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Economic Value of Open Space in Pennsylvania
 

Economic Value of Open Space in Pennsylvania

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Economic Value of Open Space in Pennsylvania Economic Value of Open Space in Pennsylvania Presentation Transcript

  • THE ECONOMIC VALUE OF PROTECTED OPEN SPACE INSOUTHEASTERN PENNSYLVANIA Greenspace Alliance / DVRPC April 20, 2010 Econsult Corporation
  • Economic Value Components• Job and revenue generation• Environmental services provided• Direct use benefits• Property value impact• Status – Research, modeling complete – Fine-tuning results and visuals – Deciding how conservative to be – Accounting for potential overlaps within/between categories Econsult Corporation
  • Status of Engagement• Research, modeling complete• Fine-tuning results and visuals• Deciding how conservative to be• Accounting for potential overlaps within/between categories Econsult Corporation
  • Economic Value Components• Job and revenue generation• Environmental services provided• Direct use benefits• Property value impact Econsult Corporation
  • Job and Revenue Generation• Accounting for economic impacts• Categories – Privately controlled open space – Publicly controlled open space – Tourism activity – Aggregate impact• Context and commentary Econsult Corporation
  • Accounting for Economic Impacts• Typical discussion: dollar terms vs. non-dollar terms• Development = net new revenues AND net new expenditures• Economic activity from open space > 0 – Privately controlled preserved farmland – Publicly controlled park space – Tourism attracted by open space• Ancillary effects of any direct expenditures Econsult Corporation
  • Privately Controlled Open Space• Acreage: preserved farmland 59.6K + land trust 42.0K = 101.6K• Satellite imagery isolates only agricultural uses: preserved farmland 35.7K + land trust 14.6K = 50.3K• Commercial activities on small community gardens not included• USDA/Census data on sales and employment by county, apportioned Econsult Corporation
  • Estimated Annual DirectEconomic Activity on PrivatelyControlled Open Space (in $M) County Sales Employment Bucks $1.1 25 Chester $5.5 123 Delaware $0.2 16 Montgomery $1.0 24 Philadelphia $0.5 19 TOTAL $8.2 207 Econsult Corporation
  • Publicly Controlled Open Space• Budget data obtained from federal/state/county/municipal parks and related departments• Independence National Historic Park not included, recreation portions of “parks and recreation” departments not included• Municipal parks account for 34.5K out of 95.7K acres, but only municipalities with park acreage >200 acres included (16% of municipalities and 43% of acreage) Econsult Corporation
  • Estimated Annual DirectEconomic Activity on PubliclyControlled Open Space (in $M) Budgets Employment Bucks $13.7 187 Chester $11.1 137 Delaware $13.8 188 Montgomery $12.7 173 Philadelphia $12.6 171 Total $63.9 856 Econsult Corporation
  • Estimated Annual 5-County Total Economic Impact of All Protected Open Space (in $M) 5-County Total Philadelphia Bucks Chester Delaware MontgomeryExpenditures $135.6 $24.7 $27.9 $30.7 $26.5 $25.8Employment 1650.3 295.3 335.6 394.5 314.4 310.5Earnings $76.8 $14.4 $13.8 $20.3 $14.1 $14.1Local Taxes $1.0 $0.9 $0.0 $0.1 $0.0 $0.1 Econsult Corporation
  • Tourism Activity• Protected open space a significant component of Philadelphia region tourism industry – 2007 survey of international visitors ~ 16% participated in outdoor activities – Out of 30M visitors, top attractions incl. Valley Forge (1.3M), Longwood Gardens (730K)• Tourism industry as a whole - $9.3B in expenditures supporting 87K employees and $2.8B earnings, and generating $600M in local/state taxes• Assuming 2% attributable to protected open space - $186M in expenditures supporting 1,750 employees and $56M earnings, and generating $12M in local/state taxes Econsult Corporation
  • Estimated Annual 5-County Total Economic Impact of All Protected Open Space (in $M) 5-County Total Philadelphia Bucks Chester Delaware MontgomeryExpenditures $322.2 $131.3 $44.9 $48.3 $41.7 $56.0Employment 3,396 1,059 570 586 506 674Earnings $133.2 $46.0 $19.0 $25.5 $18.9 $23.7Local Taxes $6.8 $5.0 $0.4 $0.4 $0.4 $0.6 Econsult Corporation
