectares), the state would need to allocate as much as $4.58 billion to obtain the least expensive eligible acres (Lynch et al. 2007b). Addressing both the opportunity cost of enrollment and the size of the budget requires a better understanding of the “right” price farmers should be paid for their enrollment in the program. Conceptually, this is quite straightforward: the attachment of the easement reduces the value of the agricultural property because of the lost opportunity to develop. If the development rights have no value, i.e. the highest and best use for the land is an agricultural use, then no compensation should be paid. If the development rights are the full market value of the land, i.e. there is no profitable agricultural use, then a fee simple purchase by the public sector might be most appropriate.
