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Agricultural land loss in New Brunswick Dick, Brian R. 1977

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AGRICULTURAL LAND LOSS IN NEW BRUNSWICK by BRIAN R. DICK B.A., UNIVERSITY OF NEW BRUNSWICK, 1975 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS in the School of Community and Regional Planning We accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA APRIL, 1977 (T) Brian R. Dick, 1977 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of Brit ish Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the Head of my Department or by his representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my wr i t ten pe rm i ss ion . Department of Sahaal of Bflminnnitv awH Rft g i a n a l P l a n n i n g The University of Brit ish Columbia 2075 Wesbrook Place Vancouver, Canada V6T 1W5 Date A p r i l 27 f 1977 6 i i ABSTRACT Within the province of New Brunswick, there has been a continual decline in the number of acres of improved land under cultivation since 1911. While the rate of decline was gradual before World War II, i t increased rapidly during the post-war period. Much of the loss during the f i r s t 10-15 years of the post-war period was undoubtedly the result of the abandonment of land with marginal agricultural value and was generally accepted as a necessary part of the rationalization process that was required to bring New Brunswick agriculture into the twentieth century. By 1961 however, the amount of improved land reported by the census was approximately equal to the estimated 710,809 acres of cleared C.L.I, class 2-4 land within the province which is considered to have the highest agricultural potential. In the following ten years, a further 246,727 acres of improved land went out of production. It is d i f f i c u l t to relate these recent losses to the quality of the soil available for agriculture or to the productivity of New Brunswick farmers, in light of the fact that nearly 75 per cent of the above mentioned 710,809 acres is of C.L.I, class 2 and 3 capability and the average net income per acre of improved land has consistently been nearly double the Canadian average since 1961. Concurrent with these recent losses, there has been a dramatic increase in the amount of urban-oriented residential construction which occurs within the rural areas of the province. This activity f i r s t became evident during the 1966-71 period, but i t has been since 1971 i i i that the greatest increases have taken place. The main objective of this thesis has been to address the following questions: (1) What is the impact of this urban-oriented development on the rate of loss of agricultural land? (2) Is the present market allocation of agricultural land between urban and agricultural uses in the long run interest of society at large? and (3) What policies or programs are required to deal with the problems of agricultural land loss in New Brunswick? The following are in general the answers which have been found: (1) Urban-oriented development within rural areas has become an inc-reasingly more important determinant of the rate of loss of agricultural land. However, other traditional problems such as small farm size and the related socio-economic circumstances of a large portion of the farming community continue to be influential. Unfortunately these two factors working in tandem have a synergistic effect which causes the total loss to be greater than the sum of the individual losses either factor would produce i f acting alone. (2) The price agricultural producers are willing to pay to obtain land for agricultural production underestimates the true long run value of this land to society as a whole. Furthermore, the prices urban uses must pay to obtain agricultural land do not accurately reflect the f u l l long run cost which society as a whole incurs when i t is permanently destroyed for agricultural production. Therefore, when these two uses compete to obtain agricultural land, more land will be allocated to urban uses than is in the long run interests of society as a whole. iv (3) Although programs to prevent the needless destruction of agricul-tural land by urban uses are needed, they only make sense i f a viable agricultural industry continues to exist within the province and uses the available land base as f u l l y as is economically possible. Further-more a program to prevent development on agricultural land will have the unfortunate effect of increasing land and housing prices and/or accelerating urban sparwl and ribbon development on non-agricultural land. Therefore a positive program for the preservation of agricultural land must also encourage the f u l l use of the land so protected and f a c i l i t a t e low cost orderly development of land for housing within urban areas. V TABLE OF CONTENTS Chapter Page I. INTRODUCTION SCOPE AND OBJECTIVES 1 II. LAND BASE FOR AGRICULTURE AND ITS USE -PAST PRESENT AND FUTURE 7 The Land Base for Agriculture 7 Past Trends in Agricultural Land Use 10 The Rise of Urban-Agricultural Land Use Conflicts. . 16 Future Supply and Demand for Agricultural Land . . . 31 III. STATISTICAL ANALYSIS OF FACTORS CAUSING LOSSES OF IMPROVED LAND 35 Results of the Regression Model . . . . . 37 IV. THE PRESENT MARKET ALLOCATION OF AGRICULTURAL LAND -A RATIONALE FOR CHANGE 46 Factors Causing a Misallocation of Agricultural Land in the Short-run 48 Improper Adjustment to the Realities bfi Modern Agriculture 48 The Problem of Externalities 58 Summary 63 The Long-run Demand for Agricultural Land 64 Concluding Remarks 69 V. MECHANISMS FOR PRESERVING AGRICULTURAL LAND 71 Indirect Mechanisms 71 Direct Mechanisms . . . 77 VI. CONCLUSIONS AND RECOMMENDATIONS 85 FOOTNOTES 88 BIBLIOGRAPHY 90 vi LIST OF TABLES Table Page I. Acres of C.L.I. Class 0-4 Agricultural Land 9 II. Number of Farms and Acreage of Farms, Improved and Unimproved Land - New Brunswick 1871-1971 11 III. Selected Economic Indicators for Canadian and New Brunswick Agriculture 1961-1971 14 IV. Building Permits Issued in Unincorporated Areas of York and Sunbury Counties 1968-1976 25 V. Problems Restricting Expansion 30 VI. Percent of Farmers Reporting L i t t l e or No Off-farm Work 30 VII. Stop Non-farm Development? 32 VIII. Future Agricultural Land Based Requirements 33 IX. Data for 1961-1966 Model 39 X. Data for 1966-1971 Model 40 XI. Data for 1961-1971 Model 41 XII. Intercorrelations 1961-1966 43 XIII. Intercorrelations 1966-1971 43 XIV. Intercorrelations 1961-1971 43 XV. Changes in Average Size of New Brunswick Farms , . . . . 1941-1971 53 XVI. Attitudes of Farmers to Selling Portions of Their Farms. 57 XVII. Loss of Prime Agricultural Land in British Columbia . . 80 XVIII. Acres Included and Excluded from Agriculturan Land Reserve 81 v i i LIST OF DIAGRAMS Diagram Page I. Total Farm Land and Improved Farmland - New Brunswick 1871-1971 13 II-VIII. Subdivisions Lots and Building Permits - Planning Districts and Counties of New Brunswick 1972-1973 . .18-24 IX. Building Permits - Selected Parishes 1968-1975 . . . . 26 X. Urban Rural Population Proportional Changes 52 MAP 1 New Brunswick 27 ACKNOWLEDGEMENTS I would like to express my sincere gratitude to Professors H. Craig Davis and Irving K. Fox, my thesis advisors for their constructive criticism and helpful suggestions during the preparation of this thesis. In addition, I would like to thank the New Brunswick Depart-ment of Municipal Affairs who made my studies at U.B.C. possible and especially Tom Jellinek, Director of the Community Planning Branch, who started the ball r o l l i n g . I am also indebted to Gordon Hood and other members of the Community Planning Branch staff for their help in forwarding information to me. 1 CHAPTER I INTRODUCTION, SCOPE AND OBJECTIVES In recent years, residents of urban areas in both Canada and the United States have opted to live further and further away from the centers of their c i t i e s , seemingly in an attempt to escape the noise, crime, pollution and high cost of city li v i n g . This outward migration has been stimulated and f a c i l i t a t e d by the automobile, improved highway systems, increased affluence, and the extension of community f a c i l i t i e s far into the urban fringe. In the wake of this trend, concern has arisen over the amount of agricultural land which has been destroyed in the process and replaced with large suburbs, subdivisions and ribbon developments. In general, however, most of the attention has been focused on the physical destruction of this land for agricultural purposes. Unfortunately the amount of land which is physically destroyed for agriculture may, in some cases, be only a small proportion of the land which is economically destroyed for agricultural purposes. Land can be economically destroyed for agriculture by segregating i t into parcels which are too small for a viable farm unit; isolating i t from transportation routes because of ribbon developments; bisecting individual fields with roads; and