What's Open Space Worth? A Lot.
from the Los Angeles Daily Journal
May 2003

By Lori Saldana

Ask any real estate appraiser outside California how much urban wildlife habitat is worth. The answer: Zero - or less than zero, when you figure in taxes, insurance, and upkeep.

And it is easy to see why: habitat doesn't generate rent. With no economic value, landowners have no incentive to preserve it. Thus the battles across the country between the lovers of wildlife who want more habitat preserved, and the landowners who may love wildlife just as much, but who also want to make a few dollars on their investment.

Those are the battles that also raged through large parts of Southern California ten years ago as well, but much less so today.

That's because of a quiet environmental revolution that began in San Diego and swept through the region since then - transforming the way we save (or don't save) critical environmental habitat.

Ten years ago, almost every day brought news of a new battle over open space. Landowners feared this battle would drive down the value of their property, so the rush was on to develop their land while they still could.  Combined with cities waiting to gobble up the sales taxes from retail centers, these two forces helped economically marginal developments sprout like mushrooms, contributing to sprawl and many of its unfortunate consequences.

Then came the revolution: Instead of expensive, lengthy battles over every inch of land during every development plan-  and instead of turning Southern California into one large tax-spewing shopping opportunity- local leaders teamed up with environmentalists, land developers and biologists, and set out to solve the problem once and for all. They began mapping out San Diego's rich biological diversity, then agreeing what land would be used for development, and what areas would be dedicated as open space.

A few developers thought it was a land grab. Some environmentalists claimed it was a sellout. But people in the middle found a new way to save habitat and protect property rights. They called it the Multiple Species Conservation Plan, and in its various guises throughout the region, it has received national recognition for saving hundreds of millions of dollars worth of open space at little or no cost to the taxpayers.

Here's how it works: When a landowner submits plans to build on a large piece of property, this land often contains pockets of habitat that are too small to support the complete ecosystems that animals need to survive. So a deal is made: The landowner develops the isolated habitat, and in return, he must buy other habitat (usually three times more than the land he is developing) to become part of a larger regional system nearby.

Sounds simple, but here's the revolutionary part: The landowners who own habitat-rich open space now know their land has value, even if only as mitigation for another development.

Just a few years ago, the market was telling the landowners to get rid of their habitat today or their land will be worth nothing tomorrow. But after the revolution, the incentives are just the opposite. Today, landowners are competing to buy the available habitat to mitigate their own developments. Some are actually buying more of it because they now know that open space and habitat is a good investment. Not for strip malls, but for parks, recreation and wildlife. And prices reflect that.

In North San Diego, land that people couldn't give away a few years ago is worth $30,000 an acre today. And more. And just for birds and bees and plants and animals. You want to find a committed environmentalist? Find a property owner whose land is worth $30,000 an acre - as habitat.

Similar market-oriented solutions have worked to improve the environment in other areas, says Ed Balsdon, a professor of economics at San Diego State University and a national authority on economic solutions for environmental problems.  
"It's not surprising to see environmental protection from profit seekers
when the incentives are right," Balsdon says. "For example power generators spend millions to control pollution, even beyond levels required by traditional
regulation, when they can sell pollution credits for a good price. Likewise, if you are interested in habitat conservation look no further than the prices facing landowners. The national market for wetlands credits promotes conservation by making the protection and restoration of wetlands profitable. The same can easily apply to other habitat, but only when the price of mitigation land is competitive with other kinds of development."