Quantifying The Economic Value of Greenway Benefits: Leveling The Budget Playing

Field

Richard Hartman, AICP, CNU-aSt. Petersburg, FL

Based on preliminary paper, A Review of Methodologies to Determine the Economic Value of Greenways

Texas State University, San Marcos

Presented at:

Texas Trails and

Active Transportation Conference

Fort Worth, TexasMarch 26, 2014

In the beginning: Frederick Law Olmsted

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• Central Park• Economic impact of

parks and open spaces on property values

Distinct analysis: greenways are not linear parks

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• Parks and Open Space

• Large contiguous space

• Single responsibility• Passive use

• Greenways are not linear parks

• Linear; connected• Multi-jurisdictional• Incremental

proximity• Different benefits

Why measure economic value of greenways? Scarce resources

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• Budgets• Cost-Benefit Analysis

One-sided

Validity

• Public perceptions• Public support

• Construction• Maintenance

Lack of care = lack of use = loss of economic advantage

Make the budget fair by accounting for economic return from greenways in the ‘Plus’ column of a Cost-Benefit Analysis

Budget impacts from greenways

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• Long-range Transportation Plans

• Capital Improvement Elements

• 5-year Capital Improvement Plans

• Open Space and Parks Master Plans

• Levels of Service

Two distinct problems

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• Study limitations • Benefits omitted

The most commonly mentioned problem of earlier studies was that almost all findings were based on anecdotal evidence and not on market data.

What defines a greenway: Traverse or not?

Trail not required:

“A greenway is defined here as a linear open space that connects parks, improves recreational opportunities, or aids in the protection of wildlife, natural areas, and scenic places.” (Lindsey and Knaap, 2005)

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Ability to traverse

A greenway is a…”linear open space established along a natural corridor such as a riverfront or stream valley, and abandoned railroad right-of-way, a canal, a scenic road or some other linear route.”(Little, 1990)

Greenway benefits

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• MonetaryEconomic

Health

Hazard management

Safety

Transportation

Ecological

Equity

• Non-monetaryCultural and Historic

preservation

Quality of Life

Benefits: Provide Choices

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Residents are 65% more likely to walk in a neighborhood with sidewalks.

Cities with more bike lanes per square mile have higher levels of bicycle commuting.

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Americans want choices

of Americans want more transportation options so they have the freedom to choose how to get where they need to go.

Future of Transportation National Survey (2010)

66%

73%

57%

currently feel they have no choice but to drive as much as they do.

would like to spend less time in the car.

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The Tremendous Potential

Of all trips:

National Household Travel Survey (2009)

39% are less than 3 miles

17% are less than1 mile

47%are driven

of these trips…

Benefits: Environment

Transportation accounts for nearly 1/3 of all greenhouse gas emissions.

Switching to walking or bicycling for short trips = reduce CO2 emissions by 12 to 22 million tons/year.

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Benefits: Reduce Infrastructure Costs

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Lee County, Florida• Re-examined 5 road-

widening projects• Found widenings

unnecessary = $58.5 million savings

• Use Greenways as ROW retainers for future use

Greenways Benefit Children, Parents, and Schools

• Enable and encourage children, including those with disabilities, to walk and bike to school

• Reduce # of car trips to schools, miles driven and time (grid reduces gridlock)

• Improve health, safety, socialization, and school performance.

Benefits: Health

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17% of kids and teens are obese.

Limited physical activity contributes to the obesity epidemic.

Dedicated, safe space for bicycling and walking help kids be active and gain independence.

Benefits: Community Cohesion

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Greenways increase and improve the quantity and quality of interactions among community residents. They can increase mental and physical health by increasing friendships and by improving community security.

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ValueCategory

Value Path

Primary Valuation Methods

Recreation (active) Walking, jogging, cycling, skating, nature observation

Travel cost Unit day value

Property People are willing to pay more for properties with accessibility to trails or for properties with amenities such as views of green space

Hedonic pricing method

Health/fitness User physical activity produces health benefits that generate secondary economic benefits

Avoided medical costs

Transportation Users value greenways trail as an alternative route for commuting and errands (utility trips)

Value of commuting time; avoided pollution costs

Ecological biodiversity and services

Value provision of biological habitat and environmental services such as carbon sequestration or mitigation of runoff

Contingent valuation Value of comparable

technological services

Amenity Visual/aesthetic

Neighbors and passers-by benefit psychologically from views of open space and vegetation

Hedonic pricing method Contingent valuation

Economic development

Greenway development may spur tourism and commercial investment and development

Economic impact analysis (input-output models)

Lindsey’s taxonomy of methods

Methodologies reviewed

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· Hedonic Pricing method

· Contingent Valuation· Willingness to Pay

· Travel or Time Cost Valuation

· Collective methods analysis

· Property values

• Value of public good• How much would

user pay for amenity· Value from costs of

use or time committed

· Combining methods to capture more of total value

Property Values – Hedonic Pricing Method· Proximity Principle (1/4 to ½ mile typically)

• The value of an amenity is at least partially related to the price of residential properties in relation to their location relative to an amenity.

