Valuation of Conservation and Preservation Properties: an Analysis of the Effect of Development Restrictions and Option Values on Land Prices

There has been a recent trend for many local, state, and federal agencies to buy land for conservation purposes. Also, many of these agencies have issued development moratoria, which decreases the value of some private property. This book analyzes the effects of these policies and uses data to research the possibility of alternative land uses on land prices. Both economic theory and statistical analysis are used to show that a large percentage of the value of preservation properties comes from potential uses of the property. This implies that if landowners are not compensated for taking away their development rights, they have an incentive to develop the land before development is banned. This outcome is not optimal for either party. These results should be of interest to various government agencies as well as many landowners.