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THE FLORIDA PANTHER & PRIVATE LANDS, AN ECONOMIC ANALYSIS:
The Cost of the
Landowners' "Conceptual Plan"
Compared to Other Conservation Alternatives
Project Director &
Editor: Craig Evans
Researcher/Analyst: Jean McGuire
©1997, Florida Stewardship Foundation, Inc. All Rights Reserved.
Scroll down or click on your choice:
| Acknowledgments | Introduction | Executive Summary | Findings | Other Methods of Valuing Habitat | Recommendations |
You also may view other sections of the study (in another part of this web site) by clicking on:
| Background | Methodology | Review Process | Calculations | Order Full Report |
The Full Report includes the Endnotes, where all sources of information for the study are cited, and the Spreadsheets where the calculations used in the study are shown in detail.
A special thanks is due to the members of the Technical Advisory Group (TAG) who devoted considerable time and effort to guide this study, make suggestions, review its methodology and calculations, read drafts and answer questions:
Dr. J. John Charbonneau, Acting
Chief,
Division of Economics, U.S. Fish & Wildlife Service
Dr. Fritz M. Roka, Assistant
Professor, Economics
University of Florida, Southwest Florida Research and Education Center
Dr. Richard Thalheimer, President,
Thalheimer Research Associates, Lexington, Kentucky
We are also grateful to the following individuals and organizations for their assistance and support in carrying out this study:
Andrew C. Eller, Jr., Assistant
Panther Coordinator
U.S. Fish & Wildlife Service
Dr. Martin Main, Wildlife
Specialist
University of Florida, Southwest Florida Research and Education Center
Wilkison Associates
Scofield Warehouse
We also wish to thank the following foundations for funding this study...
The Curtis and Edith
Munson Foundation
Florida Advisory Council on Environmental
Education
(using a portion of the proceeds from the sale of
manatee and Florida panther license plates)
National Fish & Wildlife Foundation
Turner Foundation
The purpose of this analysis is to calculate and compare the costs of:
1) the conceptual plan as described in A Landowners' Strategy for Protecting Florida Panther Habitat on Private Lands in South Florida: A Project Report (Florida Game and Fresh Water Fish Commission, June, 1995), 2) a conservation easement, and 3) government purchase and management of land within the Priority 1 and Priority 2 Panther Habitat areas (hereafter referred to as "priority panther habitat") as outlined in The Florida Panther Habitat Preservation Plan: South Florida Population. |
This study's intent is to determine which of these three alternatives is the least costly. The analysis does not, however, include a determination as how the conceptual plan could or should be changed in order to be more effective from either a cost or panther survival point of view. Our purpose here is to simply look at the costs of the conceptual plan as it was proposed. Further enhancements or changes to the conceptual plan may be suggested by this analysis. Such changes, of course, would require changes to this analysis.
The publication, A Landowners' Strategy for Protecting Florida Panther Habitat on Private Lands in South Florida: A Project Report, presented an economic analysis prepared by Dallas Townsend, County Extension Director, Hendry County, Florida. His analysis was based upon a hypothetical farm, and according to Mr. Townsend, "A much more detailed analysis would be required if this compensation plan were adopted" (p. 25). This document is intended to be that more extensive analysis.
This analysis is based upon actual land and land uses in three south Florida counties: Lee, Hendry and Collier. These three counties were selected since they contain the majority of priority panther habitat on private lands and, as a result, would be indicative of the total land under consideration. By using the actual parcels and the related data as shown in each of the three counties' tax roll files, a more complete picture can be shown of the variety of actual land uses and resulting costs of each alternative habitat preservation plan.
This analysis is part of a larger project, Panthers and Private Lands, conducted by Florida Stewardship Foundation. For an overview of the project please click on Project Overview.
The purpose of this cost analysis is to compare the cost to the government (and, hence, to taxpayers) of three alternative plans for preserving habitat for the Florida panther on private land in south Florida that the U.S. Fish and Wildlife Service has designated as priority panther habitat.
