Preferential taxation and the control of urban sprawl: An analysis of the California Land Conservation Act

The premature conversion of agricultural lands to urban use has concerned many persons, especially when urban sprawl results. In an effort to reduce such premature conversion California offers reduced property taxation to landowners who sign a contract to give up development rights to their property for a specified period. The California program is described and the potential economic benefits, measured as the present value of the tax savings, are calculated. Using these values, the conditions under which acceptance of a contract is preferred to nonacceptance are analyzed. The implications of the results for program effectiveness and land use control policy are discussed.