Source: UNIV OF CONNECTICUT submitted to
EVALUATION OF LAND USE POLICIES AND PRACTICES FOR ENHANCING AGRICULTURAL SUSTAINABILITY IN CONNECTICUT
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
TERMINATED
Funding Source
Reporting Frequency
Annual
Accession No.
0218973
Grant No.
(N/A)
Project No.
CONS00856
Proposal No.
(N/A)
Multistate No.
(N/A)
Program Code
(N/A)
Project Start Date
Oct 1, 2009
Project End Date
Sep 30, 2013
Grant Year
(N/A)
Project Director
Altobello, MA.
Recipient Organization
UNIV OF CONNECTICUT
(N/A)
STORRS,CT 06269
Performing Department
Agri & Resource Economics
Non Technical Summary
Farmland in Connecticut is being rapidly converted to non-farm uses and as such has been disappearing at an increasing rate in recent years. Dairy farms, which are primary stewards of agricultural land in Connecticut, have been reduced in number from approximately 250 in 1999 to about 157 today. Many farms have been converted into residential, commercial and other non-farm developments, and as a consequence, hundreds of acres of farmland have fallen out of production. Keeping farmland in agricultural production is important, and there are a number of alternative approaches used by the public and private sectors in order to accomplish the objective of farmland preservation. Because implementation of these preservation approaches often involves large public expenditures for land purchases or purchases of development rights to land parcels, it is essential that all benefits and costs associated with land preservation be estimated in order to make sure that funds are being efficiently spent. Futhermore, it is important to evaluate alternative approaches for financing farmland preservation initiatives. As a result of this project, information and other resources will be available to state and local policy-makers, the CT Dept of Agriculture, local towns and municipalities, land trusts, and to agricultural producers to increase their knowledge of farmland preservation options and strategies for financing those options. Additionally, an assessment and identification of strategies for improving farm profitability and technical efficieny are needed as well, since farmland preservation is important, but not the only factor necessary for economic viability of the agricultural sector. Moreover, state-wide policy discussions have moved toward promoting sustainability and beyond farm land preservation as a sole objective. The ultimate goal of this project is to enhance agricultural sustainability in Connecticut, and this requires addressing efficiency and profitability issues, as well as land preservation issues.
Animal Health Component
(N/A)
Research Effort Categories
Basic
(N/A)
Applied
(N/A)
Developmental
(N/A)
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
6010120301020%
6016030301020%
6020120301010%
6026030301010%
6050120301040%
Goals / Objectives
The goal of this project is to conduct research, desseminate findings, and provide information and other resources for the purpose of enhancing the economic viability and sustainability of agriculture in Connecticut. The overall objective of this project is to economically evaluate alternative land use programs and policies, as well as other strategies, including farm household technical efficiency, farm profitability, and financing alternatives for enhancing agricultural sustainability in Connecticut. Specific Objectives include: identifying alternative policies and strategies for preserving farmland in Connecticut; estimating benefits and costs, both market and non-market, of alternative approaches for farmland preservation; estimating the impact of farmland preservation programs on technical efficiency and profitability of Connecticut dairy farms; evaluating