Abstract—Public support for
protection of farmland—cropland, pasture, and rangeland—is
growing, as private decisions to convert land may not account
for rural amenity and other nonmarket benefits of farmland. Protection
programs include both regulatory and voluntary measures. Whether
the benefits of farmland protection exceed program costs may depend
greatly on local conditions.
Introduction
Expansion of land in urban uses often encroaches on cropland, pasture,
and rangeland. When these types of farmland are converted to urban
uses, the ability of the land to produce agricultural outputs is
lost. Such losses are the focus of growing public financial support
for farmland protection. All 50 States have enacted one or more
farmland protection programs to help slow the conversion of farmland
to developed uses.
If farmland only produced agricultural commodities, the normal
workings of the land market would optimally allocate land between
farming and urban uses. However, farmland also provides a number
of other benefits, or rural amenities, including open space, scenic
views, rural agrarian character, and wildlife habitat. These nonmarket
benefits are not typically accounted for in the land market, as
landowners are seldom able to extract payment from anyone for providing
these amenities. Consequently, landowners may not take the social
value of these amenities into account when considering whether to
develop land for urban-related purposes.
Trends in Farmland Losses
While farmland converted to urban uses comes from a large base,
urban areas have grown rapidly from a small acreage base (see AREI
Chapter 1.1). On average, 2.2 million acres of farmland per
year were converted to urban uses between 1992 and 2001, versus
1.1 million acres per year during the previous decade (Vesterby
and Krupa, 2001). Still, this annual rate represents barely 0.2
percent of the Nation's 1.03 billion acres of cropland, grassland, pasture, and rangeland suggests little threat to the Nation's capacity to produce
food and fiber (Barnard, 2000).
Rapid urban development since World War II has been fueled primarily
by population and economic growth, which has occurred in conjunction
with increased automobile ownership, declines in average household
size, and an increase in average residential lot sizes beyond the
urban fringe (Heimlich and Anderson, 2001). The movement of urban
populations to suburban locations has also increased development
pressures (Barnard, 2004). Despite more than doubling since 1960,
urban area made up less than 3 percent of U.S. land area (excluding
Alaska) in 1997. Developed area—which includes urban areas
plus large lot development, development in rural areas, and rural
roads and transportation—made up slightly more than 6 percent
in 1997 (Vesterby and Krupa, 2001).
Land moves into and out of different uses for a variety of reasons.
Movements of land into urban uses, however, tend to be permanent.
Once farmland is developed, it is typically economically infeasible
to revert back to farming. In 1982-97, 22.7 million acres of farmland
were converted to forest, versus 13.9 million acres converted to
urban uses.1 About 5.4 million acres
of land converted to urban uses were prime farmland. However, the
share of land converted that was prime (22 percent) was very similar
to the share of the land base that was prime in 1982 (20 percent),
so prime farmland was not disproportionately converted (fig. 5.6.1).
The amount of land in cropland uses remained nearly constant nationwide
between 1945 and 1997, at about 20 percent of U.S. land. Yet, some
regions have consistently lost cropland (fig. 5.6.2). The Northeast
lost 46 percent (11.6 million acres) of the cropland that existed
in 1945, the Southeast lost 33 percent (9.0 million acres), Appalachia
lost 20 percent (7.0 million acres), and the Lake States, 12 percent
(5.5 million acres). Western regions, however, added 12 percent
(37.1 million acres). Losses in the East are likely due to increased
urbanization, while Western gains are due in part to federally subsidized
irrigation water (Vesterby and Krupa, 2001). See data product for
State-level detail.
Losses in grassland pasture and range in 1945-97 exceeded 70 percent
(7.3 million acres) in the Northeast. Causes include natural regeneration
of forests and losses of grassland to urban development (Vesterby
and Krupa, 2001). Grassland losses in the West were 10 percent (61.4
million acres), due largely to nonpermanent conversions to cropland
(see data product for State-level
detail).
