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. Vyn1 B. James Deaton2 Alfons
Weersink2 1 University of Guelph Ridgetown
Campus 2 Department of Agricultural Economics and
Business, University of Guelph
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(No Transcript)
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Greenbelt Background

• November 2003 - Idea of a Greenbelt was
  introduced by the Ontario govt
• December 2003 Govt 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

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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
• ltlthttp//mah.gov.on.ca/userfiles/html/nts_1_23407
  _1.html.gtgt

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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

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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

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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

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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

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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

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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

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Data

• Prices are actual sale prices per acre
• Only arms lengths 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

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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
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Issues

• Development of GIS variables
• How to account for temporal issues
• How to account for spatial interactions

Nov 2003
Dec 2003
Feb 2005
June 2004
Greenbelt Introduced
Moratorium Imposed
Greenbelt Legislated
Greenbelt Protection Act (Temp)
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Thank you for your attention.

• Any Questions?