Land Development at the RuralUrban Interface: Trends, Causes, and Impacts

1
Land Development at the Rural-Urban Interface
Trends, Causes, and Impacts

• Dr. Elena Irwin
• Dept. of Agricultural, Environmental, and
  Development Economics
• Ohio State University
• Prepared for The American Society of Farm
  Managers and Rural Appraisers National Meeting,
  Louisville, KY, December 6, 2002

2
Outline of Talk

• Population and land use trends at the rural-urban
  interface in the U.S.
• Causes of growth
• Impacts on housing and land values
• Impacts on communities
• Policy responses?

3
What is the Rural-Urban Interface?

• Exurban Areas outside the outerbelt of a major
  metropolitan area, but within its commutershed.

• General Characteristics
• 10 to 50 miles from urban centers of
  approximately 500,000 or
• 5-30 miles from a city of at least 50,000
• Commuters travel at least 25 minutes each way to
  work
• Communities containing a mix of long-term and
  newer residents
• Low density development
• A mix of urban and rural land uses

Adapted from Daniels, 1999.
4
Overall Historical Trend Decentralization of
Population
Source Mills, 1972
5
Population Change, 1982 - 1997
Source Heimlich and Anderson, 2001.
6
Source Johnson and Beale, 2001.
7
Source Johnson and Beale, 2001.
8
Source Hart, 1995.
9
1990-2000
(Non-Metropolitan Counties)
Source Johnson and Beale, 2001.
10
Land Use Trends

• Increasing low density development
• From 1982-1997, U.S. population grew by 17,
  while total urbanized land area grew by 47.
• Between 1982 and 1997, the average number of
  people per developed acre decreased by 14.
• Acres/person for new housing have almost doubled
  in last 20 years.
• Since 1994, 10 acre housing lots have accounted
  for 55 of total land developed in U.S.

11
Developed Land Uses, 1960 - 2000
million acres
Source Heimlich and Anderson, 2001.
12
Housing Trends, 1900 - 1997
13
Land Use Trends

• Farmland loss
• From 1992-1997, more than 6 million acres of
  agricultural land were converted to developed
  uses.
• Farm and ranch land were lost at a 51 faster
  rate in the 90s than in the 80s.
• Rate of loss between 1992-97 1.2 million
  acres/year
• From 1992-1997, rate of conversion of prime land
  was 30 faster than the rate for non-prime land.

14
Source American Farmland Trust, "Farming on the
Edge Sprawling Development Threatens America's
Best Farmland," 2002
15
Factors Causing Exurban Growth
16
Location of Employment

• Edge Cities new concentrations of office and
  retail activities outside the core areas of
  metropolitan regions.
• 5 million or more square feet of leasable office
  space
• 600,000 or more square feet of leasable retail
  space (about the size of a fair-sized mall)
• Has more jobs than bedrooms
• Perceived by the population as being one place

17
Location of EmploymentJob Sprawl
Source Glaeser, Kahn, and Chu, 2001.
18
Changes in Agricultural Sector
19
Changes in Agricultural Sector
20
Changes in Agricultural Sector
21
Individual Choices

• Desire for bigger house and lower density
• Increasing demand for single family detached
  homes
• While most people prefer the housing they are
  currently living in, 2 to 1 would prefer a less
  densely populated setting
• Flight from urban ills
• Rural amenities
• 70 of Americans prefer a rural or small town
  setting within 30 miles or more of a city over
  50,000
• Growing importance of natural amenities (nice
  weather, scenic views, recreational
  opportunities)
• Affordability
• Housing in exurban areas is less expensive

22
Government Policies

• Expansion of highway system and other road
  building
• Extension of public utilities
• Rural zoning policies
• Fragmented local governments

23
Impacts on Housing and Land Values in Exurban
Areas
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Statistical Analysis Hedonic Method

• The price of the house or lot is determined by
  the bundle of characteristics.
• Housing Price p1number of rooms p2yard
  size p3school quality p4distance to urban
  area
• Implicit prices p1, p2, the marginal
  contribution of each of the housing or land
  characteristics to the overall price.
• If proximity to urban area increased by 1 mile,
  how much would housing price increase?

25
Study 1 Housing and Land Use Amenities in
Maryland
Median House Price 174,000 Source Irwin, 2002
26
Study 1 Housing and Land Use Amenities in
Maryland
Median House Price 174,000 Source Irwin, 2002
27
Study 2 Neighborhood Amenities in Ohio
Median House Price 195,000 Source Sohngen, et
al., 2000
28
Study 3 Impacts of Hogs in North Carolina
Source Palmquist, Roka, and Vukina, 1997
29
Study 4 Farmland Prices and Urbanization in
Washington State
Source Dunford, Marti, and Mittelhammer, 1985
30
Impacts on Communities in Exurban Areas
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Community Impacts of Growth

• Economic
• Fiscal
• Agricultural
• Environmental
• Social

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Impacts differ across different groups within the
community

• Households
• Existing vs. new residents
• Landowners
• Farmers
• Developers
• Government
• Community

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Economic Impacts

• Positive
• Increased economic activity and job growth
• Increased housing and land values for property
  owners
• Negative
• Decentralized regional economic growth

34
Fiscal Impacts

• Positive
• Increased tax revenues from job growth and
  property taxes
• Negative
• Increased public service needs that may not be
  met by the increase in tax revenues
• Increased transportation costs and congestion
• Inefficient and costly infrastructure needs

