The Rationale Behind This Project

Partners in Conserving America's Resources

The Rationale Behind this Project

Using Economic Incentives to Influence Land Use & Protect Endangered Species

Consider for a moment this fact: the vast majority of Florida's land area is currently owned by a small group of private landowners ... those involved in agricultural and forestry production. According to the 1994 Florida Statistical Abstract and 1992 Census of Agriculture, Florida:

Florida's agriculture and forestry landowners own virtually:

... every acre to be used for future development,
... every acre to be protected, and
... every acre to be to remain in ag and forestry.

These landowners are the custodians of the largest repository of natural resources left in Florida today. In a sense, they are the major stockholders in Florida's future, since it is from their stock of land that almost all future land uses will be drawn ... for environmental protection ... agricultural production ... and urban expansion.

The decisions these landowners make today will greatly affect Florida's appearance, environment and quality of life. In fact, if urban and suburban build out proceeds according to the local comprehensive plans that are already approved and contained in state law ... all ag and forestry will disappear ... along with its open spaces, natural resources and economic contributions to the state and local economies. That's why it's important we work with these landowners today ... before decisions are made that never can be undone.

But there is a problem. Even though some landowners go to extraordinary lengths to nurture the resources on their property and conduct their activities in a manner that is sustainable and compatible with these resources, they must make a profit ... or go out of business.

No mechanism now is in place to help the vast majority of Florida farmers pass on the costs of environmental protection to the public. They produce 253 agricultural commodities, of which only five -- tobacco, peanuts, cotton, milk and sugar -- qualify for federal subsidies or price supports. For the balance, the market sets their price, and that price is constantly changing. The costs of maintaining land that produces little or no economic return, of installing conservation systems, of hiring consultants and attorneys to comply with regulations whittle away at profit margins ... and make the Florida farmer less competitive with foreign producers.

The market currently pays Florida farmers to produce vegetables, citrus, timber and homesites. But it does not pay for the other "products" for which they are the custodians -- open space, wildlife habitat, water resources, wetlands and more.

And therein lies the dilemma: As much as agricultural landowners may want to protect wetlands or wildlife, they have a powerful inducement not to do so.

The market economy offers landowners a strong incentive to manage their holdings for the highest and best economic return. And that can translate into intensive development that may be at odds with natural resource protection. Of course, landowners are not forced to seek the highest profit obtainable. That is their choice. But if it is profitable to convert land from native habitat to agriculture and from agriculture to condominiums, chances are land will be converted.

All land in Florida is valued on the basis of how many housing units it will accommodate ... not on how effectively it will grow our food ... or how important it is for aquifer recharge ... or as wildlife habitat. In fact, there presently is no way within the market economy to assign a dollar value to the land's ability to grow food ... or to the natural resources and wildlife it harbors.

Also, unlike developed uses, such as professional buildings, auto show rooms, and single-family homes, agricultural land operates under a dual system of taxation. The same piece of agricultural land can be taxed on its current use, or on its potential to be converted to another land use. The only way agricultural landowners can avoid being driven out of business by high property taxes -- and fulfilling the property assessment law's premise, which carried to its full extent would cover every parcel of land in Florida with housing units -- is to apply for and maintain an agricultural "exemption."

As a result of these policies, Florida literally is "driving with the brakes on." Public policies are being enacted and expenditures made that are in conflict with each other -- "stepping on the accelerator" to promote the market economy, and "stepping on the brakes" to constrain its undesirable effects.

Is it any surprise, then, that many Floridians tend to view green, open land as a temporary holding pattern ... awaiting conversion to a "higher and better use," such as condominiums?

Farmers (and other landowners) often are caught in the middle. They may enjoy the natural resources on their property, but the market economy does not reward them for giving up development of their land so wetlands, wildlife species or any other environmental resource can be conserved.

Laurie Ann Macdonald, a St. Petersburg zoologists/ecologist, once said: "Ecological systems will exist in the absence of a human economy. But human economic systems cannot exist without a reasonably healthy environment." That may be true. But the question is: what is the best way to motivate a landowner to care for these resources?

When economics and natural resource protection come into conflict -- as in the case of efforts to preserve the Everglades and essential habitat for the endangered Florida panther -- many landowners feel they have only two choices: sell their land to the government so its resources can be protected or live with more regulations that may ultimately drive them out of business.

These policies have led to the destruction of many agricultural and natural resources, a trend that is continuing in Florida ... and throughout the U.S. Because of the false (or incomplete) economics created by our current land appraisal process, these lands are under constant pressure to be converted to other uses.

Nationwide, we lose almost 1 million acres of productive farmland to urban conversion every year. In Florida, the conversion rate has averaged 150,000 acres per year since 1980. That's 17 acres ... or about 13 football fields ... every hour.

