The New San Diego Land Rush: Or,
"There's Gold in 'Them Tha'r' Bushes"
October 10, 2003

By Nancy Fay

Days after the State of California paid $275 million for the largest open space purchase in the history of this state, some environmentalists and fiscal conservatives found themselves surprisingly united with a common complaint: The land was too expensive.

The state-funded sale closed earlier this month after large Los Angeles area landowners decided to take the money and run rather than face continued political opposition to their plans for thousands of new homes.

The conservatives say it wasn’t worth it – after all, there is no reason to pay a lot for dirt and rocks with no economic value. The environmentalists say high prices will drive up the cost of similar purchases in the future.

 At $45,000 an acre for Ahmanson Ranch to $289,000 an acre for the Ballona Wetlands, there is no doubt this dirt was pricey. But according to Ed Balsdon, a professor of environmental economics at San Diego State University, pricey is good, at least for people who care about saving habitat, and also for people who would like to see more private money spent on conservation.

Here’s why: People who own large pieces of land worry about how they are going to get a return on their investment. If they believe that owning important habitat is going to hurt their ability to make a buck, they are going to try and get rid of that land – usually for some marginal economic use (think strip mall or storage sheds) – as soon as they can.

Bye, bye birdies.

They know the longer they hold the land, the more likely it will be more difficult to use. These incentives discourage preservation of habitat.

But now consider the signals that the state Wildlife Conservation Board recently sent to large California landowners: Their habitat is no longer worthless. Their open space is valuable, not as a retail space, but as habitat. And all of a sudden, the urgency to get rid of their land is a lot less pressing.

To the extent they can make money off their habitat – as habitat – they will have more incentives to hold on to it, knowing it will only go up in value.

As Balsdon points out, this is exactly what has been happening in San Diego over the last ten years ever since the creation of the Multiple Species Conservation Plan. In a nutshell, this agreement hammered out between environmentalists and landowners essentially set aside large parts of San Diego for habitat and open space, while reserving the rest for whatever the land is zoned for.

If someone wants to develop their land inside the MSCP area, they are required to buy other habitat, usually about three times more land than what they are developing.

Thus the new market for habitat.  This mitigation requirement created what one writer called a “new land rush” in San Diego. Except this land rush is for habitat to meet the demands of the MSCP.

Land that just a few years ago was worthless – less than worthless since taxes still had to be paid on it – is now routinely fetching $35,000 an acre – and more. And its value is as habitat, not for the future rents it can produce.

Today, property owners have incentives to hold on to – and even enhance -- their habitat because they know that is where its value lies. This new land rush has produced a new crop of passionate environmentalists: Property owners.

Most environmentalists are happy because more habitat is being protected – even if it is not being purchased immediately. And fiscal conservatives should be happy because now many of the habitat transactions are taking place between private parties, where the government does not spend a dime.

As for the $275 million for the recent state transactions, that came from ballot authorized wildlife funds that cannot be used for any other purpose.

But old battles and ancient suspicions between landowners and environmentalists have made some wary of this new economic reality.  Already newspaper columns are popping up suggesting this new environmental and economic reality is some kind of plot to payoff political debts.

Which calls to mind the Oscar Wilde definition of a cynic as someone who knows the price of everything but the value of nothing.

There should be nothing cynical about this new environmental and economic success story. This new market for habitat means more open space for environmentalists with less money from government. And soon not even the grumpiest cynic will be able to find fault with that.