Do Zoning Regulations Rob Rural Landowners' Equity?

Abstract

Zoning regulations are land use control tools used to conserve resource land, limit negative externalities from high density development, and achieve agglomeration benefits from conserving large blocks of land. However, the passage of low-density zoning is often challenged by landowners who claim that through it, they lose their land's equity due to lower land values. We investigate whether lowdensity zoning impacts rural land value using arm's-length sales in Maryland's nine Eastern Shore counties. Using both a propensity score matching method and an instrumental variable approach, we find that low-density zoning has differentiated impacts. Resource parcels' land values are unaffected, and non-resource parcels' values decrease by 20-50%.

The Effect of Ontario's Greenbelt on the Price of Vacant Farmland

“…Liu and Lynch () argued that zoning should be treated as endogenous. One approach they use to assess this issue empirically is the IV approach.…”

“…Liu and Lynch () review the literature on zoning and note that while some studies find evidence that zoning reduces land values (e.g., Henneberry and Barrows ; Isakson ; Dehring and Lind ), other studies find evidence that zoning has no significant effect or, alternatively, increases land values (e.g., Henneberry and Barrows ; Beaton ). In their article, Liu and Lynch () argue that previous literature fails to adequately address endogeneity concerns. They address this concern using propensity score matching and instrumental variables (IV) approaches and conclude that the effects of down zoning on “resource” parcels “…disappear after [they] control for endogeneity” (Liu and Lynch , p. 23).…”

“…In their article, Liu and Lynch () argue that previous literature fails to adequately address endogeneity concerns. They address this concern using propensity score matching and instrumental variables (IV) approaches and conclude that the effects of down zoning on “resource” parcels “…disappear after [they] control for endogeneity” (Liu and Lynch , p. 23).…”

Factors influencing zoning ordinance adoption in rural and exurban townships

“…Rudel (1989) applies growth machine theory (Molotch, 1976) to explain why poorer, less developed rural jurisdictions are unlikely to zone: (1) informal control networks among neighbors render formal rules unnecessary where land-use conflict is rare, (2) low land prices allow current landowners to resolve conflicts by buying land buffers between neighbors, (3) developers are local and known, and (4) residents are predominantly oldtimers (local rural workers) who stand to lose from zoning rather than exurbanites (commuting residents) who stand to gain. Some rural landowners fear that down-zoning (requiring larger lot sizes) will decrease their property values, though the effect of down-zoning on property value is positive in some cases (Liu & Lynch, 2011). Residents might also be concerned that zoning caters to outside development interests (Anderson & Sass, 2004).…”

The Future of Preserved Farmland: Ownership Succession in Three Mid-Atlantic States

“…In contrast, agricultural conservation easement programs retire development rights and usually aim to ensure that enrolled properties will be available for farming in perpetuity. While costly to implement, these programs are also popular because landowner participation is voluntary and compensated (through an easement payment or tax deduction), thus avoiding potential "takings" concerns that may accompany regulatory-based land use controls (Liu & Lynch, 2011a).…”