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- Fall - 1996 "Update" Newsletter Article -
Ag land conversion addressed
Site study shows that initial cost to community for providing public services to new urban areas outpace income from fees
From CATI Publication #961001
Copyright © 1996. All rights reserved.
An economic study of the costs of converting agricultural land to urban uses indicates that Fresno County government does not reap the revenues it needs to cover costs of initial services.
The study, conducted by Fresno State agricultural economist Dennis Nef, has been concluded with a published report entitled "The Economics of Maintaining Land in Agriculture in Fresno County." It addresses the issues surrounding the growth of cities and suburbs, and how the loss of prime agricultural farmland should be examined by county and other government agencies.
As part of the Fresno area study, Nef examined the conversion of 3,840 acres of farmland to urban uses during the early 1990s. The agricultural economics professor found that at least initially, the cost of providing services to new urban areas would outpace revenues gained from developer's fees by an average of about $3,500 per acre of land converted.
The figures were obtained using standardized formulas for estimating the value of agricultural land, costs of development, and the costs to government for providing social programs, for public health and safety, road construction and maintenance, schools, and other services.
One objective of the study was to present site-specific figures that government officials can use in evaluating the costs of urban sprawl; another was to address the intangible value of agricultural land community leaders should consider when planning additional farmland conversion.
"There is value attached to open space, green surroundings, and the peace and serenity some associate with farmland," Nef writes in his report. The problem for the surrounding community is that the cash- driven marketplace often does not recognize these amenities. "Thus, society as a whole loses if these amenity values are reduced through development."
There are a number of methods both public and private agencies already have used in attempts to place "amenity" values on prime farmland threatened by urban sprawl. One method Nef outlines is issuing "development rights" to landowners. These development rights could be bought and sold by landowners, as well as developers wishing to convert the property, thus raising the cost of the land to include the value of its amenities.
While many people oppose "government intrusion" into the free market, the shrinkage of farmland in California continues at the estimated rate of more than 44,000 acres per year. On a statewide cropland base of about 11 million acres, that amounts to slightly less than one-half of one percent per year.
If the free marketplace is indeed "missing something" in its valuation of prime agricultural land, society, in the form of government, should take more care in at least educating the public on the issues of farmland conversion. "Permanent protection requires a better understanding of the benefits and costs associated with development," Nef writes.
The full text of Nef's report is titled "The Economics of Maintaining Land in Agriculture in Fresno County." Copies are available and may be viewed or requested from the Research Publications page.
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CALIFORNIA AGRICULTURAL TECHNOLOGY INSTITUTE - CATI
College of Agricultural Sciences and Technology
California State University, Fresno