Abstract
We examine the effect that public facilities moratorium and minimum lot size zoning have on the conversion of rural land to residential subdivisions in fast-growing exurban areas using a natural experiment approach. Zoning ordinances are the most common growth control policy at the local level and are hypothesized to be one of the most important factors in determining the likelihood of residential development. We investigate the role of minimum lot size zoning by taking advantage of plausibly exogenous changes in zoning policies that altered the developable status of some rural land parcels in an exurban county of Ohio. A discrete-choice econometric model of land use conversion is estimated with a parcel-level temporal dataset, using conditional maximum likelihood estimation to account for the panel structure of the data and fixed effects to control for unobserved heterogeneity. Empirical evidence indicates that minimum lot size zoning has a negative effect on the likelihood of rural land conversion and that this effect is large in magnitude. Specifically, we find that a parcel that is subject to a minimum lot size zoning is between 4.4 and 6.4% less likely to be converted to residential land use. In comparison, results from a pooled model, in which the unobserved heterogeneity is left uncontrolled, suggest that minimum lot size zoning has a relatively small negative effect on the conversion probability of undeveloped land parcels. Thus, estimates that do not control for unobserved heterogeneity are likely biased toward zero.
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Notes
We focus on parcels that are classified as “exurban” and set aside parcels that are within the limits of the existing cities in the county (e.g., parcels incorporated to those cities). The reason is that the policy variables, particularly the public facilities moratorium to be explained, apply to those exurban parcels.
For further details on how these plans are managed, please see the development policy plan for Medina County available online at: http://www.planning.co.medina.oh.us/wp-content/uploads/2014/01/subdivision_regulations_2008.pdf (Accessed August 3, 2016).
These plans were contained in the coastal management program and environmental impact statement prepared by the Department of Commerce, the National Oceanic and Atmospheric Administration, and the Office of Ocean and Coastal Resource Management for the State of Ohio in August 1996. The original plan development also involved specialized studies addressing Best Management Practices on rural lands NOACA WQM Technical Appendix A03. Control of Nonpoint Source Pollution from Rural Lands Through the Use of Best Management Practices, 1978 can be found at: http://www.epa.ohio.gov/portals/35/mgmtplans/Final2006Plan/Final208_Aug06_Append_10-4_93SWQMplan_noaca.pdf (Accessed August 3, 2016).
A more general specification would also include the option value associated with irreversible land development when future rents are uncertain (Capozza and Helsey 1989). We do not consider this effect in our empirical model and thus abstract from this consideration here. The empirical literature on the influence of price volatility, a generator of option value, on land development timing (e.g., Cunningham 2007; Towe et al. 2008) has found weak or inconclusive results.
Many of these areas have been drained by tile fields or open ditches in order to be farmed, and these systems are often disrupted during excavation for non-farm uses.
We also estimated the pooled logit model using the sub-samples considered for robustness purposes in the fixed effects logit results. The pooled logit model results for these sub-samples are very similar and are available upon request. Also, as a robustness check, pooled linear probability models were estimated, which yielded similar results to the pooled logit. They are also available upon request.
Note that, in this model, two township-specific trends are dropped due to collinearity, corresponding to Granger and Homer townships.
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Carrión-Flores, C., Irwin, E.G. A fixed effects logit model of rural land conversion and zoning. Ann Reg Sci 58, 181–208 (2017). https://doi.org/10.1007/s00168-016-0796-z
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DOI: https://doi.org/10.1007/s00168-016-0796-z