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 – 19982003
• 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:
Nov 2003
Greenbelt
Introduced
Dec 2003
June 2004
Moratorium Greenbelt
Imposed
Protection
Act (Temp)
Feb 2005
Greenbelt
Legislated
• How to account for spatial interactions
13
Thank you for your attention.
Any Questions?