increasing production costs as a result of vandalism and other nuisances related to i t s proximity to urban development. The importance of land economically destroyed for agriculture, in relation to the total destruction of this land by urban 2 encroachment, will depend upon the intensity with which urban encroach-ment uses the land as i t moves outward from the city. The intensity of use will in turn depend to a large extent on the economic strength and profitability of the agriculture industry surrounding the urban area in question. For an urban center surrounded by agricultural land which is occupied by a reasonably profitable agriculture industry, we should expect urbanization to take place in a relatively contiguous fashion; using the land intensely. We should also expect the land to remain in agricultural production relatively close to the time i t is physically occupied by an urban use. In such a case the amount of land which is physically destroyed for agriculture will be a high proportion of the total land destroyed. In areas where agriculture is on a weak economic footing, urbanization can be expected to move outward more rapidly-taking the less viable farm operations f i r s t ; then surrounding and choking the viable ones. The amount of land which will remain undeveloped but which has been economically destroyed for agriculture will be much greater. In the f i r s t situation the zone of conflict between urban and agricultural uses of the land will likely be a narrow band along the urban frontier. In the second situation, however, the zone of con-f l i c t will penetrate further into the agricultural community, thus producing a greater loss of agricultural land for a similar increase in population. In a study, by A.D. Crerar, on the rate of loss of 3 agricultural land around major Canadian c i t i e s , i t was found that for each 1000 increase in population the amount of land lost, varied from a high of 1001 acres in the Ottawa area to a low of 192 in the area surrounding Windsor.1 It must be noted that the agriculture industry in much of the Ottawa Valley has gone through a d i f f i c u l t period of adjustment since the end of World War II while in the Windsor area the agriculture industry is among the most profitable in Canada. The loss of agricultural land surrounding urban areas where the f i r s t situation exists has received the most attention from academics and governments concerned with this problem. The Niagara f r u i t lands, the farmland surrounding Vancouver in the lower mainland of British Columbia, the vegetable and grape lands of California, and the pineapple and cane lands of Hawaii a l l immediately come to mind as areas where concern has been greatest and where governments have acted to prevent this loss. In a l l these cases a relatively strong agricul-ture industry has traditionally existed. In the province of New Brunswick-the area this thesis will deal with-this is clearly not the case. The agricultural industry in New Brunswick, with the possible exception of the potato growing areas of Carleton, Victoria and Madawaska counties, has had a long history of weak economic performance. There has been a continual decline in the number of improved acres under cultivation since 1911. While much of the land that was lost in the past had marginal agriculture value, there is evidence that two factors, other than the productivity of the land, have become increasingly more important determinants of the rate of loss 4 in recent years. The f i r s t of these factors is the constraint that the tradi-tionally small number of improved acres per farm puts on the v i a b i l i t y of individual farm units. Table II shows that on a per acre basis farms in New Brunswick are on average more productive than the Canadian average. However because many farm operators control such a small number of improved acres they are unable to provide themselves and their families with a living which compares reasonably with alternative employment opportunities. Concurrently farms of this size are unable to produce competitive returns for the capital the operator invested in them. Thus increasingly, as incomes in alternative forms of employment and investment rise, operators of these farms are faced with the choice of either expanding their operations or going out of business. The second factor is the dramatic acceleration since 1966 in the amount of urban-oriented residential construction which has taken place within the rural areas of the province. Most of this residential development has been in the form of haphazard ribbon development stretching sometimes for as much as 40-50 miles along the roads and highways surrounding urban areas both large and small. Another aspect of this development has been the purchase by residents and non-residents of properties for rural estates, hobby farms and recreational purposes. This urban-oriented demand for agricultural land, working in tandem with the historical problems of small farm size, now threatens to destroy both economically and physically, land which otherwise would be valuable for agriculture. In areas where this type of development has 5 occurred i t has placed both physical and economic impediments in the path of farmers wishing to expand the size of their operations. In some cases i t physically restricts the expansion of a farm onto adjacent land while in others i t drives up land values beyond their value for agricultural production. The end result of this process has been to permanently seg-regate good agricultural land into parcels which are too small for a viable farm unit, and which subsequently l i e abandoned and non-productive. In a report by the Department of Agriculture's Land Planning Section, we find the following passage: Moreover, the degree and extent of semi-rural or semi-suburban pressures dramatically influence land prices through the speculative demands on agricultural lands, reflected in acquisition and rental prices which are not necessarily coin-cident with productive value. The subtle pressures of low density population growth confer a devastating effect on agricultural production in the area. In these regions, farm operations cease or show low growth potential due to environ-mental considerations (i.e. air and water pollution) as well as anticipated sepculative aspects associated with urban development. ^  Thus, the amount of agricultural land which is physically con-verted to urban uses is not a good indication of the f u l l effect of urban pressures on the loss of agricultural land in New Brunswick. However, the loss of land which is due to the tenure problems of the agriculture industry and that which is due to urban pressures cannot be dealt with separately. The spread of urban-oriented development far into the fringes of urban centers is encouraged and f a c i l i t a t e d by the abandonment of non-viable farm units; but the abandonment of these units is accelerated by urban pressures for land and the lure of urban oppor-tunities for employment and investment. We are squarely faced with a 6 synergistic relationship in which the total loss of land is greater than the sum of the invididual losses either factor would produce i f acting alone. The foregoing has been a brief introduction to the problem of agricultural land loss, as i t affects the province of New Brunswick, which attempts to put the factors causing this loss in perspective with regards to other areas where this problem has arisen. In the remainder of this thesis we w i l l : document this loss of land and the growth of urban-oriented residential construction in the rural areas of the province; provide a rationale for intervening into the present market allocation of this land; attempt to determine s t a t i s t i c a l l y the effects of various factors on this loss; and suggest policies to deal with this problem. 