Farmland Protection Policies and Tools
Because private land use and conversion decisions may not account
for rural amenity and other nonmarket benefits provided by farmland,
government agencies and other organizations adopt policies and programs
to protect farmland. Land use management is a local prerogative
by tradition and law, and every State has enacted measures that
help protect farmland. An
ERS analysis of the "purpose clauses" of State farmland
protection laws and programs found that protecting rural amenities
was cited by 36 States, along with protecting local food supplies
(30 States), protecting environmental services—including water
and air quality (29 States), protecting the local economy's
natural resource-related jobs (23 States), and maintaining orderly
development (18 States). The focus on protecting rural amenities
most often stemmed from goals relating to the protection of open
space and rural/agrarian character.
Local jurisdictions and nonprofit organizations have adopted an
expanding array of farmland
protection programs since World War II. Agricultural/rural residential
zoning defines minimum parcel sizes and may include limitations
that restrict use to farm-related activities (farm family and labor
housing, processing, and marketing). Another regulatory approach
is right-to-farm laws, which protect farmers from nuisance lawsuits
brought by neighbors objecting to normal farm activities, and sometimes
from local government-imposed ordinances that unreasonably restrict
agricultural activities
Voluntary approaches include preferential assessment, which allows
jurisdictions to assess agricultural land for property tax purposes
at its value in current agricultural uses instead of its full market
value for potential urban (developed) uses. In some cases, landowners
must forgo development for a specified time period. Preferential
assessment laws were first enacted at the State level in Maryland
in 1956; by 1989, they had been adopted by all 50 States. Other
voluntary approaches include agricultural districts, in which enrolled
landowners maintain the land in an agricultural use for a specified
term, in exchange for property tax relief, insulation from nuisance
complaints, and other benefits; Purchase of Development Rights (PDR)
programs, in which landowners sell the rights to develop the land;
and Transfer of Development Rights (TDR) programs, in which landowners
in locally designated "sending areas" privately negotiate
to sell development rights to developers who use them to develop
at higher densities in locally designated "receiving areas."
Use of these incentive-based mechanisms avoids the property rights
issues that have hampered regulatory programs.
Trends in Farmland Protection
State and local governments spend millions of dollars annually on
farmland protection programs. For example, ERS estimated that costs
incurred through use value assessment programs (a "tax expenditure")
range from about $25,000 annually in Wyoming to $218 million annually
in California. The national total is almost $1.1
billion annually (Heimlich and Anderson, 2001).
Another major outlay is State and county PDR programs. Nineteen
States have State-level PDR programs, and at least 41 local jurisdictions
operate separate programs in 11 States (AFT, 2004a
and 2004b).
The average easement cost in State PDR programs was about $1,400
per acre, and nearly $2,000 per acre in local PDR programs. However,
PDR expenditures are one-time expenditures to restrict development
over the long term (or permanently).
The most active State and local PDR programs are in the Northeast.
Maryland, Massachusetts, New Jersey, and Pennsylvania account for
76 percent of State-level PDR expenditures to date and 58 percent
of the acres preserved to date in State programs (AFT,
2004a). Especially active programs elsewhere are county-level
programs in Sonoma County, CA, and King County, WA.
ERS estimates all State PDR programs to average $123 million in
spending annually. State PDR programs have cumulatively
preserved nearly 1 million acres of farmland at a cost
of nearly $1.4 billion since the late 1970s (fig. 5.6.3)
(AFT,
2004a). This is slightly more than the annual
tax receipts that are forgone through use value assessment
(when capitalized at 4 percent, the 1995 value of U.S.
public expenditures on use value assessment is estimated
to be $27
billion). The amount of land preserved through government programs represents
less than 2 percent of cropland that ERS estimates to
be subject to some degree of development pressure (fig.
5.6.4). The total cost of preserving cropland
subject to development pressure could be as much as $130
billion (Heimlich and Anderson, 2001).
