My dissertation examines the relationship between single-family homes (SFH) and surrounding conservation easement (CE) property parcels in the city of Worcester, Massachusetts. The research was designed to examine whether conservation easements indeed externalize benefits to the surrounding SFH values. Externalities are those factors that are outside of SFH and contribute positive or negative effective on SFH's values.
Conservation easement is a voluntary land-conservation tool and is increasingly popular in the United States. It is used widely to protect privately owned properties offering scenic views and vistas, open spaces, rural and historic character, watersheds and natural systems, habitats and endangered species, and other preservation-worthy attributes. CE-protected parcels are restricted via an agreement for any future development. With donation of the development rights, CE advances public good-- forever-- by protecting preservation-worthy land in perpetuity, and landowners are rewarded with tax abatements. With public tax dollars involved in CE in the form of tax abatement, municipalities may need to make the case that such conservation programs have a positive public benefit and that there is a potential economic benefit on the surrounding home values, or at least the preservation of property values.
This dissertation examines the relationship between conservation-easement parcels and the values of surrounding SFH using a hedonic price modeling (HPM) framework and SFH sales data for Worcester. Using 3-D GIS, externality-capturing explanatory variables were developed that include proximity from homes to CE parcels, viewable areas of CE parcels from homes, and Conservation Easement Visibility Index (CEVI), a relative index for home samples that measures both the visibility and proximity together through a single variable.
The research findings were interesting. Contrary to expectation, distance from, and visibility of, CE property parcels from SFH samples was statistically insignificant; however, their interaction effect was found to be significant. The interaction effect was measured via the CEVI. It was found that on average there is a marginal value creation for homes that have both features– visibility of CE parcels and proximity to them. The research findings support the notion that homeowners place higher value on quieter, everlasting, conserved landscapes, but the low effect of CE parcels on home prices could be due to lack of recognition or knowledge about the CE-protected parcels. Further, the combined effect of proximity and visibility (being able to enjoy the property from the comfort of one's home) emerged as the key factors in driving higher home values. For few select homes with higher value of CEVI, it was found that CE parcels do create as high as a 34 percent premium to those homes. The research findings are useful for federal, state and local governments, land trusts, and land-use planners as conservation easement is the most commonly used tool in land protection. This research provides insights and tools for estimating the direct benefits of land protection, especially with scenic amenities. Since the effect of home values has implications on property tax revenues, local governments can use this as a tool to make land-protection decisions and prioritize their efforts.