Measuring the effects of preservation on farm profits in a continuous treatment setting

• Published in: Applied economics Vol. 48; no. 60; pp. 5850 - 5865
• Main Authors: Attavanich, Witsanu, Schilling, Brian J., Sullivan, Kevin P.
• Format: Journal Article
• Language: English
• Published: London Routledge 01.12.2016; Taylor & Francis Ltd
• Subjects: Conservation; conservation easement; Conservation easements; continuous treatment; farm profitability; Farmland preservation; Farms; generalized propensity score; New Jersey; Preservation; Profit; Profitability; Profits; programme evaluation; purchase of development rights; U.S.A; United States
• ISSN: 0003-6846; 1466-4283
• DOI: 10.1080/00036846.2016.1186795

Despite billions of dollars of public appropriations to state purchase of development rights (PDR) programmes, there has been limited evaluation of the effects of these investments on the economic performance of preserved farms. This article estimates dose-response functions to evaluate the effects of enrolment in New Jersey's PDR programme on farm profitability. The generalized propensity score method in a continuous treatment setting is used to address selection bias arising from voluntary programme participation. Treatment effects are measured across treatment levels to determine whether farm profitability is affected differently across levels of programme participation. Our findings reveal that, relative to unpreserved farms, profit per acre tends to increase along lower treatment levels. The profit per acre of preserved farms in the 1-40% treatment range is, on average, $407 higher than that of unpreserved farms in the full sample. Positive profit differentials averaging between $317 and $472 per acre are also observed in the 1-20%, 1-40% and 1-60% treatment quintiles in the farming occupation sample. We do not observe statistically significant profitability differentials when treatment effects are averaged across all positive treatment values.