35
Agricultural Impacts

• Positive
• Provides an option for farmers to supplement
  income with off-farm employment
• Niche market opportunities
• Increased land values for farmers
• Negative
• Loss/fragmentation of agricultural land
• Decline in local agricultural economy
• Increased conflicts between farmers and
  homeowners (i.e. pesticide use, odors,
  trespassing)
• Increased land rental rates for farmers

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Environmental Impacts

• Positive
• Distributes population at lower density
• Negative
• Loss of open space
• Increased runoff of sediments, pollutants into
  streams and groundwater
• Increased traffic congestion, noise and air
  pollution
• Loss/fragmentation of wildlife habitat areas

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Social Impacts

• Positive
• More housing choices
• Benefits from new residents entering communities
  that may have previously experienced population
  decline
• Negative
• Conflicts between old and new residents
• Disruption of rural character of existing
  community
• Increased segregation of urban poor

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Is Exurban Growth a Positive or Negative for
Communities?

• Weighing costs and benefits Many of the costs of
  exurban development accrue to communities, while
  many of the benefits accrue to individuals.
• Communities need to make conscious decisions
  regarding how they want to grow in the future.
• Some communities have begun
• implementing growth management
• strategies to contain low density growth.

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Policy Responses

• Farmland Preservation Programs
• Permanent easements/Purchase of development
  rights - Pennsylvania
• Urban Containment Policies
• Urban growth boundaries - Oregon
• Urban service boundaries - Maryland
• Development impact fees
• Regional cooperation
• Regional governance Metro Portland
• Regional tax-sharing Minneapolis-St. Paul

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Command and Control Policies

• Government determines land uses that are
  permissible
• Zoning
• Urban growth boundaries
• Challenges
• Legal issues
• Unintended consequences

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Incentive-Based Policies

• Government provides incentives to direct growth
  in desired locations and pattern
• Urban service boundaries
• Preferential tax assessment for agriculture
• Getting the price right policies incorporate the
  full costs and full benefits of individuals
  choices
• Impact fees for development to cover public
  service costs
• Purchase of development rights for farmers
• Challenge getting the incentives right so that
  the desired outcome is attained

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Contact Information

• Elena Irwin, Assistant Professor, Dept. of
  Agricultural, Environmental, and Development
  Economics, Ohio State University.
• Email irwin.78_at_osu.edu
• Phone [phone]
• Website http//aede.osu.edu
• For information on urbanization, land use, and
  other trends in Ohio, visit the Exurban Change
  Project website http//aede.osu.edu/programs/exur
  bs

43
References

• Population and Land Use Change
• Daniels, Tom. 1999. When City and Country
  Collide Managing Growth in the Metropolitan
  Fringe, Island Press, Washington, D.C.
• Hart, J.F. 1995. "Rural and Farm No Longer Mean
  the Same," in The Changing American Countryside,
  E. Castle (ed.), University Press of Kansas,
  Lawrence, KS.
• Glaser, Ed, Mathew Kahn, and Chenghuan Chu. May
  2001. Job Sprawl Employment Location in U.S.
  Metropolitan Areas, Brookings Institute Survey
  Series.
• Heimlich, Ralph E. and William D. Anderson. June
  2001. "Development at the Urban Fringe and
  Beyond Impacts on Agriculture and Rural Land."
  USDA, Economic Research Service Report No. 803.
  http//www.ers.usda.gov/publications/aer803/
• Johnson, Kenneth M. and Clavin L. Beale. May 2,
  2001. "The Rural Rebound Recent
  Nonmetropolitan Demographic Trends in the United
  States." http//www.luc.edu/depts/sociology/johnso
  n/p99webn.html
• McGranahan, D. 1999. Natural Amenities Drive
  Rural Population Change. Agricultural Economic
  Report 781. Washington, DC Economic Research
  Service, USDA.
• Mills, Edwin. 1972. Studies in the Structure of
  the Urban Economy. Baltimore Johns Hopkins
  Press.
• USDA, Economic Research Service. November 5,
  2002. "Land Use, Value and Management
  Agricultural Land Values." Briefing Rooms.
  http//www.ers.usda.gov/Briefing/LandUse/agchangec
  hapter.htm

44
References (continued)

• USDA, Economic Research Service. November 1,
  2002. "Land Use, Value and Management
  Urbanization and Agricultural Land." Briefing
  Rooms. http//www.ers.usda.gov/Briefing/LandUse/a
  gchangechapter.htm
• USDA, Economic Research Service. September 2002.
  "Rural America At A Glance." Rural Development
  Research Report Number 94-1. http//www.ers.usda
  .gov/publications/rdrr94-1/
• USDA, National Agricultural Statistics Service.
  "2000-2001 Statistical Highlights of U.S.
  Agriculture." http//www.usda.gov/nass/pubs/stath
  igh/2001/stathighnar.htm
• Hedonic Studies
• Dunford, Richard, Carole E. Marti, and Ronald C.
  Mittelhammer, 1985. A Case Study of Rural Land
  Prices at the Urban Fringe Including Subjective
  Buyer Expectations, Land Economics, 61(1)
  10-16.
• Irwin, Elena G. 2002. The Effects of Open Space
  on Residential Property Values, Land Economics,
  78(4)465-81.
• Palmquist, R.B., F.M. Roka, and T. Vukina, 1997.
  Hog Operations, Environmental Effects, and
  Residential Property Values, Land Economics,
  73(1) 114-124.
• Sohngen, Brent, Diane Hite, John Simpson, and
  Josh Templeton. 2000. The Value of Open Space
  and Agricultural Land to Rural Non-Farm
  residents. Manuscript. Ohio State University.