7 CHAPTER II LAND BASE FOR AGRICULTURE AND ITS USE - PAST PRESENT AND FUTURE Before continuing further, i t is appropriate at this point, to outline the New Brunswick situation with regards to the agricultural land base and i t s use. In this chapter we will describe: the quantity and quality of agricultural land within the province; past and present trends in i t s use; and the supply of and demand for this land in the immediate future. A. The Land Base for Agriculture Agricultural land within the province of New Brunswick has been classified according to the Canada Land Inventory, Soil Capability for Agriculture System. This system divides a l l soils into seven capability classes, plus the class of organic soils for which no capability rating is made. With the exception of class 1, each soil class is subsequently divided into a number of subclasses which indicate the types of limitations to which soils within each class are subject. Basically, soil classes 1-4 are considered appropriate for some form of continuous agricultural production. Class 1 soils have no serious limitations for cultivation and each succeeding soil class is more limited in the range of crops which can be grown and as to the ease with which cultivation can take place. There are no class 1 soils within the province of New Brunswick. The C.L.I, classification system considers only physical 8 characteristics such as soil f e r t i l i t y , stoniness, or cliamte in its evaluation of agricultural land. Economic considerations such as dis-tance to markets, types of roads, location, size of farms, characteris-tics of land ownership and cultural patterns are not considered as c r i t e r i a for capability groupings. In an attempt to partially overcome this limitation, agricultural soils within the province have also been blocked. The term agricultural blocking has been applied to designated areas, where there are a significant number of acres of land that display consistently high agricultural capabilities. This blocking has been done in an attempt to indicate where the agricultural potential of the province is greatest. Areas of C.L.I, class 2-4 land which exist in small pockets, isolated from markets, transportation networks and other agricul-tural communities, have not been included within the blocking. However, small amounts of C.L.I, class 5-7 land are included within the blocking, where they occur in close proximity to land of high agricultural capability. Table 1, shows the distribution of C.L.I, class 0, 2, 3 and 4 land which is both cleared and blocked, as i t occurs within the fifteen counties of the province. The table also gives totals, within each county and the province, for C.L.I, class 0-4 land which is cleared but unblocked; blocked but forested; and unblocked and forested. From this information we find that although the province contains a total of 8,263,918 acres of land with C.L.I, capabilities 0-4, only 3,287,164 acres of this land are included within agricultural blocking. Furthermore, of this total, only 710,809 acres are presently cleared. TABLE I - ACRES OF C.L.I. CLASS 0-4 AGRICULTURAL LAND CLEARED AND BLOCKED TOTAL TOTAL TOTAL TOTAL COUNTY 0 2 3 4 CLEARED BLOCKED CLEARED UNBLOCKED FORESTED BLOCKED FORESTED UNBLOCKED ALBERT. '. - 4,792 22,991 8,878 36,661 14,553 37,917 81,575 CARLETON 355 33,158 57,831 23,937 115,281 39,612 116,827 206,555 CHARLOTTE - - 5,613 3,091 8,704 23,728 31,209 143,293 GLOUCESTER 314 - 38,751 18,655 57,720 40,851 202,610 325,089 KENT 48 - 37,561 18,825 56,434 53,345 281,774 444,609 KINGS - 9,729 23,711 12,973 46,413 62,057 86,671 134,794 MADAWASKA 314 15,028 20,071 10,907 46,320 24,827 161,181 250,246 NORTHUMBERLAND 164 24 19,278 15,536 35,002 34,617 421,870 830,507 QUEENS - 2,802 6,594 4,896 14,292 23,594 85,872 325,095 RESTIGOUCHE 1,805 10,063 11,569 3,777 27,214 16,794 257,474 455,974 ST. JOHN - - - - - 12,089 - 32,803 SUNBURY 115 3,957 5,383 4,113 13,568 10,377 89,904 220,551 VICTORIA 96 20,384 23,666 13,794 57,940 13,629 350,591 230,846 WESTMORLAND 155 521 123,425 25,771 149,872 23,175 264,258 236,604 YORK - 3,920 28,359 13,109 45,388 34,701 188,197 630,264 PROVINCE 3,366 104,378 424,803 178,262 710,809 427,949 2,576,355 4,548,805 Source: Canada Land Inventory ID 10 This figure represents what we can consider to be the provincial land base for agriculture within the immediate future. Although the table shows much more class 0-4 land which is presently forested; or cleared but outside agricultural blocking, economic constraints would prevent this land from being used unless existing product prices were to rise dramatically. The cost of clearing the presently forested areas of class 0-4 land is estimated to be as much as $1000 per acre.^ When we consider that much of this land is isolated from existing transportation systems, i t becomes apparent that the cost of bringing this land into production would be prohibitive. In a province where the present average purchase price for improved farmland is between 101-151 dollars 5 per acre, i t would take a considerable rise in food prices to bring forest land into production. The areas of cleared class 0-4 land out-side agricultural blocking, may be used to some extent, but overall, the fragmented and isolated nature of this land excludes i t from viable agricultural production in the near future. In conclusion, although at f i r s t glance there appears to be a large surplus of C.L.I, class 0-4 land within the province, economic and physical obstacles restr i c t the amount of this land which can be used for viable agricultural production within the immediate future. Good improved agricultural land with high C.L.I, capabilities is a scarce resource within the province at present. B. Past Trends in Agricultural Land Use Table II, shows the number of farms and the acreage of farms-improved and unimproved land-within the province of New Brunswick TABLE II Number of Farms and Acreage of Farms, Improved and Unimproved Land  New Brunswick, 1871 - 1971 12 between 1871 and 1971. Diagram I gives a graphical representation of the number of improved acres under cultivation for each census year during this period. The most evident message conveyed by this data is the continual decline in the number of cultivated acres since 1911 and especially the dramatic decline in the post World War II period. Undoubtedly the abandonment of land with marginal agricultural value was responsible for a large portion of the early losses. However, by 1961, the amount of improved land reported in the census was approximately equal to the 710,809 acres of cleared class 0-4 land which exists within agricultural blocking. Between 1961 and 1971 a further 246,727 acres of improved land went out of production. These recent losses can hardly be a t t r i -buted to the poor quality or low productivity of the soil available for agriculture. This is especially true when we find that nearly 75 per cent of this cleared and blocked land is of C.L.I, class 2 & 3 capability. Table III provides further evidence that these recent losses are not related to productivity. As can be seen from the table, both gross and net income per acre have consistently been nearly double the Canadian average. A close look at this table also provides further in-sight into the factors which have been responsible for these recent losses. The table shows that while New Brunswick farms have consistently had higher average gross and net incomes per acre, and gross incomes per dollar of machinery and equipment; they have consistently had lower average, gross and net incomes per farm, gross and net incomes per worker, and in 1971, lower net income per dollar of machinery and equipment. 14 TABLE III - TITLE-SELECTED ECONOMIC INDICATIONS FOR CANADIAN AND NEW BRUNSWICK AGRICULTURE 1961-1971 Source: STAT-CAN - 96-505, 96-605, 96-705, 21-202 1961 1966 1971 N.B. CANADA N.B. CANADA N.B. CANADA Acres Improved Land Per Farm 62.29 215.02 73.36 251.22 88.86 295.39 $ of Machinery and Equipment per Acre $43.15 $24.84 $57.66 $32.85 $83.30 $36.15 Gross Income per $ of Machinery and Equipment $ 1.02 $ .91 $ 1.10 $ .94 $ 1.15 $ 1.06 Net Income per $ of Machinery and Equipment $ .41 $ .36 $ .59 $ .54 $ .25 $ .14 Full Time Workers per Farm 1.09 1.10 1.11 1 .10 1.12 1.10 Full Time Workers per Acre .0175 .0051 .0151 .0044 .0126 .0037 Gross Income per Worker $2508 $4441 $4193 $7072 $7615 $10,317 Net Income per Worker $1015 $1745 $2247 $4129 $1667 $3964 Gross Income per Acre . $43.83 $22.70 $63.30 $30.86 $96.20 $38.35 Net Income per Acre $17.75 $ 8.92 $33.92 $18.02 $21.06 $14.74 Gross Income per Farm $2730 $4880 $4643 $7753 $8548 $11,328 Net Income per Farm $1106 $1917 $2489 $4527 $1871 $4352 $ of Machinery & Equipment per Farm $2688 $5341 $4230 $8251 $7402 $10,677 N.B. Machinery & Equipment as % of Canada Machinery & Equipment 50. .33% 60 .32% 15 It would be wrong to conclude that lower gross and net incomes per farm are the result of lower labor or capital productivity. The average number of workers per farm is very close to the Canadian average and not significantly greater than the lowest possible ratio of one. This would indicate that most farms are worked by the operator alone and suggests that the low labor productivity is the result of the small number of acres each farmer controls. The small average farm size also explains why in 1971, gross income per dollar invested in machinery and equipment was higher than the Canadian average yet net income was lower. New Brunswick farms have traditionally had low levels of investment in machinery and equipment per farm. However modern farm practices and labor constraints have forced farmers to acquire more machinery. The table shows that the value of machinery and equipment per farm has risen from 50.33 per cent of the Canadian average in 1961 to 69.32 per cent in 1971. Unfor-tunately, because machinery and equipment comes in fixed sizes, New Brunswick farmers are forced to buy some units which have a yearly capacity exceeding that required on their small farms. The table shows that although in 1971, farmers on average had over $3000 less than the Canadian average investment in machinery and equipment