Despite State and local prerogatives in land use management, the
Federal Government is increasingly partnering with local/State agencies
and nonprofit organizations to protect farmland. Federal efforts
to protect farmland began with the Agriculture and Food Act of 1981,
which required Federal agencies to evaluate the impact of federally
funded programs that converted farmland to nonagricultural uses
and to consider alternative actions that would lessen the adverse
impacts. Direct Federal involvement in permanent farmland protection
did not begin until 1996, when the Farmland Protection Program (FPP)
was established to help State, local, and tribal governments purchase
agricultural conservation easements. The FPP distributed approximately
$50 million during 1996–2001 in matching funds.
The 2002
Farm Security and Rural Investment Act reauthorized the FPP,
which was renamed Farm
and Ranch Land Protection Program (FRPP).
FRPP provides up to 50 percent of easement costs on qualified, privately
owned agricultural land. It also expanded the set of entities eligible
to apply for funding to include nongovernmental organizations (primarily
land trusts). Authorized funding increased to approximately $100
million per year for the 6 years beginning in 2002. With
this increase, FRPP is now authorized to spend almost as much annually
as all State PDR programs combined.
The high costs of permanently preserving farmland through PDR programs
have generated support for TDR programs. While the sponsoring jurisdiction
faces fewer costs, garnering taxpayer support in areas targeted
to receive the urban densities being transferred is difficult, as
is balancing the supply of and demand for development rights (Fulton
et al., 2004). Fifty local jurisdictions have passed TDR ordinances,
but only 15 TDR programs have individually preserved more than 100
acres (AFT,
2001).
Many land trusts exist to preserve farmland (fig. 5.6.5). These
private, nonprofit organizations accept donations of conservation
easements on farmland and environmentally sensitive land. The donations
benefit landowners in the form of Federal and State (in 10 States)
income tax deductions. In Colorado, South Carolina, and Virginia,
formal markets are developing that allow a landowner who donates
an easement but cannot use the State tax credit to sell the unused
credit to a third party (Conservation Fund, 2002).
Issues in Farmland Protection
The public benefits that are lost when farmland is converted cannot
be readily measured in money terms. Instead, the benefits are typically
estimated based on what people are willing to pay to avoid the losses
associated with the conversion of farmland—i.e., the loss
of agricultural production and rural amenities. Variation in local
conditions leads to a wide range in estimates—from a fraction
of a penny to more than a nickel per acre annually—to prevent
the development of farmland. One analysis suggests this willingness
to pay may exceed $1 billion annually
for the United States (Heimlich and Anderson, 2001).
Whether the benefits of farmland protection programs exceed program
costs again depends heavily on local conditions. The direct costs
of purchasing easements must be added to the value of urban benefits
forgone when land is preserved (Lopez et al., 1994; Miller and Doering,
2004). Estimates for these opportunity costs are not readily available.
In addition to program costs, farmland protection programs have
other impacts on government budgets and on resident taxpayers. Jurisdictions
may save money on public service costs by preserving farmland because
farmland requires fewer public services than residential uses do.
Preserving land may benefit nearby residents who can look forward
to rural scenic views and open space for the length of the easement
(often into perpetuity). However, farmland preservation may impose
costs on potential new residents who then have to live in higher
densities elsewhere, face higher land prices, or endure longer commutes
if they seek rural land farther from employment centers. How programs
are implemented, and the distribution of enrolled lands, will determine
the impacts on government budgets and taxpayers.
Farmland protection tools vary in their effectiveness at permanently
preserving farmland, and providing intended benefits. For example,
agricultural zoning exemptions allowing higher density residential
development are common, and can limit the ability to preserve farmland.
Agricultural districts may have limited success in areas where landowners
commit to not develop only when their land faces little development
pressure. Preferential assessment does little to preserve farmland
in the long run because the capital gains from developing farmland
usually exceed the rollback penalties for conversion. Preferential
assessment may even encourage land speculation by reducing developers'
costs of holding farmland in inventory.
