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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. 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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  1. 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

  2. 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

  3. 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.>>

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. Thank you for your attention. Any Questions?

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