per farm, they s t i l l had well over twice as much invested in this capital on a per acre basis. Thus, while they were able to obtain higher average gross returns per dollar invested in machinery, these returns were not propor-tionately high enough to offset the higher capital costs incurred per unit of output. Consequently, net returns per dollar invested in 16 machinery and equipment were lower in New Brunswick than in Canada. This very clearly sums up the position of the average New Brunswick farmer, and a major reason why improved land went out of production during the 1961-71 period. New Brunswick farmers, while being more productive than the Canadian average on a per acre basis, operate too few acres of improved land. This results in higher capital costs per unit of output and, more importantly, in net incomes for operators which do not compare reasonably with alternative employment opportunities. Concurrently, farms of this size are unable to produce competitive returns to the land and capital resources operators have invested in them. As incomes in other forms of employment and investment have risen, operators of these farms have been faced with the choice of either expanding their enterprises; or looking elsewhere for employment opportunities for them-selves and their capital. C. The Rise of Urban - Agricultural Land Use Conflicts As was indicated in the introduction, urban-oriented residential development has within the past ten years become an increasingly more important determinant of the rate of loss of agricultural land within the province. Since approximately 1966, there has been a dramatic acceleration in the amount of urban-oriented residential construction which takes place within the rural areas of the province. Most of this development has been in the form of low density, haphazard ribbon development which stretches for as much as 40-50 miles along the roads and highways surrounding urban areas-large and small alike. Another aspect of this development, has been the purchase by residents and non-17 residents, of farms for rural estates, hobby farms and recreational pur-poses. Diagrams II-VIII show the magnitude of this rural residential development in comparison to that occurring within municiaplities. In almost every planning d i s t r i c t and county, the number of sub-divisions and lots created, along with the number of building permits issued was considerably greater in the unincorporated areas than in the munici-palities during the 1973-74 period. Table IV shows the number of building permits issued for the construction of single family residences within the unincorporated areas of twenty parishes surrounding the city of Fredericton, New Brunswick. The graphic representation of this information for the most active parishes, shown in Diagram IX indicates the dramatic increase in this activity over the 1968-76 period. In the f i r s t seven months of 1976, nearly as many permits were issued as were issued in the entire period between 1968 and 1971. By relating this information to Map I we can see that by 1976, this activity had reached those parishes most remote from Fredericton. Because land abandonment due to the socio-economic and institu-tional problems of New Brunswick agriculture had been taking place long before this urban oriented development began to occur in the rural areas, i t seems reasonable to assume that much of the early development took place on land which had already been abandoned. However, there is evidence that as the trend toward this type of development accelerated following 1971, and abandoned land in the vicinity of urban areas became A P P R O V E D S U B D I V I S I O N S O O O o w o o o o Municipalities Unincorporated > o X A P P R O V E D L O T S l\> * <J» O O O O O o 03 o o ^ Municipalities CD 2 Unincorporated] CO H X o (6 O O O 3 C D'3 ^ 3 P- 0 H-,01 (6 o w •• H- H* .. P> O 3 3 H c 0) o < to o in i > CD c z o m » z H a rt-n *d a CT Sit rr c m Ql D O L L A R V A L U E O F B U I L D I N G P E R M I T S _ ( M I L L I O N S ) w O o i V O in M ft) —< 3 M u n i c i p a l i t i e s Unincorporated] 8L DIAGRAM i n - BELLEDUNE PLANNING DISTRICT SUBDIVISIONS , LOTS , AND BUILDING PERMITS 1973 - 1974 4 I 50 CO z o CO > 100 S m 3 CO o > o a. a. a. S O o a. o i 5 2 3 CO o a > o <E O. 0. < 600 400 200 oL .g. 1973 1974 I c 3 CO t-2 or u 3 0. o z Q J CO z 5 o IS 2 u. -J o i Ul 3 _i < > 1 or < _i - i o a 03 < I-o 7C i l L — 2 i S o u r c e : D i s t r i c t P l a n n i n g C o m m i s s i o n a n d R e g i o n a l P l a n n i n g T e c h n i c i a n s , F e b r u a r y 1 9 7 5 DIAGRAM iv - MONCTON PLANNING DISTRICT SUBDIVISIONS .LOTS AND BUILDING PERMITS 1 9 7 3 - 1 9 7 4 600 4000 1973 I I 1974 11111!$ 100 Source: D i s t r i c t Planning Commission and Regional Planning Technicians, February 1975 -1 ro o to <o A P P R O V E D S U B D I V I S I O N S o O o o N O O M u n i c i p a l i t i e s Unincorporated] C o g s s i o I z P o z CI -o m 3D K 3 A P P R O V E D L O T S •3 n w moo o 3 3" I 3 P-0 01 p. H. 01 o 3 3 C i-l - m 3 *d a it O" 50 I"! (B c ia U> H" K O 3 P> P- l~' Ul P" & 3 3 P-3 v3 •0 M Di 3 3 P-3 O O o Ol o rO O O o Municipalities Unincorporated D O L L A R V A L U E O F B U I L D I N G P E R M I T S ( M I L L I O N S ) M u n i c i p a l i t i e s Unincorporated N O P E R M I T S I S S U E D L2 A P P R O V E D S U B D I V I S I O N S A N D L O T S KM D 1-3 O CO moo 0 i 3"[ p- w O 01 c H o (D - B) 3 rq (J, (C 0" W i-< (B c W CU H->1 o 3 f» t - 1 1-< -j T> ua in Pi 3 3 (-<• 3 «0 o o 4 > O o o o CD O o o o o g Subdivisions o ~* a L o t s $ Subdivisions L o t s S a g- Subdivisions 8 o L o t s n Subdivisions •* o o L o t s *=:»'!'--V,'iii o Subdivisions! § L o t s D O L L A R V A L U E O F B U I L D I N G P E R M I T S ( M I L L I O N S ) (A c CD O < M 5 z 10 _ o W > I z ._ o <0 •V C3 J> C z o 31 z Westmorland A l b e r t > » w I Z o o :o T » O m D > > CO H X m o o c z H m to L 2 0 0 1 0 0 0 o a z *t tn z o CO 8 0 0 6 0 0 > 4 0 0 o m CO o Ul > o ft 0. a. < 2 0 0 .2 3 o s •B •5 City of Fredericton Y o r k 1 9 7 3 Sunbury DIAGRAM: V I I - CITY OF FREDERICTON AMD THE UNINCORPORATED AREAS IN THE COUNTIES SUBDIVISIONS , LOTS AND BUILDING PERMITS 1 9 7 3 - 1 9 7 4 CO H 2 a. iii a. (9 i " S 3 si Ul -I $ OS < _ l -J O I S ui c o •— o o 'Z. <B >• -o .~ « o ul ts. •*> O 3 >- w 1 9 7 4 X - 1 9 7 3 i n c l u d e s M a r y s v i l l e , N o s h M o a i s s i s , B a r k e r s Point a n d C i t y o f F r e d e r i c t o n Source: C i t y of Fr e d e r i c t o n Advisory Committee and the Regional Planning Technicians February/ 1975 ro A P P R O V E D S U B D I V I S I O N S A N D L O T S CM n St. John Subdivisions D City L o t s (A Subdivisions L o t s * Subdivisions I 5" o V L o t s Chorl Subdivisions 3 o L o t s Subdivisions a m Lots N O T A V A I L A B L E • H n 13 > 01 i - a o p> <: c a p-3 to H-O 3 n vQ >< (I> O rt o a » • a 3 H - o H- (f H> o rt H- (D CO 0) (D CU 3 H-(A Pi 3 * 3 rt "J C| Jtft 0 tr 3- 3* c ® 3 0) w 5 , 8 HO *a 3 -J Jo D O L L A R V A L U E O F B U I L D I N G P E R M I T S ( M I L L I O N S ) o - ro S t . J o h n City S t . J o h n K i n g s C h a r l o t t e OUGCP.S N O T A V A I L A B L E HI H X m o o c m to 17Z 25 TABLE IV BUILDING PERMITS ISSUED IN UNINCORPORATED AREAS OF YORK  AND SUNBURY COUNTIES (1968-1976) TO JULY PARISH 1968 1969 1970 1971 1972 1973 1974 1975 1976 TOTAL BRIGHT 1 2 6 11 25 27 29 27 20 148 CANTERBURY 0 0 0 0 0 0 0 0 0 0 DOUGLAS 3 6 18 46 70 69 42 65 70 389 DUMFRIES 1 1 1 0 0 3 3 5 2 16 KINGSCLEAR 19 23 17 24 54 51 30 75 70 363 MANNERS SUTTON 2 2 3 3 8 9 13 11 7 58 NEW MARYLAND 7 9 12 35 78 86 66 85 83 461 NORTH LAKE 0 0 0 0 0 0 0 0 0 0 PRINCE WILLIAM 1 1 0 3 4 6 2 0 3 20 QUEENSBURY 0 1 3 6 4 5 13 7 8 47 ST. MARYS 7 8 10 35 25 14 31 36 20 186 SOUTHAMPTON 0 3 4 6 9 13 20 33 16 104 STANLEY 0 0 0 1 3 6 5 5 3 23 BLISSVILLE 1 2 1 2 4 7 11 4 2 34 BURTON 10 12 7 33 34 25 33 30 19 203 GLADSTONE 2 0 0 2 0 0 6 3 1 14 LINCOLN 5 2 4 41 44 33 36 34 46 245 MAUGERVILLE 7 3 2 6 12 12 16 17 6 81 NORTHFIELD 0 0 0 0 0 1 7 7 5 20 SHEFFIELD 3 2 1 1 2 1 3 0 1 14 TOTAL 69 77 89 255 376 368 366 444 382 2426 Source: Dept. of Municipal Affairs Files z/ C-4 15 - York County 1. a r i g h t 5* 6. 7. 10 11. C a n t e r b u r y 3. Douglas 4. p u n f i ' i e s K i n g s c l e a r Manners S u t t o a New M a r y l a n d 8. N o r t h Lake, 9, P r i n c e W i l l i a m Queensbury S t . Marys 12. Southampton 13. S t a n l e y 12- Sunbury Count 1. B l i s s v i l l e 2. B u r t o n 3. G l a d s t o n e 4. L i n c o l n 5. M a u g e r v i l l e 6. N o r t h f i e l d 7. S h e f f i e l d CENSMS DIVISION DIVISION DE RECENSEMENT CENSUS SUBDIVISION SUBDIVISION DE RECENSEMENT [ I LARGES1 CITY - VILLE PRINCIPALS r — — n CENSUS' METROPOLITAN AREA L _ J RiciON M E T R O P O L I T A N DE RECENSEMENT I 1 'EN5US AGGLOMERATION AGGLOMERATION DE RECENSEMENT SCALE —fCHCLLE IN MILES , .