The three alternative plans examined include: 1) public land purchases with the government maintaining the land, 2) a conservation easement where the government pays the landowner up front for the development rights and 3) the "conceptual plan" as proposed by the landowner working group, which would involve incentive payments (mainly tax credits) over a renewable 25-year lease period.
The conceptual plan examined in this analysis is defined in detail in A Landowners' Strategy for Protecting Florida Panther Habitat on Private Lands in South Florida: A Project Report (Florida Game and Fresh Water Fish Commission, June, 1995). Although the conceptual plan covers all nine counties in south Florida which have priority panther habitat, this analysis only deals, for reasons of manageability, with three of those counties: Lee, Collier and Hendry.
The conceptual plan has the following major elements: 1) an income tax credit in the amount of the income tax due for income earned from the land; 2) an estate tax credit for the value of the land; 3) a tax credit if a landowner is denied the right to develop his or her land from a raw or low intensity agricultural use to a more intensive or higher agricultural use; and 4) a tax credit if a landowner is requested to reduce the agricultural intensity or return the land to its native state. All of these items are costed out in this analysis. Additionally, although not referenced in the conceptual plan, the cost of exempting land from the Agricultural Privilege Tax (levied on landowners in Hendry County as a result of the Everglades Forever Act) is also analyzed.
In A Landowners' Strategy for Protecting Florida Panther Habitat on Private Lands in South Florida: A Project Report, a cost analysis was done to compared the cost of the conceptual plan to public land purchases, but it was based upon various scenarios possible under the conceptual plan on a hypothetical farm, and was intended only to be an initial look at the costs involved. At the end of that analysis, it is recommended that a "much more detailed analysis" be done. This study is intended to be the more detailed analysis.
The findings of the analysis done in A Landowners' Strategy for Protecting Florida Panther Habitat on Private Lands in South Florida: A Project Report states that "In each of the situations analyzed...the government saved by leasing the non-agricultural or agricultural development rights."
The findings of this analysis are consistent with those in A Landowners' Strategy for Protecting Florida Panther Habitat on Private Lands in South Florida: A Project Report in that the conceptual plan is a much less expensive method of preserving the priority panther habitat than either a conservation easement or public purchase of the land.
It could be argued that the land values in two of the three counties included in this analysis may be somewhat high due to including more sales of lands (mostly residential) near urban areas than the rest of the counties with priority panther habitat. Additionally, it is unclear in the conceptual plan whether non-agricultural lands would be included. Therefore, a second calculation was done to use land values which may be more representative of the total priority panther habitat and would include only agricultural lands. The first scenario uses actual sales in the last four years by land use code to determine fair market value. However, since some of the land use codes had only a limited number of sales, the second scenario (although it includes only agriculture) may be somewhat more reliable.
For this second scenario, a survey done by the University of Florida's Institute of Food and Resource Economics was used which included land values for cropland, grazing land and citrus land, with lands close to the urban area being segregated out. This survey covered more counties. It used a wide variety of knowledgeable people such as rural appraisers, farm lenders, real estate brokers, farm managers, investors, county extension agents, Farm Services Agency and Natural Resource and Conservation Service personnel, county property appraisers and others to provide information on current land values for these types of agricultural lands.
Not only are the costs important to understand, but the ramifications to local governments and schools, and to the regional economy need to be examined in order to see the complete picture. This analysis found that if the government were to purchase the priority panther habitat lands, even though "payment in lieu" of taxes may be paid, there would still be a loss of tax revenue to local governments and schools. And these "payments in lieu of taxes" also increase the costs to the government of purchasing and maintaining the land. Additionally, if the government were to purchase the land and thus take it out of agricultural production, there would be a large impact on the economy. This loss involves three elements: 1) lost output, 2) lost earnings and 3) lost jobs. These losses create a "ripple effect" of losses to other businesses in the region, which results in a larger loss of jobs and economic activity than just those involved with agriculture. This loss would be offset to a degree by the amount of economic activity generated by public land (entrance fees, hunting, fishing, camping fees, mining or grazing rights, federal expenditures in the local area, etc.) However, the public land's economic impact is relatively minor compared to that of agriculture.
