ANALYSIS OF ALTERNATIVE PAYMENT DESIGNS FOR FARMLAND DEVELOPMENT RIGHTS

Steven D. Hanson

No 11540, Staff Paper Series from Michigan State University, Department of Agricultural, Food, and Resource Economics

Abstract: Four alternative payment rules were examined to evaluate their ability to accomplish the objectives of the development rights purchase program. Paying the true economic value for the development rights does not allow the program to target high quality agricultural land. Modifying the payment strategy by offering a minimum payment will provide some extra incentive for high quality agricultural land in areas with little development pressure, but will provide little help in areas with high development pressure. Indexing the payment to a representative agricultural-use value for an area will provide premiums to high quality agricultural land and discounts to low quality agricultural land which provides additional incentives (disincentives) for high (low) quality land to enter the program. This representative payment rule can be modified in order to increase the participation incentives to owners of targeted land.

Keywords: Land; Economics/Use (search for similar items in EconPapers)
Pages: 12
Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:ags:midasp:11540

DOI: 10.22004/ag.econ.11540

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