  • Context and Commentary• Estimates intended to be rough and conservative• Impact relative to overall regional economy – insignificant• Impact relative to how protected open space is often perceived – significant• Little to no overlap with other impact types from this study – Environmental services provided – no overlap – Direct use benefits / Tourism – small overlap with usage fees – Property value impact – no overlap Econsult Corporation
  • Economic Value Components• Job and revenue generation• Environmental services provided• Direct use benefits• Property value impact Econsult Corporation
  • Environmental Services Provided• Air Pollution• Ecosystem Services Econsult Corporation
  • Air Pollution Benefits• Open space offers the ability to remove significant amounts of air pollutants• Most of the air pollution benefits are generated by the tree canopy cover found on the open space parcels• Trees improve air quality by removing NO2 , SO2 , CO, O3 , and PM10• Trees help clean the air by storing and sequestering carbon in their biomass Econsult Corporation
  • Air Pollution Benefits• Tree canopy amounts were estimated from satellite land cover data• Air Pollutant Removal amounts were estimated using the i-Tree Vue model from the US Forest Service
  • Tree Canopy Cover Preserved County County Federal Municipal Non-Profit State Total FarmlandBucks 3,642 0 3,959 1,387 2,838 8,364 20,189Chester 3,229 623 3,716 3,267 14,065 4,477 29,377Delaware 594 103 1,861 0 1,421 1,955 5,934Montgomery 2,332 677 3,673 709 2,450 2,206 12,047Philadelphia 3,774 0 115 0 254 59 4,202Total 13,571 1,404 13,324 5,362 21,028 17,060 71,749 Econsult Corporation
  • Pollutant Removal (tons)Pollutant (tons) Bucks Chester Delaware Montgomery Philadelphia TotalO3 310 446 93 185 66 1,099PM10 325 468 97 194 69 1,153NO2 156 224 47 93 33 553SO2 69 99 21 41 15 244CO 17 24 5 10 4 59Pollutant ( Thousands tons) Bucks Chester Delaware Montgomery Philadelphia TotalCarbon Sequestration 27 39 8 16 6 95Carbon Storage 815 1,175 244 488 174 2,895
  • Air Pollution Benefits• Benefits were calculated by multiplying the pollutant removal amounts by the externality value of the pollutant• Externality values are considered the estimated costs of pollution to society that is not accounted for in the market price of the goods or services that produced the pollution• One example is the value that society would have to pay in areas such as healthcare if trees did not remove these pollutants due to increased cases of asthma and other respiratory conditions
  • Air Pollution Benefits Value ($million) Bucks Chester Delaware Montgomery Philadelphia TotalO3 $ 2.78 $ 4.01 $ 0.83 $ 1.66 $ 0.59 $ 9.88PM10 $ 1.95 $ 2.81 $ 0.58 $ 1.16 $ 0.41 $ 6.92NO2 $ 1.40 $ 2.02 $ 0.42 $ 0.84 $ 0.30 $ 4.97SO2 $ 0.15 $ 0.22 $ 0.05 $ 0.09 $ 0.03 $ 0.54CO $ 0.02 $ 0.03 $ 0.01 $ 0.01 $ 0.00 $ 0.08Total $ 6.30 $ 9.08 $ 1.89 $ 3.77 $ 1.34 $ 22.38 Value ($million) Bucks Chester Delaware Montgomery Philadelphia TotalCarbon Sequestration $ 0.56 $ 0.80 $ 0.17 $ 0.33 $ 0.12 $ 1.97Carbon Storage $ 16.86 $ 24.30 $ 5.05 $ 10.09 $ 3.59 $ 59.88Total $ 17.41 $ 25.10 $ 5.21 $ 10.42 $ 3.71 $ 61.86
  • Ecosystem Services• In addition to air pollution removal, open space parcels also provide a number of valuable ecosystem services• Examples include: waste treatment, disturbance buffering, plant and animal habitat and others• The amount and type of ecosystem services generated depends on the land cover of the preserved open space
  • Value Transfer• Utilized value transfer techniques to generate estimates of ecosystem service values• Value transfer has become a practical way to inform policy decisions when primary data collection is not feasible due to budget or time constraints• It is important tool because it can be reliably used to the economic value associated with a particular landscape, based on existing research for considerably less time and expense than a new primary study
  • Ecosystem Service Methods• Utilized satellite land cover data to estimate the amounts of various land cover types• Ecosystem service flow values were then determined by multiplying the amount of land cover types by the estimated dollar value per acre for each ecosystem service• We used the mean value of the studies cited by Costanza et al. (2005) for a similar study in New Jersey; the Costanza report identified and used over 100 earlier studies, including 94 studies that contained original research and were published in peer- reviewed journals
