Landowner Incentives to Participate in a Purchase of Development Rights Program with Application To Maryland

A theory-based participation model is developed using the assumptions of perfect capital markets and perfect information. Given this specification it is shown that participation in a PDR program is always equivalent in present value terms to selling the land, and is always at least as good as not participating and remaining in farming. In order to investigate participation rates in the Maryland PDR program a less restrictive model is developed which relaxes the perfect capital markets assumption. It is found that a PDR program is most likely to be successful in regions characterized by relatively low levels of development pressure, and least likely to be successful in areas experiencing high rates of growth or areas that are not undergoing development pressure.