—. IN KILOMETRES ' i £N KILOMETRES EN MILLE8 RECENSEMENT OU CANADA , 1971 CENSUS OF CANADA , I 9 T I 28 more scarce, this development began to encourage the abandonment of land and compete for land s t i l l in production. In 1976, the Agricultural Resources Study conducted a survey of 89 farms within four parishes which represented a range of agricultural activities and locations similar to that within the province as a whole. It found that 25 per cent of the farmers surveyed had abandoned land within the last five years. It was also found that 84 per cent of this land was of C.L.I, capabilities 2, 3, and 3-4. However, almost 50 per cent of the land abandoned was less than one-half mile from an urban area. Concurrent with this, the majority of the farmers stated they did not like farming on land next to urban areas. The survey report states: Toys l e f t in fields by children and bottles and other types of trash l e f t by adults make f i e l d operations d i f f i c u l t and some-times hazardous. Also strip development along roads reduces access to fields and may influence the type of crop grown. The net result is that a one acre building lot may remove between three and eight acres of improved land from production. The same survey reported that 51.8 per cent of the farmers stated that they had received offers to purchase a l l or part of their land within the last five years-46.4 per cent reported two or more offers. Of those farmers reporting offers of purchase, 51.3 per cent stated the intended use was non-agricultural. Only 26.7 per cent of the farmers stated they had subdivided their land within the past five years. How-ever,, since the questionnaire was restricted to farmers presently in business, i t did not include those who had sold their entire farm or sold enough lots to make farming on the remainder non-viable. An impor-tant finding was that 63.6 per cent of the land which was subdivided was of C.L.I, capabilities 2 and 3. Although this survey dealt with a small sample, and was specific to only four parishes, i t does suggest that urban-oriented residential development no longer passively accepts land which has already been abandoned due to the tenure problems of the agriculture industry. On the contrary, the survey suggests that this type of development actively influences the abandonment of land and competes for land which is cur-rently in production. This competition for land by non-agricultural uses, threatens to impede the tenure adjustments which are needed within New Brunswick agriculture and therefore to encourage more land abandonment. Table V shows that in the parishes of St. Isidore and Grand Falls, 40 per cent and 50 per cent of the farmers reported that d i f f i c u l t y purchasing more land was the main constraint to expanding their operations. The reason why this was perceived as a problem by the farmers of these parishes and not the others may partly be explained by the relatively higher percentage of farmers reporting l i t t l e or no off-farm work in these two parishes. This information is shown in Table VI. This suggests that serious full-time farmers have a more urgent need to expand and have actually encountered d i f f i c u l t i e s , while part-time farmers have less need to buy more land and therefore have not experienced this as a problem. It would seem reasonable that farmers who perceive other problems, such as lack of capital, labor shortages, and poor returns on investment, as reasons for not expanding, would not be actively engaged in attempting to purchase new land. Therefore as the percentage of farmers who wish to expand increases, the d i f f i c u l t y 30 TABLE V PROBLEMS RESTRICTING EXPANSION % of farmers reporting LOCATION CANNOT BUY LACK OF LABOUR POOR RETURNS OTHER MORE LAND CAPITAL PROBLEMS ON INVESTMENT St. Isidore 40.0 60.0 0 0 0 St. Mary 0 55.0 10.0 35.0 0 Salisbury 5.6 38.9 16.7 22.0 16.7 Grand Falls 50.0 30.0 0 0 20.0 TABLE VI PERCENT OF FARMERS REPORTING LITTLE OR  NO OFF-FARM WORK LOCATION % REPORTING LITTLE OR NO OFF-FARM WORK St. Isidore 80.9 St. Mary 52.4 Salisbury 68.0 Grand Falls 81.0 31 of each obtaining land is greater. The important point here is that any unnecessary competition from non-agricultural uses will only aggravate the situation further and thus hinder the tenure adjustments which are essential for improving the v i a b i l i t y of New Brunswick agriculture. Finally, Table VII, gives an indication of how serious the problem of non-farm development on agricultural land is perceived by the farmers. It is clear that the overwhelming majority of the farmers surveyed f e l t there was a need to stop this type of development. This response, coming from a constituency that stands to gain financially in the short run from this type of development, speaks for i t s e l f . D. Future Supply and Demand for Agricultural Land Before closing this chapter i t is appropriate to put this loss of agricultural land in perspective with respect to future supply and demand for agricultural products within the province of New Brunswick. In the f i r s t section of this chapter i t was revealed that of a l l the C.L.I, class 0-4 land within the province, only 710,809 acres are presently cleared and within agricultural blocking. The New Brunswick Agricultural Resources Study has suggested that a reasonable goal for development efforts within the agricultural sector would be to maintain present export levels for specific crops and produce 60 per cent of the domestic food requirements by 1985 (New Brunswick presently produces approximately 50 per cent of i t s domestic food requirements). Table VIII, indicates the minimum amount of land that will be required by 1985, in order to achieve these objectives. These estimates of land based requirements were made by the Agricultural TABLE VII Stop Non-Farm Development on Farmland? % of farmers reporting; Yes No St. Isidore 90.5 0.5 St. Mary 75.0 25.0 Salisbury 76.0 20.0 Grand Falls 66.7 33.3 All Study Areas 77.0 23.0 TABLE VIII: Future Agricultural Land Based Requirements Commodity Total Production Units Sufficient Farm Size Number of Farm Units Productive Acres Equivalent per Farm Total Commodity Acres PORK 171,000 75 sows farrow to finish 127 145 18,400 BEEF1 59,800 120 cow-calf 598 285 170,400 POTATOES2 60,000 150 acres 400 215 86,000 DAIRY1 27,800 45 cows 618 210 129,800 POULTRY 4,400,000 151,200 birds (35,000 per cycle) 29 395 12,000 VEGETABLE 5,000 25 acres 200 25 5,000 FRUITS 3,000 30 acres 100 30 3,000 MISC.3 56,000 TOTAL 2,072 480,600 Includes pastures at one acre per cow unit. Includes potato grain rotation, 150 acres potatoes, 65 acres grain. Includes blueberries, tobacco, land in transfer of holding, etc. CO co 34 Resources Study Group and are minimums assuming certain optimal farm sizes and efficiencies. Given these assumptions, the analysis indicates that a minimum of 480,600 acres of productive farmland and 2,072 farm units will be required to achieve these goals. However, i t is unrealistic to assume that this exact combination of optimal size farm units will actually be achieved. Moreover, there is bound to be some land within each farm unit and between farm units which is non-productive. In the 1971 census, for example, the category of "other improved lands" accounted for 41,640 acres. This included the area of barnyards, home gardens, lanes and roads, and other land that was lying idle. Taking these considerations into account, an estimate of 600,000 or more acres would possibly be closer to the minimum requirement. Consequently, the supply of improved class 0-4 land within agricultural blocking is very nearly the minimum required to achieve these very modest goals within the agricultural sector. Clearly, any unnecessary loss of this land will needlessly impair the province's ab i l i t y to meet these minimum requirements in the near future. Therefore, i t will be necessary to clear presently forested areas for cultivation, move production to more marginal cleared land, or import more food from outside the province in order to meet future increases in domestic food demand. The f i r s t two alternatives will undoubtedly lead to higher food costs and with the present outlook for world food production and demand, we can only expect imported food to be more expensive in the future also. 35 CHAPTER III STATISTICAL ANALYSIS OF THE FACTORS  CAUSING LOSSES OF IMPROVED LAND In an attempt to gain a clearer understanding of the impact of various factors on the loss rate of improved land within the province of New Brunswick, correlation and regression techniques were used. These techniques were used on cross sectional data with observations for each variable taken from each of the fifteen counties of the province. The regression model constructed from this data attempts to explain dif-ferences in the rate of loss of improved land between the counties in terms of variations in a number of independent variables. The indepen-dent variables f a l l into one of two categories: (1) variables reflecting urban pressures on the rate of loss of improved land; and (2) variables reflecting the effects of the socio-economic and institutional problems of agriculture