Because they result in permanent (or at least 30-year) restrictions
on nonfarm development, PDR and TDR programs are considered to be
the most effective in preserving agricultural lands. However, the
actual effect of these programs on land development rates and patterns
is uncertain. While the number of acres preserved can be counted,
these programs may simply shift development pressures elsewhere.
Also, compliance with/enforcement of development restrictions over
the long term is not a sure thing.
An often-cited argument in support of PDR programs is that they
help keep farmland affordable for new farmers. In theory, once the
development rights have been sold, the market value of the preserved
land will reflect only its value in a farming use, and may be significantly
lower than its residential market value. However, a recent study
found little evidence that easement restrictions significantly lowered
preserved farmland prices (Nickerson and Lynch, 2001). It could
be that landowners who farm as a recreational pursuit are outbidding
"traditional" farmers for the land.
Though both TDR and PDR programs rely on conservation easements,
economic implications and effectiveness can differ. Some PDR programs
(due to ranking criteria and agency efforts to minimize costs) yield
a pattern of preserved parcels that are widely separated. This raises
questions about whether a "critical mass" of remaining
farms can support farm input suppliers, and about the sustainability
of remaining farms. TDR programs, on the other hand, have often
been implemented in conjunction with reductions in allowed housing
density (downzoning) of a large area. While many of the parcels
in the downzoned area are not technically "preserved,"
the combination of zoning and TDRs may be effective at preventing
widespread development. It is much more difficult to change zoning
on an area-wide basis than on individual parcels. As a consequence,
large clusters of "undeveloped" farmland (the downzoned
area) may be preserved through TDR.
Policy Developments
Most recently, States have begun to implement "smart growth"
strategies. Smart growth is a catchall phrase to describe a number
of land use policies for influencing the pattern and density of
new development. Without prohibiting development outside designated
areas, smart growth policies use incentives and disincentives to
direct new development to existing urban areas with appropriate
infrastructure. PDR programs are one tool used to meet these goals.
The effectiveness of smart
growth will depend on how the incentive effects of new policies
differ from pre-existing policies (Nickerson, 2001).
Endnotes
1 Some of the reported shift to forest
use is likely due to
reclassifications. As trees reach a 10 percent canopy level, they
are
classified as forest, even though the land may still be used for grazing.
American Farmland Trust (1997). Saving American Farmland:
What Works. Northampton, MA.
Barnard, C.H. (2004). "Land Use Problems and Conflicts: The
Interrelated Roles of Employment, Growth, Population Growth and
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Shortle (eds.), Land Use Problems and Conflicts, Routledge,
London.
Barnard, C.H. (2000). "Urbanization Affects a Large Share
of Farmland," Rural
Conditions and Trends 10(2), U.S. Dept. Agr., Econ. Res. Serv.
Conservation Fund (2002). "Buying and Selling Easement Tax
Credits," Common Ground: Conservation News from the Conservation
Fund 13(4): 4, Oct.-Dec.
Fulton, W., J. Mazurek, R. Pruetz, and C. Williamson (2004). TDRs
and Other Market-Based Land Mechanisms: How They Work and Their
Role in Shaping Metropolitan Growth. Brookings Institution
Center on Urban and Metropolitan Policy, June.
Lopez, R.A., F.A. Shah, and M.A. Altobello (1994). "Amenity
Benefits and the Optimal Allocation of Land," Land Economics
70: 346-58 (Feb).
Miller, Douglas, and Otto Doering (2004). "Purchase of Development
Rights Programs: Assessments of Their Impact on Development Trends
and Net Benefits." Unpublished manuscript, Purdue University.
Nickerson, Cynthia J., and Lori Lynch (2001). "The Effect
of Farmland Preservation Programs on Farmland Prices," American
Journal of Agricultural Economics 83(2):341-351 (May).