alternative financial strategies for providing resources needed for farmland preservation; and recommending changes or modifications in existing policies and programs for improving the outcomes for farmland preservation. Expected outputs include conducting surveys and analyzing data obtained from surveys and advising and mentoring graduate student(s)working on their MS or PhD programs. Presentions of project findings will occur at professional conferences and workshops, as well as at Extension Events and Connecticut Farm Risk Management Project programs carried out throughout the state and region. Consultations will be provided to Connecticut state agencies, municipalities, land trusts, and will be made available to agricultural producers and their advisors if requested. Finally project findings will be included on the CT Farm Risk Management Website at www.ctfarmrisk.uconn.edu.
Project Methods
The initial phase of the project will involve an extensive review of the literature on farmland preservation programs, as well as an examination of programs currently being used in Connecticut and elsewhere. Land preservation strategies used by Connecticut towns and municipalities will also be identified, as well as those used by land trusts. The next phase will entail estimating the benefits and costs associated with the alternative programs and policies for farmland preservation using direct estimation, contingent valuation, and benefits transfer methodologies. These estimations will allow measures of program efficiencies to be determined by analyzing net benefits (or benefits over costs) for individual programs. Data for this phase of the project will be obtained from the American Farmland Trust, CT Department of Agriculture, local towns and municipalities, and from land trusts. The next phase involves reviewing alternative strategies for financing farmland preservation according to the benefits, costs, and ease of applicability of each of the strategies. Strategies to be analyzed include private funding, installment payments, debt swap, special taxes dedicated to farmland preservation, use of legal settlement funds, and contributing to retirement funds of landowners. In the next phase, analysis of efficiencies of current programs and financing strategies will be undertaken and recommendations for improvement made. The final phase of the project will assess the impacts of participation in farmland preservation programs on technical efficiency and profitability of dairy farms. An extensive literature review will be undertaken in these areas. Two quantitative approaches will be utilized, and a survey of Connecticut dairy farms, as well as recent work in Connecticut on estimating public amenity benefits, will serve as data sources. Stochastic Frontier Analysis (SFA) will be used to estimate technical efficiency. This approach has the advantage of combining rigorous definitions of efficieny by relating production inputs and outputs through distance funtions. To address the endogeneity of farmland preservation participation in assessing determinants of efficiency, an instrumental variable will be used which takes into account the spatial and locational aspects of the farm households. The impact of farmland preservation programs on farm profitability is also assessed by regressing profits of farmland units on the vector of variables, including participation in farmland preservation programs. Evaluation strategies for this project will include peer reviews of research results, reviews of findings by stakeholders for accuracy, feasibility and ease of application, and results of evaluations completed by participants of workshops and other Extension and Connecticut Farm Risk Management Outreach programs.