A summary of the major findings of this analysis is shown below.
Although some of the methodology and much of the data varied from the analysis done by Dallas Townsend in the publication, A Landowners’ Strategy for Protecting Florida Panther Habitat on Private Lands in South Florida: A Project Report, the findings are consistent. Both analyses found that the cost per acre of the conceptual plan is significantly less than the cost per acre for public land purchase and maintenance in the priority panther habitat area.
This analysis focused on the total acres within three of the counties involved: Collier, Hendry and Lee. Including all of the counties which have priority panther habitat would have been too cumbersome and time consuming for this analysis. Therefore these three counties were chosen since they represent the majority of priority panther habitat in private ownership and a variety of economies, developmental pressures and types of vacant and agricultural lands.
There are three types of findings in this report: 1) a comparison of the costs of the conceptual plan, the costs of conservation easements and the costs of the government purchasing and managing the land ("Leasing Part of the ‘Bundle of Rights’ vs. Direct Land Acquisition by the Government"); 2) the loss of land productivity ("Economic Impact"); and 3) the reduction of local taxes ("Effect on Local Taxes").
1. Leasing Part of the "Bundle of Rights" versus Direct Land Acquisition by the Government:
This analysis was done with two scenarios: a) using fair market values calculated from sales in the tax rolls and applied to both agricultural and non-agricultural land uses; and b) using fair market values taken from a survey conducted by John E. Reynolds and Stacey R. Linn of the Food and Resource Economics Department of the Institute of Food and Agricultural Sciences of the University of Florida. The survey, entitled Florida Land Value Trend Continues: 1996 Survey Results, July-August 1996, gathered data from several sources in fourteen counties in southwest/central Florida on cropland, pasture and citrus land values to develop "estimated land values per acre" for the region. This survey segregates out land that has higher costs due to being near urban areas.
The analysis shows that under the first scenario, the cost of government purchase and management of the land, based on the three counties analyzed, would be $3,322 per acre. The cost of a conservation easement would be $2,328 per acre, and the cost of all elements of the conceptual plan (income and estate tax credits, the value of restoration/reduced agricultural use, agricultural development rights and agricultural privilege tax exemption) would be $823 per acre. The following graph shows these numbers:
Please note: these figures represent the present value per acre of the costs associated with each of the three alternative methods. They are not annual amounts.
The analysis shows that under the second scenario, the cost of government purchase and management of the land, based on the three counties analyzed, would be $2,242 per acre. The cost of a conservation easement would be $1,295 per acre, and the cost of all elements of the conceptual plan (as mentioned above) would be $930 per acre. The following graph shows these numbers:
The first scenario, which uses fair market values for all eligible land uses and is based upon the arm's length sales in the tax rolls for Lee, Collier and Hendry counties of which Lee and Collier would tend to include sales inflated by being close to urban areas. It uses actual sales in the last four years by land use code to determine fair market value. However, since some of the land use codes had only a limited number of sales, the second scenario (although it includes only agriculture) may be somewhat more reliable.
The second scenario includes only agricultural land uses, and is based upon survey information from 14 counties in the southwest/central sections of the state, many of which are not near large urban areas.
Therefore, the ultimate cost would depend upon whether the conceptual plan in its final version applies to all vacant land, or just to agricultural land; and upon the inclusion of land near the urban fringe.
The costs presented above represent the present value of a series of payments on a continuous basis. Another way to look at these costs is on an annual basis. This is sometimes an easier concept to understand. However, since the conceptual plan represents a continuous series of costs, and both a public purchase and conservation easement could represent a one-time payment, obtaining annual values that are comparable can be done by annualizing the present values shown above. Doing so results in the following amounts for Scenario 1 and Scenario 2:
Although the total costs for these three counties had to be computed in order to find the cost per acre, the important figure is cost per acre, not total cost. This is because the government may determine that certain portions of individual parcels may not be appropriate for habitat and thus the government may not request that those portions be protected. Also, several areas are currently part of the government's plans to purchase, but the transactions haven't gone through yet. So the total acres (and therefore total costs) used in this study are greater than would ever be the case for these three counties in terms of the amount of land which could eventually fall under this program.
