Givings: Does Protecting Land Increase Its Value? - #22
[Note: This post is part of a series.]
In Washington, proponents of Initiative 933 often claim that the measure is a sort of righteous response to certain land protections—protections that they see as burdensome regulations. They allege that such protections reduce the value of land. But do they?
This summer, an extension student at the University of Washington, John Abbotts, conducted a study of changes to land values in rural King County from 1993 to 2004. What he found may be a surprise: Land with environmental protections did not lose value. In fact, regulated land may have gained more value than land without the regulations.
Here’s the technical part. (But it won’t hurt.) Abbotts analyzed land zoned “RA-5,” a designation for property that is considered rural and where only one dwelling is permitted per 5 acres. It’s very common in eastern King County. And he chose three watersheds—Bear Creek, Evans Creek, and Patterson Creek—to compare. Why those three? Because since 1995 the Bear and Evans watersheds have been under regulations similar to the hotly-debated “critical areas ordinances” that went into effect countywide in 2005. So Bear and Evans are two examples of what happens to property values under regulations; Patterson is an example of what happens without them.
So, how did the property values fare?
Patterson—the unprotected watershed—did very well. Over the 11 year study period, the mean property value per square foot (the best comparable measurement of property values) increased by 71 percent. Property in the Patterson watershed was (and still is) the cheapest, but it increased by 30 cents per square foot.
By comparison, in the Bear Creek watershed—which was under regulations starting in 1995—property values increased by only 48 percent. (Not that a 48 percent increase is too shabby!) But Bear Creek was (and still is) the most expensive place to own property: land values there increased by 70 cents per square foot.
In the third watershed, Evans Creek—also regulated since 1995—property values increased by 69 percent. And in absolute terms, property values added 72 cents per square foot.
I suppose that the conclusion you reach from Abbotts’s study depends on which numbers you like and what you think they mean. But it is clear that the regulated watersheds saw substantial appreciation. It’s also clear that, in percentage terms, property in the unprotected watershed increased by about the same as property in one of the two protected watersheds. In absolute terms, however, the regulated watersheds saw more than twice as much growth as the unregulated watershed.
My look at the numbers tells me that the 1995 regulations didn’t hurt property values. And that makes me suspect that the 2005 protections—the critical areas ordinances—won’t either. Are they fair? Are they helpful? Do they preserve our heritage? I’m trying to answer those questions elsewhere. But I think it’s fair to say that, at least in rural King County, environmental protections have not hurt property values—and they have probably helped.
There are a number of important caveats: Abbotts’s study is an aggregate of RA-5 property values by watershed; he didn’t analyze individual properties. He analyzed only properties that were zoned RA-5 in 2004 and it’s possible that some properties were zoned differently in 1993. Also, what’s true of property values in King County may not be true elsewhere; we would need further study to find out. Finally, even though the regulated properties increased in value, it’s possible that they would have increased more without the regulations. (Conversely, however, it’s possible that the unregulated properties would have increased more with regulations.)
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