Progress 10/01/09 to 09/30/13

Outputs
Target Audience: Nothing Reported Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided? This project provided training opportunities for two PH.D level graduate students in Agricultural and Resource Economics. These students were mentored by the PI and participated in interviews, searched data bases, conducted literature reviews, developed and tested analytical models in cost-benefit anlysis and econometrics, wrote reports and presented results. The Principal investigator was also able to develop professionally as a result of participation in this project. How have the results been disseminated to communities of interest? Results were presented at the Northeastern Agricultural and Resource Economics Annual Meeting inJune 2012. What do you plan to do during the next reporting period to accomplish the goals? Nothing Reported

Impacts
What was accomplished under these goals? Project Impacts: Results of this project can be used to inform policy-makers, researchers, state and local agencies, municipalities, agricultural communities and organizations,and other interest groups on the importance of reducing the conversion of farmland to non-farm uses. Also frameworks for assessing farm profitability and technical efficiency were developed, since farmland preservation is important, but not the only factor necessary for economic viability of the agricultural sector. Recent policy discussions have focused on promoting agricultural sustainability and economic viability of the agricultural sector, and this requires assessing efficiency and profitability as well as land preservation. The work reported here provides research and information to inform decsions on efficiency and profitability as well as on farmland preservation. Specific Objectives: 1. Identifying Policies and Strategies for Preserving Farmland in CT: An extensive literature review was completed, and over 30 methods used in the US and elsewhere were identified and evaluated as possible approaches for farmland preservation in CT. The primary ones evaluated included purchase of development rights, transferable development rights, agricultural districts, agricultural zoning, preferential or differential assessment, right-to-farm, and urban growth boundaries. The approach selected for extensive evaluation in this project was the primary one currently used in the CT Farmland Preservation Program,which is the purchase of development rights program. This is the approach specified in CT Statutes relating to state-level farmland preservation, and it is the approach also used by some municipalities in CT to preserve farmland. 2. Estimating Market and Non-Market Benefits and Costs of Alternative Approaches for Farmland Preservation: Data were collected and analyzed to compare the benefits and costs of farmland preservation in CT. Benefits included non-market amenity benefits, as well as market benefits, and costs were represented by costs of farmland preservation at the state level. These data were then applied in a cost benefit model. Benefit estimates were made for Connecticut using benefit-transfer methods. This involved taking willingness-to-pay per acre estimates from the literature and using these as the dependent variable in estimating regression coefficients for the following independent variables: state level household income, acres of farmland in CT and population. The same model was then run using data from other New England States, and results were compared to those from CT. Cost estimates were made using government expendidtures for state level and local level farmland preservation prpgrams in CT. This same methodology was used in determining cost estimates for other New England States to use as a basis of comparison.The cost benefit analysis first compared undiscounted benefits with costs, using 2011 dollars. Next, perpetual net present values per acre of preserved farmland were calculated using discount rates of 2% and 5%. These estimates were made for CT and then compared to those of other New England States. The cost benefit analyses indicate very high levels of net benefits accruing to society from relatively modest direct government expendidtures to preserve farmland. Similar results occurred in the undiscounted case and also in using 2% and 5% levels of discounting in perpetuity. Such findings can be used to justify even higher levels of government expenditures in farmland preservation. 3. Estimating the Impact of Farmland Preservation on Technical Efficiency and Profitability of CT Dairy Farms: Econometric models were developed to analyze the impacts of farmland preservation on technical efficiency and profitability of CT Dairy Fams. Dairy Farms were chosen as the group for analysis since industry data are available and there is considerable preserved farmland on dairy farms in the state. Results of the estimation indicate that, from the private perspective, use of technology on dairy farms presents the largest positive and significant effect on dairy farm efficiency, supporting that a farm's technology investment enables daity farms to improve productivity. The association between farmland preservation and technical efficiency is low, but statistically significant and shows a slightly negative effect on efficiency. This result is counter-intuitive, but it could be the case that the farmland preservation variable is overriden by the technology variable. From the social perspective, the technology variable is significantly positive, as was the case in the private example. However, the farmland preservation variaible is also positive, likely the result of the inclusion of amenity bebefits as an output in the social perspective alternative. In terms of farm profitability, estimation of the Cobb-Douglas production function yields interesting findings. The results show that on average, in the private case, the amount of farmland required for maximum profitability on the average dairy farm is lower than actual. (136 acres vs. 331). However, from the social perspective, the socially optimal amount of farmland is much higher than the actual (878 acres vs. 331 acres) and this results is significantly higher social benefits (profits) than in the private case This result is again likely related to the inclusion of amenity benebits as an output in the social case. 4. Evaluating Alternative Financial Strategies for Farmland Preservation: A number of alternative financing strategies for farmland preservation were identified and evaluated for potential use in CT. These included: mortgage assistance for purchase of land by private owners, installment payments to farmers rather than lump sum, outright purchase of land by the state, capital gains reduction treatment, state income tax forgiveness, as well as purchase of development rights. No specific recommendations are indicated at this time, other than to increase state funding for farmland preservation via the purchase of development rights program. . 5. Recommending Changes in Existing Policies for Farmland Preservation: No specific recommendations for changes in policies are indicated at this time, but public-private partnerships should be enhanced,