Some people think the solution is stronger zoning regulations ... and more rules. Unfortunately, zoning can be changed by a simple majority vote. And it often is changed ... usually because someone can make more money selling land for development than farming it or keeping it in its natural state. As a result, zoning has not worked as a means of protecting farmland ... or natural resources.

Farm Bureau members often have said: "The best way to preserve farmland is to preserve profits." They are right.

First, we should think of wetlands, endangered species, water recharge areas, and open space as "environmental products." Next, we should develop a means to compensate landowners for producing or caring for these products ... on our behalf. This, in turn, will reduce the chance that a landowner might want to replace wetlands or natural habitats that are essential for the survival of an endangered species with a more traditional commodity that will earn a profit, or sell out so the land can be developed for a higher cash return.

This may require a new way of looking at environmental protection and the market economy. But it is one many landowners can easily understand. When one landowner in southwest Florida was asked what he would say if he was paid to grow habitat for the endangered Florida panther, he responded immediately by saying, "Here, kitty, kitty ..."

Finding workable ways to tie good stewardship to good business decisions is important. The intent is to turn wetlands, endangered species and other natural resources into an asset for landowners ... to encourage them to grow and maintain these resources just like any other crop that they might produce on their land ... and to provide them with an economic return for doing so.

This is the premise behind the Panthers & Private Lands project, which began in 1993 and has evolved into a nationwide project (now renamed Private Habitats: Havens for Threatened & Endangered Species): to develop a new conservation tool that rewards landowners for entering into long-term contracts and lease agreements to retain, manage and protect natural resources on their properties.

The approach makes sound economic sense. A study conducted by Florida Stewardship Foundation in 1997, The Florida Panther & Private Lands, An Economic Analysis: The Landowners' "Conceptual Plan" Compared With Other Conservation Alternatives, indicates it is far cheaper to keep land on property tax roles and in economic production while paying landowners for stewardship efforts than it is to buy land, take it off tax roles and maintain it at public cost. It also is cheaper to pay incentives to a landowner to encourage proper stewardship, than to let a resource degrade and pay to clean it up later.

Florida Stewardship Foundation presently is conducting a study in Polk County to examine the economic relationships between different types of land use. The data gathered to date from this and other studies conducted by our researchers in Collier, Hillsborough, Lake and Palm Beach counties lead us to believe that land use planning in Florida completely lacks an effective cost-accounting component. This allows many decisions to be made that favor intense land uses that could negatively affect the states's future appearance and quality of life and, perhaps worse, are not economically sustainable. This has enormous implications for all existing environmental protection efforts ... and the state's future economy.

Land use planning (and the market value placed on land) currently is done by the colors: a yellow square on a future land use planning map, for example, may indicate residential uses of 5 units per acre, an orange block can indicate multi-family dwellings of 12 units per acre, dark brown or black nodes denote high-intensity commercial areas, and green fields mark areas occupied by agricultural uses. Colors are changed and densities adjusted up and down after sometimes spirited debate, but never as a result of a thorough cost analysis to identify or weigh the long-term economic impacts -- both to the local economy and to county and school budgets -- of choosing one color or density over another.

Florida Stewardship Foundation's studies indicate that, with a few minor policy changes, it may be possible to do all future land use planning in Florida by the numbers: so deficits created by a change in one land use can be identified and precisely balanced by surpluses generated through an accompanying adjustment in another land use. For example, if a community decides to build 100 affordable housing units, it is possible to calculate exactly how much of a deficit will be created by this land use for county and school budgets over time. It also is possible to calculate which other land uses can be encouraged at the same time to completely offset this deficit.

Our studies suggest that, when land use planning is done by the numbers, so all revenues and costs are taken into consideration over time, economics will favor more compact land uses over sprawl, and protection of large areas of open space and environmentally sensitive areas over more intense uses, such as an unbroken sea of gated, cul-de-sac communities (which can create enormous deficits over time -- as much as $1.50 for every $1.00 of revenue generated). It also is likely these numbers will show that public investments in attracting and retaining certain industries -- such as agriculture -- will be repaid many times over in reduced costs for infrastructure and avoidance of future deficits that could be caused by other land use choices.

Our studies are identifying an opportunity, and a means, that could change land use planning in Florida so it is done, not by the colors, but by the numbers. It also provides a means of assigning economic values to open space, clean water, wildlife habitats and areas of high ecological value, so they can compete effectively in the market place with houses, shopping centers and other developed uses.

Hence, it may be possible to pursue environmental protection, not by rule and regulation and private property "takings," but by the numbers. This will allow us to stop working in opposition to the market economy (as we often do now) and, instead, harness and respond to the market by providing an economically solid rationale for offering incentives and "givings" to encourage land uses that will create surpluses instead of deficits, and be environmentally sustainable.

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