• Hedonic Pricing • Used to determine value of a non-marketable

good.• Allows capture of the true value of multiple

characteristics• Separates out small incremental values that

become significant when aggregated from large number of benefactors

• Beneficial impacts may come from view, aesthetics, proximity, accessibility.

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Hedonic pricing - Limitations

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• Proximity limit omits significant amounts of incremental benefit

• Overlapping benefits• Benefits fall outside

of single jurisdiction• Context of greenway

and neighborhood – topography, view?

• Other concernsBenefits fall outside

single jurisdiction

Contingent Valuation (CV)

· CV provides an indication of overall economic value in terms of public good.

• Assessment through use of general population surveys

• Effective tool for quantifying large-scale public projects

• Often relies upon subjective Willingness to Pay (WTP) to extrapolate how much public values a conservation or environmental project

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Contingent Valuation - Limitations

· Findings lack level of validity specific to public expenditures· Amount willing to pay typically overstated, especially in relation to an immediate solicitation.· Surveys do not have immediate consequences· People tend to value losses more than gains; leads to WTP more to prevent loss of a public good than pay for creation of a new good.

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Travel / Time Cost Model

· Determines economic value of greenway by assessing the amount of money or time users spend to use the greenway.

· Extrapolates findings to total number of trail users to determine full economic impact.

· Example: Study of impact of greenways on Lindsey et al. 2004

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Travel / Time Cost - Limitations

· Unreliability of extrapolating use of particular location and/or day to determine total usage.

· Omission of many greenway benefits· Difficulty aggregating different categories of

benefits

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Collective Analysis Approach

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• Use of two or more methodologies to present a more complete analysis of economic impact of greenway.

• Lindsey et al. (2004) combined findings of hedonic pricing method on property values and travel cost method for recreational values in study of Indianapolis, IN, greenways, including the Monon Trail.

Collective Analysis - Limitations

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• Complementary, not combinable; Different method findings have different confidence levels in data.

• Overlapping benefits, may lead to double counting• Some benefits are not counted• Constrain use for policy-making and budget

justification.

Suggestions - Public Side Inputs

Budget for more of the benefits

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Sustainable Communities

• Federal grant program under HUD, DOT, and EPA• Application requires monetary benefit analysis of multiple impacts from proposed greenway• Model to combine studies of multiple benefits to capture reliable data for many benefits usually omitted• Example: Houston Bayou Greenways 2020 -proposal to construct or complete 13 greenways

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Sustainable Communities criteriaCypress Creek Greenway Case Study, Appendix A

• Benefit Projections:• Proximate

Population• Recreation benefits• Health benefits• Vehicle Operating

cost savings• Congestion relief• Crash reduction

• Air Quality• Carbon Sequestration• Ecosystem Services

benefits• Property Value• Total annual benefits

(aggregated)• Average benefit per

person

Ways to Quantify the Benefits of Greenways — 1 (Litman 2013; Complete Streets)

Benefit Quantification MethodSafety benefits – reduced traffic crashes due to Improved facilities for alternative modes and reduced vehicle travel.

Estimate crash cost reductions from reduced traffic and reduced total vehicle travel.

Improved public health – increased public fitness and health from more walking and cycling.

Estimate increases in walking and cycling activity and assign monetary values as indicated by NZTA (2011).

Energy conservation and emission reductions – from reduced total vehicle travel.

Estimate energy conservation and emission reductions and assign dollar values.

Supports more efficient land use (maybe?) – encourages more compact, multi-modal development to take advantage of greenway proximity.

Estimate the community savings and benefits from more compact development and reduced sprawl. Assign monetary values to each household that locates in existing urban areas and avoids urban expansion.

Ways to Quantify the Benefits of Greenways — 2

Benefit Quantification MethodDirect user benefits – improved convenience, comfort and enjoyment from improved walking, cycling and public transit, and reduced driver stress

Survey travelers to determine their preferences. Adjust travel time unit costs downward as travel conditions improve.

Reduced barrier effects – reduced pedestrian and cyclist delays.

Quantify and monetize the incremental delays and shifts from active to motorized modes. [Check amt. of motorized to active]

Vehicle cost savings – reduced vehicle ownership and operating costs if residents own fewer vehicles and drive less.

Use vehicle ownership surveys to determine whether residents tend to own fewer vehicles and drive less in areas with more multi-modal transport systems

Parking savings – reduced parking problems and subsidy costs if travelers shift mode.