Publications


    Progress 01/01/12 to 12/31/12

    Outputs
    OUTPUTS: Two Graduate Research Assistants (Ph.D. level)in the Dept of Agricultural and Resource Economics were employed on this project during the year to collect and analyze data for comparing the benefits and costs of farmland preservation in Connecticut.These data were then applied to a cost-benefit model developed in previous project years. Results for Connecticut were then compared to those from other New England states. Benefits from preserved farmland are many and varied and include amenity and ecological benefits, natural resources such as soils and water, wildlife habitat, and historical resources. Benefit estimates were made for Connecticut by taking willingness to pay per acre from the existing literature (Kukielka, Johnston and Duke, 2008; Lynch and Duke, 2004)and using these as the dependent variable in estimating regression coefficients for the following independent variables: state-level household income; acres of farmland in Connecticut and population. The same model was then run using data from other New England states with those results compared to Connecticut estimates. Cost estimates were made using government expenditures for state level and local farmland preservation programs in Connecticut. This same methodology was used in determining cost estimates for other New England States to use as a basis of comparison. The Cost Benefit Analysis first compared undiscounted benefits with costs, using 2011 dollars. Next, perpetual net present values per acre of preserved farmland were calculated using discount rates of 2% and 5%.These estimates were made for Connecticut and then compared to other New England States. The results were presented in a paper entitled: "Cost-Benefit Analysis of Farmland Preservation in New England" at the Northeastern Agricultural and Resource Economics Annual meetings in June 2012. PARTICIPANTS: Marilyn Altobello, PI, Associate Professor, Dept.of Agricultural and Resource Economics, University of CT, Storrs. Beverly Fernandez and Lingqiao Qui, Graduate Research Assistants and Ph.D candidates, Dept. of Agricultural and Resouce Economics, University of Connecticut, Storrs. Partner Organizations: CT Dept. of Agriculture, Farmland Preservation Program TARGET AUDIENCES: CT Dept of Agriculture, other state and local policy-makers, agricultural and resource researchers, and CT agricultural organizations including land trusts,CT Farm Bureau, and CT Working Lands Alliance. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

    Impacts
    Results of the cost-benefit analysis of farmland preservation indicate very high levels of net benefits accruing to society from relatively modest direct government expenditures to preserve farmland. These results occurred in the undiscounted case and also in using 2% and 5% levels of discouning in perpetuity. These findings can be used to further justify higher levels of government expenditures in farmland preservation.

    Publications

    • No publications reported this period


    Progress 01/01/11 to 12/31/11

    Outputs
    OUTPUTS: A Graduate Research Assistant (Ph.D Student) in the Dept. of Agricutural and Resource Economics was employed to obtain, analyze, and develop data sets for further refinement and testing of the model for comparing the benefits and costs of farmland preservation in Connecticut (CT). This model was developed in the previous project year (2010). Additionally, work progressed in developing a methodology for enhancing agricultural sustainability in CT by analyzing farmland use and suitability using state population and income data, locational factors, and other specific attributes of farmland acreage. A detailed data set describing acreage preserved in the CT Farmland Preservation Program since its inception in 1978 was obtained from the CT Department of Agriculture. The data set included: the town(s)in which the farms were located; the number of acres preserved per farm; date of purchase of development rights; and the price paid by CT for the development rights. These data were used to further refine the cost portion of the benefit cost analysis by enabling a breakout of program costs by county. The data on willingness to pay for farmland preservation from a recent study of 6 CT towns were then extrapolated to all households in CT to arrive at estimates of state-wide benefits from farmland preservation accomplishments of the CT Farmland Preservation Program. Benefits were then compared with Costs. For comparion purposes, this model was also run with data from the other 5 New England States. An Abstract of a future paper with working title: "Farmland Preservation in New England: Cost-Benefit Analysis" was written by the Graduate Assistant and PI to be submitted for presentation at the Summer 2012 Northeastern Agricultural and Resource Economics meetings. Another segment of the project analyzed several factors influencing farmland preservation by county in CT. The goal of the CT Farmland Preservation Program is to preserve 130,000 acres. Of that total, approximately 38,000 acres have been preserved to date. In the project year being reported (2011),analysis of CT farmland NOT preserved was initiated. Unpreserved farmland by county was compared to population growth by county to show the potential for farmland loss in counties experiencing high rates of population growth. Other hypotheses relating to income levels and location are being tested. One is that the cost per acre to preserve farmland is higher in towns closer to metropolitan areas, and therefore fewer farms will be preserved. Another states that cost per acre to preserve farmland is higher in towns with higher per capita and median household incomes, and therefore fewer will farms will be preserved. The testing of these hypotheses using correlation anaysis is underway. PARTICIPANTS: 1. Marilyn Altobello, PI, Associate Professor, Dept of Agricultural and Resource Economics, University of CT, Storrs; 2. Beverly Fernandez, Graduate Research Assistant and Ph.D student, Dept of Agricultural and Resource Economics, University of CT, Storrs; 3. Contact Information: Jay Dippel, CT Dept of Agriculture TARGET AUDIENCES: Target Audiences include: CT Dept of Agriculture, other state and local policy makers, agricultural and resource researchers, and CT agricultural organizations including CT Farmland Trust, American Farmland Trust, CT Farm Bureau, and CT Working Lands Alliance PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

