CARD Publishes Study of Livestock Operations and Property Values
Bruce Babcock, CARD, (515) 294-6785
Joe Herriges, Economics, (515) 294-4964
Sandy Clarke, CARD Communications, (515) 294-6257
Susan Thompson, Ag Communications Service, (515) 294-0705
August 15, 2003
AMES, Iowa -- In the midst of the controversy surrounding the location and effects of large livestock operations in rural Iowa, a new study by the Center for Agricultural and Rural Development (CARD) at Iowa State University suggests there may be room for beneficial trade between livestock producers and neighboring homeowners.
CARD economists Bruce Babcock and Silvia Secchi and Joe Herriges, ISU economics professor, conducted the study. They wanted to know if living near large livestock confinements has a measurable impact on home property values. According to Babcock, if this effect could be quantified, perhaps damage assessments could be used as starting points for negotiations between owners of large livestock facilities and their residential neighbors.
Overall, the study shows livestock facilities can affect property values. The closer the residence is to the facility, the greater the effect, but the estimated effect is zero unless the residence is downwind.
Specifically, the analysis found that a distance of one-quarter mile to the nearest large livestock facility leads to a decrease in property values of 11 percent if downwind to the northwest and 7 percent if downwind to the south. At a distance of one-half mile, property values drop 8 and 5 percent, respectively. At one-and-one-half miles, the declines fall to 3 and 2 percent, respectively. A comparable study conducted in North Carolina found similar results.
Data for the analysis included information on every rural owner-occupied home sold in Webster, Humboldt, Hamilton, Franklin and Hardin counties from the mid-1990s to the summer of 2002. The researchers collected information about sales prices and amenities that might affect the value of the homes.
Data about large livestock facilities came from the Iowa Department of Natural Resources. This included each home's distance to the nearest livestock operation, the operation's size, and whether the home was downwind of the operation during the winter (northwest) or summer (south) seasons. The number of operations within a three- and 10-mile radius of each home also was included.
The research measured average effects on property values, not specific effects on individual residences. The study's estimates offer a prediction of average damages.
Having found a moderate effect on property values, the study's authors conclude there is room for negotiation in rural Iowa. They suggest livestock producers who wish to build new facilities might consider paying neighbors for potential declines in property values. "The size of payments would need to provide the operation the opportunity to be profitable. Agreements also would have to include good-faith provisions in which producers agree to follow management practices shown to reduce damage. In return, rural residents would agree to allow the facility to operate," said Babcock.
According to the report, "the limited size of the estimated effects suggests that common sense rules - such as not locating feeding operations close to and upwind of residences - combined with modest compensatory payments could help rural residences co-exist with modern feeding operations."
The full report, "Living with Hogs in Iowa: The Impact of Livestock Facilities on Rural Residential Property Values," is available on CARD's Web site at http://www.card.iastate.edu/products/publications/synopsis/?p=492.