The costs per acre shown can be used as estimates of what the overall costs would be once it is determined specifically which parcels and which portions of those parcels might be placed under protection.
Another very important consideration is that the actual costs of the conceptual plan will most likely be significantly lower than presented in this study because under the government purchase and conservation easement alternatives, the total parcel of land generally would be involved, whereas under the conceptual plan alternative, portions of parcels could be leased instead of the entire parcel.
2. Economic Impact
This analysis includes a calculation of the economic impact on the regional economy that the loss of agricultural lands would have as a result of public purchase. This is not an impact under the conceptual plan because the land would remain in production. But public purchase does impact the region's economy and needs to be considered whenever the government considers purchasing private lands. This loss is offset slightly by the revenues generated by publicly owned land through entrance fees, hunting, fishing, leasing of mining rights and federal expenditures in the area. (Whether public access, hunting and fishing would be compatible with panther habitat protection is another question).
This analysis revealed that if all the agricultural lands within the priority panther habitat area were purchased by the government, or if the landowner were required to take it out of agricultural production, the loss to the region's economy annually would be over 9000 jobs, $114.8 million in earnings by those employees and almost $500 million in output. Obviously, the likelihood of all the agricultural acres in the priority panther habitat area being taken out of production is slim.
On a per acre basis, the annual output impact is $1,074 with a present value of $29,833. The annual per acre earnings impact is $248 with a present value of $6,898, and the employment impact is .02 jobs. (See Full Report).
These figures would be offset by any economic impact caused by public access to these lands (recreational, hunting, fishing, camping fees, etc.). The draft of the study being done by Florida Atlantic University and Florida International University Center for Environmental and Urban Problems for the Everglades National Park on several federally owned areas shows that the annual economic impact (weighted average) generated by public use is $63 per acre (present value of $1,760), considerably less than the $1,074 economic impact (present value of $29,833) generated by agriculture. Data on state parks in south Florida also was examined.
This data was not used because most of the parks were not comparable since they either were beach parks or had heavy public use. The only park that was similar, because it had limited public access (which would be expected for public lands acquired for the purpose of panther habitat protection), was the Fakahatchee Strand, which had an economic impact per acre of $49. This figure was calculated based on the Office of Park Planning's document, "FY1996/97 Florida State Park System Economic Impact Assessment," which showed a direct impact of $1,767,212, and an estimated multiplier which is the average of tourist expenditures and park expenditures (1.8 and 1.95 respectively) taken from the national lands study mentioned above.
However, a per acre comparison does have a weakness, since the income generating power of publicly owned land is not directly linked to size, but rather to the attraction it has for the public, whereas agricultural economic impact is more directly related to the number of acres. Because this is the only data available on this issue, it is presented here for the sake of discussion. (See the Full Report for further details on the federal land economic study).
3. Effect on Local Taxes
For Scenario 1 the total estimated annual property taxes for the three counties is $4,065,775. This amount is offset, in some cases, by "payments in lieu" of taxes paid to the counties by the state and/or federal government. These "PILT" receipts are estimated to be $525,468 for the acres eligible for coverage under the conceptual plan. Thus the annual estimated loss to counties with priority panther habitat is $3.5 million, for a present value of $98.3 million or $185 per acre.
For Scenario 2 the total estimated annual property taxes for the three counties is $2,439,208. This amount is offset, in some cases, by "payments in lieu" of taxes paid to the counties by the state and/or federal government. These "PILT" receipts are estimated to be $379,795 for the acres eligible for coverage under the conceptual plan. Thus the annual estimated loss to counties with priority panther habitat is $2.1 million, for a present value of $57.2 million or $124 per acre.