on the rate of loss of improved land. Before discussing the details and results of this model further, there are several limitations of the investigation which should be out-lined. (1) Because of an almost complete lack of alternative sources of published data at the county level of aggregation, the model relied heavily on data from the Canadian Census. This reliance meant that the selection of variables for investigation was influenced to a large ex-tent by what was available from this source. Therefore in many cases the variables used were only proxies for more specific variables which 36 were not available. For example, i t would have been desirable to inves-tigate the impact of rising land prices in rural areas on the loss rate of improved land, however, since the census does not record this infor-mation i t was necessary to use increases in median house values for the county as a whole as the best available substitute. Furthermore, since the census only records this information every ten years i t was only possible to investigate i t s effect over the period between 1961 and 1971 and not for the 1961-66 and 1966-71 periods. This is just a sample of the types of limitations that reliance on census data placed on the construction of each model. These limita-tions were most severe for obtaining variables which related to the effects of urban pressure on the loss rate of improved land since the agricultural census reports a wide range of data reflecting the socio-economic condition of agriculture. (2) The last year for which the Canadian Agricultural Census is available is 1971. It was therefore impossible to investigate the fac-tors influencing the rate of loss of improved land during the 1971-76 period. This was unfortunate because as was demonstrated by Table IV in Chapter II, i t was during this period that the increase in urban-oriented residential construction within the rural areas was greatest. (3) The models which have been constructed are based on cross sectional data. This was made necessary because of a lack of data, col-lected on a frequent basis, which would have been required for the con-struction of a meaningful time-series model. Unfortunately, while a . cross sectional model is capable of explaining differences in the rate 37 of loss of improved land between the counties in terms of differences in the values of certain independent variables for each county i t cannot explain the effect variables which impact each county equally, have on the overall rate of loss within the province. For example farm product prices are f a i r l y uniform throughout the province, therefore any impact these prices may have on the rate of loss of improved land independent of conditions peculiar to individual counties will be constant. For this reason a constant or intercept term has been incorporated into the model in an attempt to determine the magnitude and direction of these effects. Unfortunately we can only speculate as to what variables are responsible for these effects. (4) The number of observations for each variable was limited by the number of counties within the province-fifteen. This small number of observations has meant a small number of degrees of freedom for statis-tical testing. Therefore, correlation and regression coefficients must be quite large before they can be considered significant. Results of the Regression Model The county model attempts to explain the variations in rates of loss of improved land between the fifteen counties of the province, over given periods, as a function of variations in the values of the following independent variables at the beginning of each period. X-| - The per cent of farms with between 3 and 129 acres of improved land. X2 - The average value-added per farm. X~ - The number of houses built within the county. 38 - The per cent of operators over sixty years old. Xg - The per cent of operators reporting off-farm work. In order to investigate how these variables have affected the loss rate of improved land during different time periods, correlations and regressions were calculated for the 1961-66, 1966-71 and 1961-71 periods. For the 1961-71 period, Xg-the per cent increase in median house values, was added to the l i s t of independent variables. The data sets used are shown in Tables IX-XI. From this data, the following regression equations were calculated. The quantities in brackets under the regression coef-ficients are the appropriate t-ratios. 1961-66 period Y = -.591 + .564X-, - .00009X2 - .0014X3 + .0683X4 + .524X5 (-1.65) (1.59) (-.049) (-.744) (.310) (2.00) R2 = .597 1966-71 period Y = -.512 + .415X-, + .00082X2 + .0015X3 + .680X4 + .344X5 (-.955) (.862) (.594) (.604) (2.81) (.725) R2 = .319 1961-71 period Y = -.926 + .729X-, + .0019X2 + .00058X3 + .517X4 + .810X5 + ..00096X (-2.94) (2.22) (1.38) (.653) (2.32) (3.60) (.013) R2 = .775 At the 95 per cent confidence level we find that Xr is the only 39 TABLE IX DATA FOR 1961-66 MODEL COUNTY Y X1 X 2 X 3 X 4 Xg Albert 19. .64 85 .71 1445 540 29 .24 57 .49 Carleton 1, .45 76 .76 3813 435 23 .38 38 .31 Charlotte 28. .01 89 .08 1616 445 38 .38 46 .13 Gloucester 21. .06 95 .30 1018 1670 28 .94 57 .14 Kent 19. .71 92 .11 1051 260 28 .56 54 .22 Kings 9. .97 86 .31 2141 925 29 .39 43 .60 Madawaska 14. .26 82 .40 2403 480 17 .83 49 .77 Northumberland 25, .33 94 .72 828 980 40 .07 60 .04 Queens 17, .32 91 .39 1714 200 30 .88 53 .15 Restigouche 30. .81 88 .78 1969 810 20 .67 63 .39 St. John 9, .94 79 .63 4407 3015 43 .52 51 .85 Sunbury 20, .49 89 .86 1413 640 30 .43 54 .71 Victoria 6 .51 85 .53 5739 355 19 .86 29 .79 Westmorland 14, .94 83 .90 1924 2550 29 .46 49 .24 York 16, .99 90 .38 2310 2235 28 .77 50 .82 40 TABLE X DATA FOR 1966-71 MODEL COUNTY Y X l x 2 X3 x 4 X5 Albert 21.64 76.65 2863 805 26.43 59.91 Carleton 18.33 70.40 8185 505 24.05 48.44 Charlotte 15.22 83.96 2840 430 39.04 45.99 Cloucester 38.23 90.41 1552 2635 32.60 58.90 Kent 35.71 88.87 1948 590 28.39 53.20 Kings 16.36 82.34 3940 1125 26.83 40.15 Madawaska 25.07 75.79 4743 650 19.24 42.29 Northumberland 41.72 94.33 1068 1090 43.95 55.47 Queens 25.65 89.45 2188 185 34.42 46.23 Restigouche 11.88 80.32 2469 1175 18.60 57.14 St. John 42.29 76.06 7676 2110 46.48 39.44 Sunbury 24.43 81.86 2775 555 29.90 49.02 Victoria 13.39 78.24 13684 540 19.38 29.62 Westmorland 22.44 81.25 3335 3070 30.60 52.05 York 29.96 86.36 3489 3130 31.57 51.72 TABLE_XX DATA FOR 1961-71 MODEL COUNTY Y X l x 2 X3 x 4 X5 X6 Albert 37 .03 85 .71 1445 1345 29 .24 57 .48 103 .85 Carleton 19 .51 76 .76 3813 985 23 .38 38 .31 48 .11 Charlotte 38 .97 89 .08 1616 875 38 .38 46 .13 40 .23 Gloucester 51 .80 95 .30 1018 4035 28 .94 57 .14 115 .13 Kent 48 .38 92 .11 1051 850 28 .56 54 .22 85 .77 Kings 24 .70 86 .31 214 2050 29 .39 43 .60 73 .19 Madawaska 35 .76 82 .40 2403 1130 17 .83 49 .77 47 .95 Northumber-r land 56 .48 94 .72 828 2070 40 .07 60 .04 64 .25 Queens 38 .52 91 .39 1714 385 30 .88 53 .15 27 .30 Restigouche 39 .04 88 .78 1969 1985 20 .67 63 .39 77 .97 St. John 48 .02 79 .63 4407 5125 43 .52 51 .85 60 .82 Sunbury 39 .91 89 .86 1413 1195 30 .43 54 .71 83 .30 Victoria 19 .03 85 .53 5739 895 19 .86 29 .79 64 .73 Wesmorland 34 .03 83 .90 1924 5620 29 .46 49 .24 56 .99 York 41 .86 90 .38 2310 5365 28 .77 50 .82 86 .63 42 significant variable during the 1961-66 period, is the only significant variable during the 1966-71 period, and the constant term, X^, X4, and X 5 are a l l significant during the 1961-71 period. At a confidence level of only 90 per cent however, the constant term and X-j are also significant during the 1961-66 period and X 2 is also significant during the 1961-71 period. The changes in the significance and the coefficients of the variables between the 1961-66 period and the 1966-71 period clearly in-dicate that the influence of each variable on the loss rate of improved land is changing. Furthermore, the same variables which combined to explain 60 per cent of the variation in loss rates during the 1961-66 period, explained only 32 per cent of the variation during the 1966-71 period. Perhaps a clearer picture of these changes can be obtained from an examination of Tables XII and XIII which show the intercorrelations between a l l the independent variables and their simple correlation with the loss rate during these two periods. From these tables we can see that the simple correlations between X-|, X 2 and Xg and the loss rate are al l lower during the 1966-71 period than they were during the previous period. However, the correlations between Xg and X^ and the loss rate have increased considerably. In fact, the correlation between the number of houses built and the loss rate was very insignificant and negative during the 1961-66 period but by the 1966-71 period had become positive and mildly significant. The most dramatic increase in corre-lation over this period was between the per cent of farmers over 60 years old and the loss rate (.237 for 1961-66 but increasing to .676 for TABLE XII INTERCORRELATIONS 1961 -66 Y X l x 2 X3 x 4 X5 1.000 .716 - .730 - .103 .237 .756 1.000 -..680 - .156 .205 .524 1.000 .133 • .232 - .754 1.000 .424 .155 1.000 .286 1.000 TABLE XIII INTERCORRELATIONS 1966 -71 Y X l X2 X3 x 4 X5 1.000 .488 - .313 .374 .676 .269 1.000 -..631 .164 .458 .368 1.000 - .143 - .299 - .779 1.000 .254 .272 1.000 .099 1.000 TABLE XIV INTERCORRELATIONS 1961 -71 Y X l X2 X3 X4 X5 X6 1.000 .632 - .456 .314 .581 .800 .322 1.000 - .680 - .043 .205 .524 .381 1.000 : .048 • .232 - .754 - .293 1.000 .424 .155 .303 1.000 .286 - .025 1.000 .382 1.000 44 for 1966-71). These results suggest that while the effects of Xg and X^ are becoming more important, the effects of the other variables are declining. These results make sense when we consider that as more and more of the small sized farms go out of business or more part-time operators leave agriculture and find full-time employment elsewhere there are fewer farms in this category and therefore less potential for losses from these factors to be a large portion of the total losses. Further-more, without new entry into agriculture, the age of operators is becoming older, thus increasing the potential of this factor to cause a large portion of the total losses. It would have been interesting to determine whether these trends continued during the 1971-76 period, however, as was mentioned previously, the data for such an investigation were not available. With the large increases in urban-oriented residential construction which occurred during this period i t seems reasonable to expect that the correlation between Xg and the loss rate would have increased significantly in the 1971-76 period. Certainly the results of the Agricultural Resources Study's sur-vey reported in Chapter II, indicate that the effect of this variable was considerable during the 1971-76 period. The percentage of farmers over 60 years old decreased only slightly from 28.49 per cent in 1966 to 25.43 per cent in 1971. This suggests that this factor also continued to be an important influence on the rate of loss of improved land during the 1971-76 period. The constant term was found to be highly significant (95 per cent) over the whole 1961-71 period, mildly significant (90 per cent) during 45 the 1961-66 period and insignificant (less than 90 per cent) during the 1966-71 period. This term can broadly be interpreted as representing the net effect of a l l variables which have an equal impact on the rate of loss of improved land in each county, independent of location or socio-economic circumstance. The interesting point here is that in each of the three time periods this term had a negative impact on the rate of loss of improved land. This suggests that i f the impact of the other variables were removed, the general climate for agriculture in the province would tend to produce an increase in the amount of land under cultivation. 46 CHAPTER IV THE PRESENT MARKET ALLOCATION OR AGRICULTURAL LAND - A RATIONALE FOR CHANGE At this point in the discussion i t is appropriate to ask the following question. Does this conversion of valuable agricultural land to non-agricultural uses which destroy i t s value for food production constitute an optimal allocation of this resource in both the short-run and long-run. Here we will consider the short-run to be the time horizon of decision-makers presently owning agricultural land and the long-run as that which is beyond this horizon. In order to answer this question i t will be necessary to examine the mechanism which is presently responsible for allocating this land between i t s various uses. In New Brunswick, as in most of the western world where the so-called free enterprise system prevails, land is a l -located to different competing uses through-the market mechanism. Conventional economic wisdom t e l l s us that any resource will be allocated to the use that is able to bid the highest price to obtain i t . Economic theory also t e l l s us that this market allocation will be an optimum allocation for society as a whole, i f , and only i f , the prices bid by the different uses are accurate reflections of the relative value to society of the product of those uses. Therefore i f in any given time period the prices bid by one or more uses of land are not accurate reflections of their relative value to society, a misallocation of land between these uses will occur. 47 Mi^allocations of this sort produce only short-run costs for society i f the uses between which they occur are ones that do not permanently des-troy the land's a b i l i t y to be used for other purposes, since a real-location is s t i l l possible in the long-run. However, more serious long-run costs accrue to society when a misallocation occurs in which too much land is allocated in the short-run to a use that permanently des-troys or impairs its value for a purpose that is essential to the long-run maximum welfare of society. Such is the case when agricultural land is misallocated to urban uses. Not only is the land which is physically occupied by urban uses permanently destroyed for agricultural purposes; but when urban develop-ment takes place in a haphazard, low density fashion, the f u l l agricul-tural potential of much of the land which remains free of buildings is permanently impaired. It is the ir r e v e r s i b i l i t y of this process which makes i t of the utmost concern to us and because i t ultimately affects the quantity of food we can produce and the price at which i t can be produced, we must be certain that land-use decisions of this type do not jeopardize the long-run welfare of society. While this concern for keeping our long-run food production options open is extremely important we must also be concerned about the short-run costs which accrue to society as a result of a misallocation of agricultural land. If indeed we are to maintain that the present market allocation is not an optimal or desirable allocation of agricultural land, in both the short-run and the long-run, in essence what we are saying is that this land has a true value to society which is greater than that which 48 is reflected by the price agricultural producers are willing to pay for i t , or the price urban uses are willing to pay for i t is higher than their true value to society, or there is some combination of these two situations. In order to justify interference with the present market allocation of agricultural land, i t will be necessary to identify the various factors which support such a claim and cause this market alloca-r tion to be less than optimal in both the short-run and the long-run. Factors Causing a Misallocation of Agricultural Land  in the Short-run c Improper Adjustment to the Realities of Modern Agriculture As was indicated in Chapter II, a large proportion of the farms.. within New Brunswick contain a very small number of acres of improved land. In order to understand the f u l l impact of this factor in causing a misallocation of agricultural land within the province today, i t is necessary to be familiar with the history of the agriculture industry and the conditions which have shaped its present tenure problem. Beyond the effect this tenure problem has on the s t r i c t l y economic v i a b i l i t y of individual farm units, the long standing nature of this tenure problem, has produced other social and institutional barriers to the development of a viable agriculture industry. Serious agricultural settlement within the province did not begin until after the coming of the United Empire Loyalists in 1783, following the American Revolutionary War. In a very short period of time, over 12,000 Loyalists were settled within the province-mainly in the south and along the Saint John River and its tributaries. 