The Nature of Value
New tools developed by resource economists offer insight into the
intrinsic worth people place on the environment and how that translates
into effective land-use policies
From the Nation's largest metropolitan
areas to the smallest rural communities, public and private land-use
decisions can have long-lasting implications for the future. At stake
are quality-of-life issues, such as scenic views, clean water and
community atmosphere, as well as the economic activities that provide
jobs.
There's no crystal ball giving landowners and planners a view of
tomorrow to ensure they make the right decisions today. Indeed,
development proposals often set the stage for public controversy and
lawsuits. However, University of Maine resource economists are going
behind the scenes to accurately capture the values that people place on
the environment. They are developing tools that help landowners and
planners look to the future and contemplate the effects of public and
private land-use decisions.
Their work is providing citizen advocates and planners with new ways to
address the tendency for expanding urban areas to gobble up farmland and
forests. One of their goals is to improve the basis for effective public
policies.
Kevin Boyle, UMaine professor of environmental economics, has been
tapped by state and federal governments, nonprofit organizations and
corporations to estimate, in simplest terms, the values that people
place on nature. He has focused on a variety of topics — from
free-flowing rivers and clear lakes to fishing preferences and
forestlands. In academic circles, he is well known for reducing the
experimental bias that can mar studies of public values.
Results of well-designed valuation research, he says, can reveal the
preferences that individuals express through their daily economic
decisions — actions that may, in aggregate, be contrary to public
policies, such as measures to preserve open space and rural heritage.
UMaine Assistant Professor of Resource Economics and Policy Kathleen
Bell studies land-use decisions. Her recent research combines economic
modeling with computerized mapping technology (geographic information
systems or GIS) to analyze changes in land-use patterns. Visualizing
future land-use patterns helps citizens and planners to understand the
consequences of public policies.
The maps that she and her colleagues have produced indicate the
likelihood that any given land parcel will be developed. They are maps
of development pressure based on models that take into account current
land-use policies, demographics and the real estate market.
Environmental economists like Boyle and Bell have their critics. For
example, some contend that the value of nature cannot be captured in
dollars and cents, that land-use decisions involve much more than
comparing the economic value of a strip mall or a subdivision to a
wetland or forest preserve.
Yet economists bring important information to the decisionmaking table.
"We observe peoples' values through their choices. All we're doing is
showing people how their values are expressed through the decisions they
make. If you do or do not care about natural resource issues, your
choices and actions tell us your preferences," Boyle says.
For example, Boyle and Bell have demonstrated that people are willing to
pay good money to be close to nature. In a recent study for the U.S.
Fish and Wildlife Service, they analyzed data on residential land prices
near federal wildlife refuges in Massachusetts, New York and
Pennsylvania. Their results show that the closer a house is to a
protected wildlife area, the higher the property value.
Property value data, says Boyle, provide an incentive for developers to
preserve views, wildlife habitat, recreational areas and other
amenities. "On a property, open space is just as important an attribute
as a fine kitchen or a luxury bathroom. This is not really the
environment versus dollars. Developers can get money out of (protecting
open space)."
Bell also points out that economists help citizens and policymakers
understand the drivers of land-use change and the efficacy of land
management policies. At the heart of the open space versus development
issue, she says, is the public's ability to influence private decisions.
Many public amenities, such as vistas and wildlife habitat, are the
cumulative result of numerous private landowner decisions. Those
amenities may have value for a community, but when owners exercise their
development rights, those public benefits can be lost. Often, the public
has no recourse or even a role in the decision. The challenge is to
design policies that align private and public interests, she says.
In a recent study of rural Calvert County, Maryland, south of
Washington, D.C., Bell worked with Elena Irwin of Ohio State University
and Jacqueline Geoghegan of Clark University to create an economic model
simulating future growth.
"We ran our model using information on past land-use decisions and
policies, parcel characteristics and land values, then used the results
to forecast where development would happen. We examined whether this
future development would be consistent with the county's comprehensive
plan."
The result was an eye-opener, Bell says. "Historically, people were very
happy with their land-use management policies. They thought their
policies were performing admirably because they hadn't seen a lot of
residential and commercial development. But we found that these policies
were not being pushed. A policy such as a five-acre minimum lot size
looked effective until people from Washington, D.C., decided that they
were willing to commute for two hours and residential subdivisions
started appearing. That five-acre minimum lot size zoning not only did
not prevent that growth, but it led to growth that might have been less
appealing to the community as a whole, in that you have individual
houses taking up more land."
Among the open-space preservation methods included in the Calvert County
model, policies that promote development within identified growth areas
were the most effective in reducing pressure on open spaces. The model
suggests that motivating developers to work within well-defined
geographical boundaries would succeed in reducing pressure on open-space
rural lands.
Such measures could be particularly important in suburban areas located
between highly urbanized and wide-open rural spaces. Yet they seem to
have limited appeal to the country as a whole. In an ongoing study of
public attitudes for the U.S. Department of Agriculture, Boyle finds
that most people don't place a high value on farmland preservation
programs. Residents of rural communities with an abundance of open land,
and big cities, where development proliferates, tend to consider such
programs a low priority for public funds. That leaves the highest
concern in communities at the urban fringe, where pressure to convert
open space to buildings and pavement is most evident.
The findings could help policymakers fine-tune their approaches to
open-space protection, taking into account local circumstances.
"The new information that economists can bring to people," says Bell,
"is that land-use decisions are individual decisions, that they reflect
human behavior played out on the landscape. We have to respect the
complexity of human behavior and acknowledge how people make decisions.
The challenge is to align private and public interests through effective
policies."
by Nick Houtman
March-April, 2003
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