Investments for Maine’s Future

Well,  it’s been a while since my last blog post. September,  to be exact. I taught a class last semester on “Community Economic Development,” and between that and trying to get a new business off the ground it’s been a bit challenging.  But the class is over,  January looks pretty quiet so far,  and so it’s back to the writing board!

There’s a lot to write lately about on the intersection of Maine’s economy and its natural resources. But I’m choosing to write this time about Governor LePage’s surprise decision to release funds for the Land for Maine Future’s program,  funds which he refused to release for about nine months. For those not familiar with the program, or the political controversy that has been swirling around it over much of the past year, I’ll spare you all but the most salient details. What I really want to write about is not the political details,  but the importance of conservation to Maine’s economy,  and,  indeed,  to the economy overall.

The Land for Maine’s program was established in 1987, when Mainers voted for $35 million dollars to conserve land considered “of statewide importance.”  Since then, the program has raised money (through bonds and donations) to conserve land in all 16 Maine counties.  The latest funds,  for $11.5 million, were approved by Maine voters in 2015, but the funds were not released until recently.

Now,  I am an economist.  But I’m an environmental economist, meaning that I consider all of our “assets” to be part of our overall “wealth” (hence,  of course,  the title of my blog).  Let’s consider a few facts about Maine.

We live in (one of? ) the most forested state in the country. But what many people don’t realize is that the vast majority of that land is privately owned.  Some of that is owned by private families, but the lion’s share is owned by private companies. A very small portion of that is owned by the government,  either federal or state.

This means that a large portion of Maine is not protected from development. I have nothing against economic development – we do live in one of the poorest states in the northeast – but I am a proponent of smart development. Of (dare I say it) sustainable development.  To me,  this means maintaining your assets in a sustainable manner. Undeveloped land is one of these assets, and in fact,  one of Maine’s most important comparative advantages. Not only that,  but land protected from development can contribute to a whole host of ecosystem services (habitat provision, flood protection,  soil stabilization,  carbon sequestration, just to mention a few) as well as recreation.  A resource economist can use many different methods to estimate the full economic and social value of a resource. For example, a “return on investment” study conducted by the Trust for Public Land found that for every dollar invested in the Land for Maine’s Future program, $11 was preserved in terms of these ecosystem services.

Consider Governor LePage’s favorite topic when it comes to land conservation: Howard Hill.  It’s a 164 acre forested lot near the State House.  LePage believes the Land for Maine Future program paid way too much for that plot of land based on its assessed value (the difference in estimates of what the land is worth depends on current use versus “highest and best use,”  as explained cogently in this article).  But neither current nor highest and best use accounts for the value of those ecosystem services, or for the “willingness to pay” or “utility” of those who visit Howard Hill.  That utility is likely heightened by the fact that Howard Hill is a wooded oasis in an otherwise busy,  developed area.  Finally,  is the fact that properties adjacent to open space see higher market values than those that aren’t.  If the full economic value – including the ecosystem services and what economists call “non-use” value – of Howard Hill were determined, it might end up being one of Land for Maine’s Future’s most valuable investments.

Are you interested in determining the full economic, environmental and social value of a natural resource? Perhaps to convince funders, grantors,  stakeholders,  legislators,  or the interested public in the value of a resource?  Leave a comment or contact me!