  • Ecosystem Services Benefits Ecosystem Service ($Million) Bucks Chester Delaware Montgomery Philadelphia TotalDisturbance Prevention /Flood Control $ 15.36 $ 13.80 $ 4.23 $ 4.06 $ 5.35 $ 42.80Waste Treatment $ 3.11 $ 4.66 $ 0.86 $ 1.32 $ 0.87 $ 10.82Water Supply $ 9.47 $ 11.72 $ 2.91 $ 4.45 $ 2.54 $ 31.09Pollination $ 3.61 $ 5.57 $ 1.04 $ 2.21 $ 0.66 $ 13.09Habitat Refugium $ 30.37 $ 42.93 $ 7.17 $ 17.36 $ 4.28 $ 102.10Soil Formation $ 0.12 $ 0.26 $ 0.04 $ 0.08 $ 0.02 $ 0.52Total $ 34.10 $ 48.75 $ 8.25 $ 19.64 $ 4.96 $ 115.71
  • Context and Commentary• Estimates intended to be rough and conservative• The estimates are conservative due to: – Gaps in the valuation literature – Distortions in current prices used to estimate the values are carried through the analysis – Most studies are based on individuals’ willingness to pay• Little or no overlap with other impacts estimated in the study – No internal overlap within environmental services categories – Little or no overlap with property value impact
  • Economic Value Components• Job and revenue generation• Environmental services provided• Direct use benefits• Property value impact Econsult Corporation
  • Direct Use Benefits• Preserved open space provides value through the recreational activities enjoyed on the open space• Value are determined based on a consumer’s “willingness to pay” (WTP) for the recreational experience• WTP represents the amount of money residents save by not having to pay market rates to partake in many of the recreational activities provided by the open space Econsult Corporation
  • Direct Use Benefits• The direct use benefits were quantified using methods based on the Army Corps of Engineers “Unit Day Value” method• Estimates of number of park visits were obtained from the SCORP data collected from DCNR• The activities enjoyed were estimated using data collected from State Parks usage data Econsult Corporation
  • Direct Use Benefits Methods• We assumed that the users of County, State, and Federal lands engaged in the same types of activities in the same proportions• We estimated the average direct-use benefit enjoyed by the average State Park visitor using State Park usage data and unit day values• For municipal parks we used the average “unit day value” assigned to the general recreation category Econsult Corporation
  • Direct Use Benefits Methods• Using SCORP data we estimated: – The number of times that average households participated in outdoor recreation in the past year – What percentage of the recreational activities took place on the various types of open space
  • Direct Use Benefits Methods• The average household in the study area: – Participated in 36 outdoor recreation activities in the past year; this resulted in 53 million estimated outdoor recreation activities – Visited a municipal park for 38% of their outdoor activities, a county park for 11%, state park/recreation area for 17% and federal park/recreation area for 8%
  • Direct Use Benefits Value ($millions) Bucks Chester Delaware Montgomery Philadelphia TotalLocal/Municipal $ 20.16 $ 15.50 $ 18.17 $ 26.50 $ 49.92 $ 130.24County $ 51.20 $ 39.37 $ 46.14 $ 67.30 $ 126.80 $ 330.81State $ 79.12 $ 60.84 $ 71.31 $ 104.01 $ 195.96 $ 511.25Federal $ 37.23 $ 28.63 $ 33.56 $ 48.95 $ 92.22 $ 240.59Total $ 187.71 $ 144.33 $ 169.19 $ 246.76 $ 464.89 $ 1,212.87
  • Context and Commentary• Estimates intended to be rough and conservative• Does not include data for activities that occur on land trust owned land• Minimal overlap with other categories – Direct use benefits / Tourism – small overlap with usage fees – Likely some overlap with the health care cost savings estimates (users accounting for health care savings when deciding on willingness to pay) – Some overlap with property value impact, which accounts primarily for aesthetics of proximity to open space but may also account for convenience of direct use)