It should be mentioned that if the conceptual plan is implemented, there could be a loss of potential local taxes if landowners with lands currently permitted for more intensive agricultural uses are not allowed to act on those permits. The amount of this potential loss is not identifiable since some of these landowners, even without the conceptual plan, might not ever act on these permits, and/or the timing of when they might act on them is not identifiable.
OTHER METHODS OF VALUING HABITAT
Although this analysis uses data from the marketplace to place value on the priority panther habitat lands, other methods and concepts with regard to placing and comparing values of land and wetlands that is habitat to endangered or threatened species should be mentioned.
When the market establishes values often social, environmental, esthetic and ecological values are minimized or ignored. The result can be a loss of greenspace, habitat and environmental balance. Additionally, it can result in the needs of individuals or corporations being met, while the overall needs of society and of nature are ignored. In other words, the benefits provided by the preservation of habitat are not always included in marketplace transactions, and the results can be irreversible.
With this fact acknowledged, it should be mentioned that there is not a great deal of useful literature on exactly how to place appropriate values on habitat other than using the market method. However, several of the alternative valuation methods are presented here to stir thought.
1. The Economic Benefits of Open Space
Four methods are discussed by Stephen Miller in a May, 1992 study entitled The Economic Benefits of Open Space to value open space: market and surrogate-market price valuations, property value techniques, travel-cost approach and survey-based techniques.
Market and Surrogate-Market Price Valuation Methods
The market approach measures a change in the market price or quantity of a marketable good that is caused by an environment change. This change in price or quantity is then used as a measure of the environmental change.
The surrogate market approach uses the price of substitutes to put a value on an environmental benefit. For example, the price of swimming pools can be used to determine the value of a natural body of water used by swimmers for free, or the cost of bottled water or individual wells can help determine the value of clean drinking water.
Property Value Technique
This technique involves seeing how environmental aspects such as attractive views, proximity to open areas or bodies of water, or clean air affect the price of housing. These differences can then be used to calculate the value of the specific environment aspect.
Travel-Cost Approach
The concept here is that if people are willing to pay to travel to a park or other type of open space, the amount of travel costs can be used to estimate the recreational value of that open space. Other benefits of that open space would need to be measured using other techniques.
Survey-Based Methods
Statistical sound surveys can be used to determine how much people are willing to pay (WTP) to use a park, to have clean air or drinking water, to ensure that endangered or threatened species exist, etc.
Another use of the survey method is to determine how much people are willing to accept (or be compensated for) the loss of property rights or of environmental benefits.
For example, this could be a survey of landowners asking whether they would accept payment for giving up one or more of their "bundle of rights" on their land; or a survey of people in an area of a river that is used recreationally and is threatened by a hydro-dam as to what they would prefer -- the continued use of the river as it is or a savings in their utilities bill.
2. Economic Dimensions of Ecosystem Management
According to Bergstrom and Loomis the most widely applied survey method is contingent valuation (CV). They state, "The method involves confronting survey respondents with realistic valuation scenarios and acceptable valuation questions. For example, suppose we want to measure a group of citizens' WTP to expand a local park. The CV survey instrument would describe the proposed expansion in detail and how it would be financed (e.g., increase in the local sales tax). The following valuation question might then be posed: >If expansion of the park cost your household $X per year because of an increase in the local sales tax, would you vote to approve the expansion?= Yes/No responses to this question across respondents for various values of X can be statistically analyzed to estimate mean WTP for the park expansion."
WTA and WTP can be separated into two methods: stated preference (such as CV), and observed behavior. The travel cost method is an example of observed behavior. According to Bergstrom and Loomis, "The primary strength of revealed preference methods is that value estimates are based on actual behavior and tradeoffs...revealed preference methods can only be applied to value ecosystem services which are associated with some type of actual market expenditures." They go on to state, "The primary strength of stated preference methods is flexibility." And the survey "...can be designed to measure WTP for a ecosystem service for which no market expenditure data exist..."
