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

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
slide10
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
slide11
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

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