WEAI/AERE 2009 - Individual Paper Abstract
Title: The Value of Land Use Patterns and Preservation Policies
Author(s): Martin D. Heintzelman, Economics and Financial Studies, School of Business, Clarkson University, Potsdam, NY 13699, mheintze@clarkson.edu, (315) 268-6427
Abstract:
This study uses a large data set on home sales in Massachusetts to investigate the effect on property values of 1) varying local land-use patterns and 2) a statewide, but locally implemented, preservation policy. I use spatial econometric methods to control for spatial dependence and spatial autocorrelation. There is an extensive literature (see the survey by McConnell and Walls (2005)) studying the value of open space preservation and how different local land uses affect property values. A separate literature exists studying the determinants of both the existence and passage of local referenda which provide funds for open space preservation (see Kotchen and Powers (2006) and Nelson et. al. (2007). This study expands upon both of these literatures.
First, my data set contains 7 years worth of home sales for the entire state of Massachusetts, more than 600,000 observations. I also collect data on local land-use patterns, zoning rules, open space parcels and other geographic variables. Using GIS I link these two datasets. The size of my dataset substantially increases my ability to identify the effects of geographic variables on property values by increasing the amount of heterogeneity across observations through the scope of the study (in more local studies (Heintzelman, 2008), there is often limited variation in the geographic measures of land-use for homes in the same region). In addition, this paper sheds additional light on the issues of local preservation referenda by studying the ex post effects of passage.
The case of Massachusetts is especially attractive for this study since the policy in question is a statewide policy which individual towns choose, by referendum, whether or not to adopt. I use a difference-in-differences approach to study the effects of the referenda, taking advantage of the similarities in the style of the referenda across towns to draw conclusions about the policy as a whole. However, because of the extent of my dataset, I am also able to take advantage of, and control for, heterogeneity in the implementation of the program across communities. This study is the most complete study to date of the effects of preservation referenda, and a substantial contribution to the literature on the value of open-space and land-use patterns.