Environmental Valuation & Cost-Benefit News

Link: http://www.tpl.org/content_documents/EconBenefitsReport_7_2009.pdf

Foreword by Will Rogers, President, The Trust for Public Land

In 1999, The Trust for Public Land published its first report on the economic benefits of parks and open space. Some of the ideas in the report had been around since at least the mid-19th century, when pioneering landscape architect Frederick Law Olmsted predicted that New York’s Central Park would prompt a dramatic increase in the value of real estate on nearby land. But even 150 years later, many people still thought about parks and conservation primarily as a public expense and not an investment.

Much has changed in the last decade. Today communities usually don’t ask whether parks and open space benefit economies, they ask how large those economic benefits might be. They are coming to realize that all of the other benefits brought by parks and open space— improved recreation and health, cleaner water and air, easier access to the out of doors, even stronger communities—also can engender economic benefits in the form of increased tax receipts, stronger economies, a better ability to attract businesses and residents, and reduced costs for environmental services.

Conservation: An Investment That Pays—like TPL’s other reports on the economic benefits of parks and conservation—is intended to help agency personnel and community conservationists make the case for conservation as a long-term economic investment. Too often, we still hear the argument that creating parks and conserving land is too expensive, especially in hard economic times.

Table of Contents
Foreword - Will Rogers, The Trust for Public Land 1
Preface - William Poole, The Trust for Public Land 2
Parks Boost Land Values and Property Taxes 3
Parks Boost Local Economies by Attracting Businesses and Residents 5
Good Parks Encourage Economic Development 7
Conservation as a Money-Saving Alternative to Some Development 10
Preserving the Value of Ecosystem Services 16
Parks Reduce Health Care Costs 22
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We have excerpted some sections of the report below:

According to real estate experts, Chicago’s new Millennium Park “is an economic engine powering the East Loop.” Homes on or near the park sell for premium prices, and property taxes on those homes help to offset the park’s $475 million cost. A study by the city’s Department of Planning and Development estimates that residential units in blocks near the park have increased in value $100 per square foot. So a 1,400-square-foot condo would be worth $140,000 more because of its proximity to the park.

The same study estimated that in the decade following the park’s 2004 opening, the additional value of all residential development attributable to the park in those blocks would be $1.4 billion. Millennium Park is only one example of what real estate experts have known for a long time: parks can increase the value of surrounding land and development. In another recent example, when Centennial Olympic Park was built in Atlanta for the 1996 Olympics, prices on condominiums adjacent to the park rose from $115 to $250 a square foot.

The increased value in land near parks is passed on to cities in the form of higher property taxes.
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In the 150 years since Olmsted designed Central Park, more than 30 studies have demonstrated a positive effect on nearby residential property values. Recent examples include the following:
• In 2007, TPL’s Center for City Park Excellence found that Philadelphia properties within 500 feet of parks or recreation land were worth an average of 5 percent more than land without this proximity. Researchers calculated a total increased value of $688.8 million and additional property taxes of more than $18.1 million.
• In 2001, as an MIT researcher, Andrew Miller investigated land values in suburban communities in north Texas. He found that homes immediately adjacent to parks were worth 22 percent more than homes 2,600 feet away from a park. About 75 percent of that increased value lay within 600 feet of the park. Miller also found that residents valued large parks more than small ones, but proximity had a greater effect on a home’s value than a park’s size. In addition, people living on small lots were willing to pay higher premiums to live near parks than people living on larger lots.
• In another 2001 study, Texas A&M University researcher John Crompton looked at property values near what he called “community- sized” parks (i.e., between 20 and 35 acres). He found an increase in property values attributable to the park extended at least 2,000 feet from it.
• A 2002 study compared the value of properties bordering permanently protected forests with those near unpreserved forests in three residential subdivisions in Grand Rapids, Michigan. Studying property sales from the late 1970s through 2000, the researcher Paul Thorsnes concluded that lots bordering permanently conserved forests sold for 19 percent to 35 percent more than lots more distant from the preserves. This was true in all three subdivisions. On the other hand, properties adjacent to unpreserved forests showed no increased value in two of the subdivisions and a much smaller increase in the third one.
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In 1998, the management-consulting firm KPMG surveyed 1,200 technology workers and concluded that a community’s quality of life increased the attractiveness of a job by 33 percent.
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Research over many years has demonstrated that showcase urban parks can boost local economies by drawing tourists. For example:
• Chicago’s Millennium Park has proved to be a great draw for tourists since it opened in 2004. According to an economic impact study prepared by URS Corporation and the Goodman William Group, the park in its first six months attracted two million people. (Three million are expected annually.) The study found that international visitors to the park spend an average of $300 per day in Chicago, and domestic visitors who stay in the city overnight spend an average of $150. From 2005 to 2015, total spending by visitors to Millennium Park is expected to range from $1.9 billion to $2.6 billion for hotels, restaurants, and retail purchases.
• [Seattle’s 9-acre Olympic Sculpture Park, a former oil tank farm, showcases works of art by world-renowned sculptors on a sloping, elegantly landscaped downtown site overlooking Elliott Bay.] According to a story in the Puget Sound Business Journal, even before the park’s opening, area restaurants were looking forward to new business from the anticipated 600,000 annual park visitors, and nearby condominium developments were experiencing “an astonishing run-up in prices.”
• TPL’s Center for City Park Excellence found that out-of-town tourists who came to Philadelphia primarily because of its parks (including the well-known Independence National Historic Park) spent $40.3 million in that city in 2007.
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TPL’s Center for City Park Excellence has been working with economists to develop methods to study the many ways that park and recreation systems contribute economic value to cities. ... The center found that in 2007 the Philadelphia park system provided the city with revenue of $23.3 million, municipal savings of $16 million, resident savings of $1.15 billion, and a collective increase of resident wealth of $729 million.

These figures included more than $1.08 billion in what economists call “direct-use value” of parks, including sporting activities, walking, picnicking, and other park visitation. These values are calculated by asking residents what they would be willing to pay for these activities if they were not available free from the park system.

Other economic benefits for Philadelphia are detailed elsewhere in this white paper, including the value of clean air, clean water, tourism, health, and property values.

In 2009, the center released Measuring the Economic Value of a City Park System, which lays out its methods for determining the economic value of park systems, including the one in Philadelphia.
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In 2006 recreational use of the National Wildlife Refuge System generated almost $1.7 billion in total economic activity, almost four times the $383 million federal appropriation to the refuge system in fiscal 2006.34 And a 2006 report for the National Parks Conservation Association showed that for every $1 appropriated in the annual national parks budget, the national park system generates at least $4 for state and local economies.

This figure includes only benefits from direct recreational use, such as money spent on travel, lodging, food, and other goods and services.

Nationwide, national parks support 267,000 private-sector jobs and generate $13.3 billion in economic activity in nearby communities.

by Erica Gies
The Trust for Public Land www.TPL.org
July, 2009