Estimate parking cost savings from reduced vehicle ownership and use in areas with multi-modal transport.

Ways to Quantify the Benefits of Greenways — 3

Benefit Quantification MethodSupports social equity objectives – improves affordable modes and access for disadvantaged people.

Weigh savings and benefits in favor of physically, economically and socially disadvantaged people (e.g., an hour saved by a person with an impairment, or a dollar saved by a lower-income household is worth several times more than the same savings by able and wealthy people).

More livable communities – improved local environmental quality

Measure increases in residential and commercial property values along complete streets.

Take Advantage of What We KnowIncrease the Impact of the Benefit

and Increase the Number of People Who Benefit

Public support and property values

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• Public intuitionNo harm

Some benefit, maybe

Negative impacts

• RealityStabilization or

increased values even with significant lack of knowledge and little, if any, marketing

EDUCATION WITH THE FACTS

Planning initiatives that complement Greenways

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Trail-oriented Design and Development

Sustainable Development Smart Growth Multi-modal planning Context Sensitive Design Street Connectivity Manage Transportation

Demand Fix-It-First Least-cost planning Road Diets and Traffic

Calming

Public inputs to enhance economic value; now and future

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• Adopt trail-friendly Future Land Uses and zoning

Trail-oriented Development (TrOD)

• Trail design to max return

• Direct benefitsTrail businesses

Tourist-oriented biz

• Indirect benefitsServices, businesses

• Community marketingCompetitive

Advantage

Branding

Wayfinding

Public inputs to enhance economic value; now and future

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• Integrate into transportation plan

• Connected to other trails, streets, and transit

• Ease of accessibility is key

• Connected to business district

• Main Street• Clear directionals to

key nodes

Plan for different types of Greenways

RuralBarton Creek, TX

Industrial corridorMidtown Greenway, MN

ExurbsAustin, TX

Multifamily suburbBarton Creek, TX

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Develop Performance Measures and Outcomes

• Proposed Trails • Existing Trails

Suggestions

Private inputs

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Private opportunities (market inefficiencies)

• Land developers

Assessing price of land• Homebuilders

Pricing homes:

Design/location

Competitive analysis

Amenities

Resale• Business community

ID & location of profitable services; maximizing profits

Developers, Homebuilders, and Real Estate Agents

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• Land acquisition and pricing

Pro-forma

IRR

• Comparative advantage

• Marketable amenity• Subdivision and

community branding

DISCUSSION

What engineering, education, and encouragement would you recommend?

What are the expected outcomes? What benefits would you measure? How could you measure those benefits?

Monetary Non-monetary

What are some anticipated costs? Would Typology by Transects help? What are we overlooking?

Readings•Crompton, John L. 2001(a). Perceptions of How the Presence of Greenway Trails Affects the Value of Proximate Properties. Journal of Park and Recreation Administration Volume 19, Number 3 Fall 2001 pp.114-132.• _____. 2001(b). The Impact of Parks on Property Values: A Review of the Empirical Evidence. Texas A & M University, Dept. of Recreation, Park and Tourism Services. Vol. 33, 1:1-31.•_____ and Nicholls. 2006. An Assessment of Tax Revenues Generated by Homes Proximate to a Greenway. Jnl of Park and Rec Administration, Fall 24:3 103-108.•_____ and Marsh Darcy Partners, Inc. 2011. Bayou Greenways – A Key to a Healthy Houston. Houston Parks Board, August.•Danzer. R. (2006) “Trails and tourism.” Rails to Trails Magazine, Summer.

Readings (CONT.)

• Fields, Billy. 2009. From Green Dots to Greenways: Planning in the Age of Climate Change in Post-Katrina New Orleans, Journal of Urban Design 14:3 325-344.• Lindsey, Greg. 1999. Willingness to Pay for Urban Greenway Projects, APA Journal, Summer.•_____, G., Payton, S., Man, J., and J. Ottensmann. (2003) Public choices and property values: Evidence from greenways in Indianapolis. The Center for Urban Policy and the Environment.•_____, et al., 2004. Property Values, Recreational Values, and Urban Greenways. Journal of Park and Recreation Administration, Fall. •_____, et al. 2006. Neighborhood Correlates of Urban Trail Use. Journal of Physical Activity and Health. Supp 1:139-157.• 

Readings (CONT.)

• Litman, Todd. 2013. Evaluating Complete Streets: The Value of Designing Roads For Diverse Modes, Users and Activities, Victoria Transport Policy Institute, 6 June 2013 •Nicholls, Sarah and John L. Crompton. 2005. The Impact of Greenways on Property Values: Evidence from Austin, Texas. Journal of Leisure Research V. 37, 3:321-341•Rails to Trails. -----. “From Trail Towns to TrOD: Trails and Economic Development.” Magazine, --------