  • Health Care Cost Savings• The importance of physical activity in reducing the morbidity and mortality from a number of chronic diseases is well established in the medical literature• Exercising 3 or more times per week at a moderate to strenuous pace is considered enough to generate health benefits• Strong evidence shows that when people have accesses to parks and open space, they are more likely to meet or exceed the minimum exercise requirements. Econsult Corporation
  • Health Care Cost Savings• The cost savings can be thought of as the “costs avoided” by a physically active person compared to a physically inactive person• The costs savings per physically active person were estimated using the Physical Inactivity Cost Calculator developed by East Carolina University Econsult Corporation
  • Cost Categories• We included 5 costs of physical inactivity: – Direct Medical Costs: the costs associated with treating the disease(s) attributable to physical activity – Indirect Medical Costs. Pain and suffering due to the medical conditions, a reduction in quality life and shorter life expectancy – Direct Workers Compensation Costs. Physically inactive persons are more likely to incur worker compensation injuries and have longer recovery times – Indirect Worker Compensation Costs. These costs include the cost of processing the compensation claims as well as other administrative costs – Lost Productivity. These include missed work associated with health conditions related to physical inactivity, absenteeism, and “presenteeism”
  • Health Care Savings Methods• Using SCORP data we estimated: – The number of working-age residents living in the study area that engage in moderate or strenuous activities at least 3 time per week – The proportion of that exercise that is engaged in at a park or on a trail
  • Health Care Savings Methods• We found that: – 38% of the working age population of the suburban counties and 33% of City residents meet the exercise requirements – 41% of moderate or strenuous exercise occurred at a park or a trail
  • Health Care Benefits Cost Savings ($ Million) Bucks Chester Delaware Montgomery Philadelphia TotalDirect Medical CostSavings $ 34.04 $ 26.02 $ 29.56 $ 42.51 $ 77.49 $ 209.63Indirect Medical CostSavings $ 102.13 $ 78.07 $ 88.67 $ 127.53 $ 232.48 $ 628.88Direct WorkersCompensation CostSavings $ 0.25 $ 0.19 $ 0.22 $ 0.32 $ 0.58 $ 1.57Indirect WorkersCompensation CostSavings $ 1.02 $ 0.78 $ 0.88 $ 1.27 $ 2.32 $ 6.27Lost Productivity $ 99.72 $ 76.23 $ 86.58 $ 167.35 $ 305.07 $ 734.95Total $ 237.17 $ 181.29 $ 205.91 $ 338.97 $ 617.95 $ 1,581.29
  • Context and Commentary• Likely some overlap with the direct use benefit estimates; as noted previously, users accounting for health care savings when deciding on willingness to pay• Substitution effect vis a vis direct use and health care benefits – Present calculations represent benefits associated with use of protected open space – Not the same as costs associated with unavailability of protected open space, as some will substitute to other recreational/exercise outlets
  • Context and Commentary• Therefore it matters whether the inquiry is “what is the benefit of its existence” or “what is the cost of its removal” – Magnitude of costs may be less than magnitude of benefits, because of substitution – Costs/benefits may not be linear as protected open space is added/subtracted – Not all open space is alike, in terms of recreational/exercise use
  • Economic Value Components• Job and revenue generation• Environmental services provided• Direct use benefits• Property value impact Econsult Corporation
  • Property Value Impact• Data: – Universe of all arms-length home sales in the city and suburbs from 2005-2009 = ~230,000 transactions – Open space parcel file from DVRPC• Home sales are geo-coded and distance to nearest open space parcel is computed• Hedonic valuation regression is estimated, with open space variables added to the specification Econsult Corporation
  • Property Value Impact Econsult Corporation
  • Property Value Impact Econsult Corporation
  • City Homes are Actually MoreProximate to Open Space than Suburban Homes Econsult Corporation