3. The value of the world's ecosystem services and natural capital
This very interesting study that appeared in the May 15, 1997 issue of Nature magazine by Robert Costanza and several colleagues provides food for thought as an alternative means for determining incentive lease payments to retain habitat.
The team of ecologists and economists took on the huge task of putting a value on the ecological services of the earth. Using all the techniques from several different studies including some of those mentioned above such as market prices, willingness to pay and the cost of replacing the service, they calculated the value of 17 different "ecological services": gas, climate, disturbance and water regulation; water supply; erosion control; soil formation; nutrient cycling; waste treatment; pollination; biological control; habitat/refugia; food production; raw materials; genetic resources; recreation; and cultural for each of 16 biomes, including open ocean, other types of water systems and various types of terrestrial systems such as forest, grasslands, wetlands, desert, tundra, cropland, urban, etc.
The total global value of ecosystem services, according to the study, is at least $33 trillion worth of services annually -- "nearly twice the combined gross domestic product (GDP) of Earth's 194 nations."
Since their numbers were based upon existing literature and methods, no values were included if there was no literature dealing with it. They found no studies that placed a value on several of the "ecosystem services." The one which would be most helpful to our analysis would be "habitat/refugia" for the biomes of cropland, forests and grasslands, but there was no literature or studies found on it, so they did not included it. If and when studies are published on these elements, it would be very interesting to see how they might be applied to valuing land for its habitat attributes.
4. Preserving Waterfowl Habitat on the Canadian Prairies: Economic Incentives versus Moral Suasion
This article by Kooten & Schmitz compared the use of economic incentives to moral suasion in preserving lands and wetlands for waterfowl. It used the survey methods of WTP and WTA, and found that incentives are better than moral suasion although that does have a place. It also found that farmers with more marginal lands were more willing to participate. One interesting comment was that, for its lease agreement, the amount of the payments was based "on perceived average rents" in the area.
5. Economic Benefits of Rare and Endangered Species: Summary and Meta Analysis
This paper, by John B. Loomis and Douglas S. White, does a multiple regression analysis on the results of WTP studies on 18 different species to identify the variables which explain the variation in values of threatened and endangered species. They recommend that the "valuation of multiple T&E species inhabiting the same ecosystems would be more sensible than the current species by species approach to valuation." They also state that their methods could be used to place an estimated value for unstudied species once more work is done.
1. More specific language needs to be developed in the conceptual plan about how the incentives are to be applied to landowners that are corporations (or forms of ownership other than sole proprietorships). (Note: the Lease Committee is currently working on this issue.)
2. More concrete ideas and language also need to be developed in the conceptual plan about what type of cash payments or "other" incentives could be used, when, how much, and under what circumstances. (Note: the Public Education/Policy Committee is currently working on this issue.)
3. There is a need to look at increased incentives for owners of non-agricultural vacant land. The incentives provided for in the conceptual plan are most likely not enough for them to give up their non-agricultural and maybe even their agricultural development rights. This is because the income tax credit on income earned from the land would not apply to them since they generally do not earn any money from their land, but rather hold it for investment purposes. They would, however, be eligible for the estate tax credit, but this may not be enough of an incentive, especially for a young landowner.
4. It is important to examine how much of an incentive the conceptual plan offers priority panther habitat landowners (especially those near urban areas) -- i.e., how many would be willing to participate in the plan as it is currently proposed (assuming a general level of compensation equivalent to $30 to $33 per acre, for each acre enrolled, as indicated by this analysis), and whether additional incentives to reduce operating costs and/or provide annual cash payments will be necessary or desirable to increase participation.
You also may view other sections of the study (in another part of this web site) by clicking on:
| Background | Methodology | Review Process | Calculations | Order Full Report |
The Full Report includes the Endnotes, where all sources of information for the study are cited, and the Spreadsheets where the calculations used in the study are shown in detail.
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