    Impacts
    To facilitate comparision of benefits and costs from the CT Farmland Preservation Program, a present value analysis of net benefits (benefits minus costs) was used. Employing a present value analysis at perpetuity discounted at 5%, results indicate a positive net present value, meaning benefits exceed costs for the CT program. Preliminary Results for other New England states also indicate positive net present values for farmland preservation programs. Because of the heterogeneous nature of farms and farmland in Connecticut, preliminary results from analyses of locational factors relating to farmland indicate that a variety of preservation techniques and strategies are needed to promote and improve the efficiency of farmland preservation.

    Publications

    • No publications reported this period


    Progress 01/01/10 to 12/31/10

    Outputs
    OUTPUTS: The goal of this project is to conduct research, desseminate findings, and provide information and other resources in order to enhance economic viability and sustainability of agriculture in Connecticut. An overall objective is to economically evaluate alternative land use programs and policies for enhancing agricultural sustainability. Specific Objectives include identifying specific policies and strategies for preserving farmland in CT; estimating benefits and costs, both market and non-market, of alternative approaches for farmland preservation. Outputs during this reporting period include the following: A Ph.D. student in the Department of Agricultural and Resouurce Economics has been employed to conduct surveys, search data bases, analyze data, complete literature searches, and develop and test analytical models for comparing benefits and costs of farmland preservation in Connecticut. More specifically, outputs during the reporting period include: Surveys of State Agencies, private land trusts, and other sources to obtain accurate numerical acreage accounts of preserved farmland by town in CT. A spatial analysis of preserved farmland by town has been completed using mapping techniques. A literature search of journals on the economics of farmland preservation and financing strategies and techniques has been completed, as well as a search of the dissertation data base on the same topics. Other topics for which literature searches were conducted include: Transfer of Development Rights (TDRs) and Amenity Benefits(non-market benefits)from farmland preservation. An inventory of approximately 30 methods used in the US and elsewhere to preserve farmland has been compiled. A listing of benefits from agricultural land preservation and an accounting of relevant costs have been developed and used to formulate and test a benefit-cost model for CT over the period 1999-2009. The model also incorporates non-market benefits for CT from a recent study (Johnston et al. 2008) using the benefits transfer method. PARTICIPANTS: Individuals working on this project were Beverly Fernandez, Ph.D student in Agricultural and Resource Economics and Marilyn Altobello, Associate Professor in Agricultural and Resource Economics (Prject PI). Partner organizations and contacts who provided information include CT Dept of Agriculture, Farmland Preservation Program (Jay Dipple); CT Farmland Trust; American Farmland Trust, CT Working Lands Alliance, (Jiff Martin), and other CT land trusts. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

    Impacts
    The preliminary results from the testing of the Benefit Cost Model indicate that the benefits from preserving farmland in CT exceed costs over the period tested (1999-2009). Also, by using a combination of preservation techniques (i.e. purchase of development rights, differential assessments, state economic farm viability grants etc), preservation results in a particular location can be enhanced. Furthermore, results also indicate that, for optimum results, preservation strategies should be designed to specifically fit existing conditions in a community.

    Publications

    • No publications reported this period