Association for Public Policy Analysis & Management

Land conservation has been widely used as a policy tool to contain urban sprawl, protect habitat, and provide ecosystem services through conservation easements. Numerous studies have shown that the public has substantial willingness-to-pay for programs that conserve open space for various environmental and ecological amenities. Meanwhile, prior research also found that conserved open space was associated with higher nearby property values and that conserved open space may reallocate development rather than altering the total amount of development. To design policies that can effectively guide the conservation of open space, an understanding of what affects landowners’ conservation decision is essential.

This paper explores the impact of neighbors on private landowners’ conservation decision for open space in the Baltimore region, Maryland. We construct a spatially-explicit panel dataset to illustrate the patterns of private land parcels on conservation easements during 2000-2009. In the empirical analysis, we use a probit model to explain private landowners’ decision to place an easement. To correct for the endogeneity of time-varying covariates, we further employ a correlated random-effects model in this study. The purposes of this paper are threefold. First, we identify endogenous spatial interactions among conservation for open space, independent of spatially correlated landscape features that influence private landowners’ conservation decision. Second, we investigate the impact of neighbors, using both the nearest distance and the number of neighbors, on private landowners’ conservation decision, controlling for the endogenous location of open space. Third, we further examine the extent of spatial spillovers, allowing for the distance that defines neighbors and the number of neighbors to vary. Our primary results show that there exist positive impacts of neighbors on the likelihood of private landowners’ conservation decision. Such spatial spillovers are further found to diminish with distance and present a non-linear pattern (i.e., an inverse U-shape) as the number of neighbors increases.

This study differs from previous research and makes several distinct contributions to the literature. First, instead of examining crowding-in and crowding-out effects of government protected land on private conservation activity (Albers et al., 2008; Parker and Thurman, 2011), we focus on the impact of neighbors on conservation decision among private landowners. Second, we use a parcel-level panel dataset to estimate spatial spillovers in more detail while prior studies generally used spatially aggregated data at either township or county level (Albers et al., 2008; Parker and Thurman, 2011) or only using cross-sectional data (Lynch and Lovell, 2003), except for Liu and Lynch (2010). Third, to identify spatial spillovers from conventional spatial econometric models that are designed for cross-sectional data, we adopt a correlated random-effects model to control for unobserved land parcel-level heterogeneity as a function of the average of time-varying covariates. We further estimate the marginal effects of the impact of neighbors and the predicted probability of conservation decision based on the number of neighbors, allowing for heterogeneous distance thresholds that define neighbors.