The Prospect of a Market in Development Rights to Allocate Land to Permanent Preservation

Funded by: Office of the Great Lakes Michigan Great Lakes Protection Fund
Authors: Rod Denning, Paul Thorsnes
Principal Investigator: John Koches

The Value of Open Space

A project titled "The Prospect of a Market in Development Rights to Allocate Land to Permanent Preservation" was the result of a grant from the Michigan Department of Environmental Quality's Michigan Great Lakes Protection Fund. AWRI joined forces with GVSU's Economics Department for this study. Dr. Paul Thorsnes, Assistant Professor of Economics, assessed just how much economic value preserved forested open space can add to property values.

Three subdivisions, two located in Plainfield Charter Township in Kent County and one in Grand Haven Township in Ottawa County were studied. The Grand Haven Township subdivision boarders Hofma preserve, a forested nature preserve of about 320 acres. The two subdivisions in Plainfield Township border the Rogue River and the forested buffer along the river within these two subdivisions is protected under the provisions of the Natural Rivers Act (Act 231, P.A. 1970).

The analysis was performed on sales data of vacant building lots rather than house values to more easily control the number of variables necessary for the standard multiple regression technique utilized in the study. Researchers also took a look at how lot values were affected by proximity to main streets, location on a cul-de-sac street, and location on a corner lot bordered by two streets.

The results of the study suggest that vacant building lots that border a forest preserve command a premium in this market of about $6000, or approximately 20% of the average sale price of otherwise similar lots. A lot located on a cul-de-sac road commanded a premium of about $1400, and a lot located on a corner resulted in a net decrease of about $2400 in value.

More information about Preserving Open Space can be obtained by contacting AWRI Research Associate Rod Denning at (616) 331-3793 ( denningr@gvsu.edu).
- From the AWRI Review, Fall 2001

The Prospect of a Market in Development Rights to Allocate Land to Permanent Preservation
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