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An Option Value Approach To Valuing Preservation Properties

Author

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  • Winfree, Jason A.
  • McCluskey, Jill J.
  • Mittelhammer, Ronald C.
Abstract
There has been a recent trend towards purchasing land for farmland preservation, wildlife refuges, other conservation, and cultural and historical preservation. There is a great deal of unexplained variation in the dollars paid per acre for these properties. The theoretical basis for this analysis is an option value model with stochastic returns to development. The data used in our analysis is sales transactions data for natural resource conservation and farmland preservation purposes from throughout the United States. We find that land, when it would be best used for development, but is not developed, has a significantly higher price.

Suggested Citation

  • Winfree, Jason A. & McCluskey, Jill J. & Mittelhammer, Ronald C., 2002. "An Option Value Approach To Valuing Preservation Properties," 2002 Annual Meeting, July 28-31, 2002, Long Beach, California 36619, Western Agricultural Economics Association.
    • Handle: RePEc:ags:waealb:36619
    DOI: 10.22004/ag.econ.36619
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    References listed on IDEAS

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