  • Regression Results ISuburban County RegressionN=127,756, R-sq=0.71Variable Label Est. Coeff. S.E. t Value Pr > |t|Intercept Intercept 11.85407 0.00959 1235.71 <.0001qtr_mi_ospace dummy=1 if <=1/4 mile from open space 0.0553 0.00309 17.9 <.0001Dist_OSpace distance to open space (mi.) -0.03625 0.00827 -4.38 <.0001ospace_acres acreage of nearest open space 0.00001974 3.11E-06 6.36 <.0001Philadelphia County RegressionN=100,457, R-sq=0.64Variable Label Est. Coeff. S.E. t Value Pr > |t|Intercept 6.65084 0.1563 42.55 <.0001qtr_mi_5 dummy=1 if <=1/4 mile from open space >=5 acres 0.06922 0.00963 7.19 <.0001dist_ospace_5 distance to open space (mi.) >=5 acres -0.29739 0.0577 -5.15 <.0001ospace_acres acreage of nearest open space 0.00002143 1.01E-05 2.12 0.0339 Econsult Corporation
  • Proximity to Open Space is More Valuable to City Dwellers Change in House $Values by Proximity to Open Space $35,000 $30,000 Philadelphia Suburbs $25,000 $20,000 $15,000 $10,000 $5,000 $0 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.5 0.55 0.6 0.65 0.7 0.75 0.8 0.85 0.9 0.95 1 Miles from Open Space Econsult Corporation
  • An Acre of Open Space is More Valuable to City Dwellers %Change in House Value for Each 1,000 acres of Open Space within 1/4 mile 2.20% 2.17% 2.15% 2.10% 2.05% 2.00% 1.99% 1.95% 1.90% City Suburb Econsult Corporation
  • But an Acre of Open Space Has aHigher $Value in the Suburbs, due to their Higher House Values $Change in House Value for Each 1,000 acres of Open Space within 1/4 mile $6,000 $5,034 $5,000 $4,000 $3,000 $2,491 $2,000 $1,000 $0 City Suburb Econsult Corporation
  • It takes Large Quantities of Open Space toHave a Meaningful Impact on House Values $Change in House Value by Quantity of Open Space $7,000 $Value-City $6,000 $Value-Suburbs $5,000 $4,000 $3,000 $2,000 $1,000 $0 1,000 1,050 1,100 50 1,150 1,200 1,250 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850 900 950 0 Acreage of Open Space within 1/4 mile Econsult Corporation
  • The Value of Open Space has Grown Over Time %Change in Value of Proximity (<1/4 mi.) to Open Space, 2005-200912.0% 10.2%10.0% City% 9.0% Suburb% 8.5%8.0% 6.2%6.0%4.0% 2.1%2.0% 1.5% 0.7% 0.7% 0.4% 0.6%0.0% 2005 2006 2007 2008 2009 Econsult Corporation
  • Both the % and $ Values of Open Space hasIncreased by More in the City than Suburbs $14,000 y = 2371.5x - 5E+06 R² = 0.749 $12,000 $11,741 $10,336 $10,000 $9,746 $8,000 $Value $7,088 City$ Suburb$ $6,000 Linear (City$) $5,318 Linear (Suburb$) y = 876.06x - 2E+06 $4,000 R² = 0.5798 $3,749 $2,000 $1,693 $1,420 $1,073 $806 $0 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 Econsult Corporation Year
  • Econsult Corporation
  • Econsult Corporation
  • There is Substantial Variation in the Value of Proximity, Across Sites $ Value of House Proximity to Case Study Sites Radnor $175,756 Clark Park $45,879 Peace Valley $35,155 Hopewell $8,273 Perkiomen $4,766 Glenolden $382 -$29,319 Honeybrook -$50,000 $0 $50,000 $100,000 $150,000 $200,000 Econsult Corporation
  • Econsult Corporation
  • The More Developed an Area, the More Valuable Open Space is to Residents %Value of Proximity to Open Space by Planning Area 16.0% 14.4% 14.0% 12.0% 10.0% 8.0% 6.7% 6.0% 4.0% 2.0% 1.1% 0.7% 0.0% Core City Developed Growing Suburb* Rural Area* Community Econsult Corporation
  • But When Adjusted for House Values, OpenSpace Has Nearly Identical $ Value in Cities and Developed Suburbs $Change in House Values by Proximity to Open Space $20,000 $18,000 Core City $16,000 Developed Community Growing Suburb $14,000 Rural Area $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.5 0.55 0.6 0.65 0.7 0.75 0.8 0.85 0.9 0.95 1 Miles from Open Space Econsult Corporation
  • Summary and Coming Attractions• Being within walking distance to open space has a positive and statistically significant value in almost all cases – 1-15% increase in home values, depending upon size and location – Only exception is small parks in the city• Although urban dwellers willing to pay more for open space, suburban dwellers actually pay more due to their higher home values Econsult Corporation
  • Summary and Coming Attractions• Policy implications – Holding the total amount of open space constant, lots of smaller open spaces create more value than fewer but larger open spaces – Urban dwellers enjoy urban space more, but suburban dwellers will pay more (in the form of total house prices)• Coming soon: total economic and fiscal value of open space Econsult Corporation
  • Questions/Comments? Econsult Corporation