The Economics of Open Space

 

From the Eccentric Newspaper 

 

Including protected open space in our plans for residential and commercial development is a trend that is catching on among more and more Michigan township planners and developers.   Unfortunately, too often citizens and some government officials may worry that they will lose money from their tax base if open space is left in its natural state.  Since the assessed value of a piece of property is higher if it is developed than if it is preserved as open space, the property is assumed to be more valuable to the community if developed rather than left in its natural state.  Recent studies are beginning to provide us with proof that this may not be true and that including open space preservation in our development plans makes good economic sense.

 

A study conducted in Michigan’s Scio Township concluded that for every dollar raised in property taxes, residential areas demand $1.17 in services.  Other national studies have placed the cost of services at $1.20 or higher for every dollar that the new taxes bring in.  The additional fire, police, schools, road maintenance, and in some cases, sewer costs, end up costing more than the additional taxes that are raised from the new property owners.  Because of the time that goes by between when a development is proposed and when its actual infrastructure costs are tallied and new taxes are raised, a thorough ”balance sheet” comparison of total project costs and benefits is often not conducted.

 

When the additional taxes collected from developed properties do not fully cover the additional costs of the services that are required, the additional costs must be passed on to everyone through higher taxes.  Land that is not developed, such as land subject to a conservation easement, or donated outright to a land trust or local government, will not require those additional infrastructure service costs.  In fact, since there are minimal costs needed for undeveloped land, those taxes which are collected represent additional funds available to help pay for the additional infrastructure services of developed land. 

 

In addition, local governments often find that where open space is protected, property values in the surrounding community rise, and property taxes in aggregate rise accordingly.  People who purchase property adjacent to protected open space expect to and do pay more for the amenity of a natural or rural setting.  Many developers who have discovered this are utilizing a cluster option, where houses are placed more closely together in order to preserve part of the development as open space.  Some townships actively encourage such land use techniques through their ordnances and Master Plans.  By finding ways to protect open space, governments are not only fulfilling their responsibility to preserve the quality of life in their communities, they’re actually improving the local economy at the same time.

 

There are other economic benefits associated with open space that often go unmeasured.  These are the benefits of the unseen services provided by many wild open space ecosystems.  The services these ecosystems provide include climate regulation, storm and flood protection, water filtration and purification, soil formulation and crop pollination, to name a few.  While these are not normally measured in terms of “goods and services,” the cost of replacing these natural services can be considerable.  A recent study cited in the peer-reviewed Science journal compared, among other things, the economic value of the “ecological” contributions made by land kept natural versus being converted to residential or commercial use.  In all 300 cases studied, the total economic value of the intact ecosystems ranged from 14 percent to almost 75 percent higher than the market benefits that came with land conversion. 

 

No one is suggesting land development be stopped in favor of total land protection.  The strength of our economy and the quality of all of our lives is too closely connected to sustainable development.  But what these studies suggest is that we take a harder look at the full costs and benefits associated with the conversion and use of the remaining open space we have, and use all of the relevant data available as we make our development plans and decisions. 

   

 Reprinted with permission from the Observer &  Eccentric Newspapers, copyright, 2002.