The effects of the greenbelt legislation on farmland prices in ontario
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The Effects of the Greenbelt Legislation on Farmland Prices in Ontario. Richard J. Vyn 1 B. James Deaton 2 Alfons Weersink 2 1 University of Guelph Ridgetown Campus 2 Department of Agricultural Economics and Business, University of Guelph. Greenbelt Background.

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The Effects of the Greenbelt Legislation on Farmland Prices in Ontario

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The effects of the greenbelt legislation on farmland prices in ontario

The Effects of the Greenbelt Legislation on Farmland Prices in Ontario

Richard J. Vyn1

B. James Deaton2

Alfons Weersink2

1 University of Guelph Ridgetown Campus

2 Department of Agricultural Economics and Business,

University of Guelph


Greenbelt background

Greenbelt Background

  • November 2003 - Idea of a Greenbelt was introduced by the Ontario gov’t

  • December 2003 – Gov’t placed moratorium on urban development in the Greenbelt study area to allow time for consideration of this idea

  • June 2004 - The Greenbelt Protection Act was passed as temporary legislative measure

  • February 2005 – Greenbelt Act 2005 was legislated


Research question

Research Question

  • Has Greenbelt Legislation influenced farmland values?

    • Ministry of MAH says “no”

      • “The value of agricultural lands in the Golden Horseshoe that are not …zoned for urban development … should not be effected.” *

    • Some farmers believe values will decrease

    • Economic Literature is mixed

      *<<http://mah.gov.on.ca/userfiles/html/nts_1_23407_1.html.>>


Previous zoning studies

Previous Zoning Studies

  • Author: Vaillancourt and Monty (1985)

  • Area of Study: Quebec

    • 1978 provincial zoning restrictions (Bill 90)

  • When:1975-1981

  • Method: Hedonic Approach

  • Major Finding:

    • For an urban fringe area (Montreal):

      • Reduced relative value of restricted use land

        • 14.7% and 30.5% less than unrestricted


Previous zoning studies1

Previous Zoning Studies

  • Author: Henneberry & Barrows (1990)

  • Area of Study: Rock County, Wisconsin

  • When:1980 & 1981

  • Method: Discriminant Analysis & Hedonic Method

  • Major Finding:

    • Capitalization can be positive or negative: depends on zoning, parcel size, distance from urban area


Previous zoning studies2

Previous Zoning Studies

  • Author: Nickerson and Lynch (2001)

  • Area of Study: Maryland

  • Sales Data:Tax and Assessment database – 1994-1997

  • Method: Hedonic approach

  • Major Finding:

    • Little statistical evidence that preservation programs decrease farmland prices


Previous zoning studies3

Previous Zoning Studies

  • Author: Ernest (2003)

  • Area of Study: Dufferin County, Ontario

  • Sales Data:Appraisal reports – 1998-2003

  • Method: Appraisal techniques, Direct Comparison Approach

  • Major Finding:

    • Sale prices were higher within the Niagara Escarpment Plan Area than outside this area


Data sharing agreement

Data Sharing Agreement

  • Research agreement between the Municipal Property Assessment Corporation (MPAC) and U of Guelph

  • MPAC provided data for the purpose of investigating the impact of the Greenbelt legislation on farmland prices


The effects of the greenbelt legislation on farmland prices in ontario

Data

  • Time period: 2002 – 2006

  • 21,163 sales of agricultural parcels from 25 counties in southern Ontario

  • Over 1,000 variables that describe the characteristics of each parcel

  • Thousands of parcels in the Greenbelt


The effects of the greenbelt legislation on farmland prices in ontario

Data

  • Prices are actual sale prices per acre

    • Only arm’s length’s transactions included

    • Highest per-acre price is $4.4 million

  • Unique variables

    • Sale type

    • Proportion of each land class

    • Crop heat units

    • Proportion of orchard acreage

    • Vacant vs non-vacant parcels

  • Urban influence accounted for through distance and population variables


Economic approach

Economic Approach

  • Empirically Estimate a Hedonic Price Function

    Pli = (Si, Qi, Ei, Li, Gi)

Structural

Greenbelt

Land Quality

Location/Spatial

Environment/Amenity

Sales Price of Property


Issues

Issues

  • Development of GIS variables

  • How to account for temporal issues:

  • How to account for spatial interactions

Nov 2003

Dec 2003

June 2004

Feb 2005

Greenbelt Introduced

Moratorium Imposed

Greenbelt Protection Act (Temp)

Greenbelt Legislated


Thank you for your attention

Thank you for your attention.

Any Questions?


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