49 The methods by which these Loyalist settlers were allocated agricultural land, was to have a detrimental effect on the development of a viable agriculture industry which is s t i l l f e l t today. The British government, in allocating land to the Loyalists, was primarily interested in the defence of the region and in the settlement of this large number of immigrants as quickly as possible. They had l i t t l e concern for estab-lishing a viable agricultural economy within the province. Furthermore the loyalists themselves came from largely urban backgrounds and had very l i t t l e knowledge of farming-especially under the primitive and harsh conditions which prevailed in the province at the time. To make matters even worse, the authorities suffered under the misconception that the soils in a l l parts of the province were suitable for agriculture. As a result of this situation, much of the land in each settler's allotment was totally unsuited for farming. Thus the arable portion of the allotment was often too small for commercial agriculture and the forest portion was too small for a self-sustaining lumber operation. However, the settlers were generally able to eek out a sub-sistence living from a combination of the two. Along the coast fishing provided another source of income. The settlers were also aided by a system of extensive subsidies for clearing land, producing wheat, raising livestock, and constructing mills. Unfortuantely these subsidies were given without a sound appraisal of the land's capabilities or an adjustment in the original allotments. These subsidies were in most cases made because of p o l i t i c a l , defence and commercial considerations, rather than for the development of agriculture per se. Consequently, when applied to the original 50 ill-considered tenure pattern, these subsidies resulted over the years in the clearing of much land which should have been l e f t forested, while much good farmland remained in the hands of the crown and remained untouched. From an examination of agricultural policy in New Brunswick from the time of this f i r s t settlement onward, a consistent pattern emerges. Down through the years agriculture has been promoted through the use of subsidies whenever there has been a prolonged recession in the provincial economy. As a result a pattern of successive settlement and abandonment of farmland has followed the boom and bust of the provincial economy. Unfortunately this promotion of agriculture has never been combined with a sound appraisal of the land's capabilities or a consolidation of the good land into viable farm units. The subsidies have been applied across the board, thus enabling those with poor land to remain in business and reducing the need for consolidation. Accordingly, the original tenure pattern with farms of excessively small amounts of good land has been perpetuated. With the post World War II period came major changes in agricul-ture throughout Canada and the world. The advent of large scale machinery in agriculture meant that in order for agriculture in New Brunswick to be viable i t would have to face up to its long standing tenure problems. Farms within the province would have to increase in size i f they were to use this new technology efficiently and provide adequate incomes for their operators. While the same adjustment problems occurred in other parts of 51 Canada, in New Brunswick the adjustment process was hampered by the severity of the original tenure problems and the lack of alternative employment for those who would have to leave agriculture. In other parts of Canada where this adjustment took place successfully, the lure of post-war urban opportunities drew farmers off the land and helped to f a c i l i t a t e the process. In New Brunswick the post-war recovery of the economy was slow and farmers tended to stay on the land even i f they discontinued commercial farming. Many turned to the forest potential of their land and farmed just enough to provide their own needs. Diagram X shows the historical s p l i t between urban and rural population in New Brunswick. It can be seen that the rural population continued to rise until 1961. This suggests that although many farmers stopped producing agricultural products for sale-as is demonstrated by the loss of farms and farm land from the census estimates during this period-they did not move to urban areas. With such a large number of farmers remaining on the land the opportunity of obtaining land for expansion would be limited. Also i t is reasonable to assume that the f i r s t land to come available would be that which was most marginal for agriculture and therefore worthless for the purposes of expansion. Table XV shows that between 1941 and 1956 there was very l i t t l e change in the average number of acres of improved land per farm, and thus very l i t t l e consolidation had taken place. In the 1956-1971 period, however, the average more than doubled. In these other regions, attractive alternative employment had been one of the most dynamic elements in supporting the shift out of low income farming. 52 D I A G R A M X - N E W BRUNSWICK URBAN - RURAL POPULATION PROPORATION CHANGES 1 0 0 YEAR r - e o m o - c M i o ^ r i o g j h . oo oo o CT> cr> < " o > o > o o > o ) A - A l l Local Improvement D i s t r i c t s , Commissions and Hydro Districts w< incorporated as villages November 9, 1966. PERCENTAGE TABULATION Y E A R RURAL URBAN RURAL URBAN TOTAL 1871 82. 6% 17.4% 235,981 49,613 285,594 1881 81. 6 18.4 262,14 3 59,090 321,233 1891 79. 4 20.6 259,055 62,208 321,263 1901 76. 4 23.6 253,180 77,940 331,120 1911 73. 0 27.0 256,951 94,938 351,889 1921 69. 7 30. 3 270,201 117,675 387,876 1931 68. 5 31.5 279,756 128,463 408,219 1941 69. 3 30.7 317,085 140.316 457,401 1951 67. 5 32.5 342,639 173.,058 515,697 1961 61. 2 38.8 382,823 215,113 597,936 1971 38. 3 61.7 243,001 391,556 634,557 Source: Municipal Journal, March 1972 TABLE XV CHANGES IN THE AVERAGE SIZE OF NEW BRUNSWICK FARMS 1941 - 1971 (improved land only) YEAR ACRES YEAR ACRES 1901 38.09 1951 38.10 1911 38.26 1956 43.01 1921 37.32 1961 62.28 1931 39.10 1966 73.35 1941 38.74 1971 88.86 Source: Canadian Agricultural Census 54 The institutional obstacles to adjustment lay partly in the pattern of land holdings and partly in the established traditions and habits of the people. The pattern of settlement and the division of farms as they passed from one generation to the next had re-sulted in many small holdings, each separately owned. Dif f i c u l t i e s of consolidating small farms into larger units were not remedied. The lack of alternative employment had led to much underemployment on small farms.' This delay in the adjustment of farms in New Brunswick to the realities of modern agriculture allowed other disadvantages to build up, which were to further hamper an ultimate adjustment. The most important of these disadvantages are as follows: (1) As other regions successfully adapted to large-scale mechani-zation, the competitive position of existing farms in New Brunswick was further undermined. Adaptation to the new technologies in other areas resulted in considerable economies of scale and thus lower costs of pro-duction per unit of output even with increasing input prices. As a result, output prices rose very l i t t l e in the f i r s t two decades after the war. New Brunswick farmers who maintained traditional size enterprises were thus faced with rising production costs and relatively stable output prices. The resulting income squeeze meant that the longer a once-profitable farm unit waited to increase its size, the weaker its position to finance such an expansion independently or to persuade financial institutions to loan i t the required capital. This situation could have drastic effects in areas occupied by a large number of traditionally profitable farm units. In such a case each operator would be restricted from expanding as long as a l l stayed in business. With no prospects for alternative full-time employment, i t is unlikely that any farmer would want to sell his farm to the others. Consequently by the time the f i r s t of these farmers was 55 forced out of business the financial position of those remaining would make i t d i f f i c u l t for them to obtain the money required to finance expansion. (2) The low profitability of agriculture and the rural poverty which existed in New Brunswick during the post war period, meant that the children of farm families l e f t the industry in large numbers to seek opportunities in the urban areas of New Brunswick and Canada. As a result the average age of farm operators within the province today is very high. Thus while the opportunity for acquiring good land for expansion is better than in the past, many farmers are reluctant to invest in expanding their operations because they expect to retire soon and have nobody to continue the enterprise. (3) Although opportunities for full-time alternative employment were bad, many operators of small farms were able to supplement low-income farming with seasonal and part time work in other occupations. Many of these farmers turned to seasonal work in logging, carpentry, government work crews, school bus and truck driving etc. or commuted to part time work in urban areas. This allowed them to continue farming and s t i l l maintain a reasonable income. This arrangement, although beneficial to individual farmers, further impeded an ultimate adjustment in the tenure problems that influenced the pro f i t a b i l i t y of the agricul-ture industry. As a result, a large proportion of farm operators in the province today are partially employed in off-farm occupations. (42.44 per cent in the 1971 census) Thus by the time urban-oriented residential development began to compete for land in the rural areas, starting about 1966, much of the 56 agricultural land of the province was s t i l l divided into small parcels and controlled by aged operators, many of whomv by this time depended heavily on other sources of income for their livelihood, and whose heirs had long since migrated to urban areas to seek employment. Because the tenure problems of the agriculture industry have remained unsolved for so long, farming has come to be associated with low incomes and limited opportunities for advancement. The effect that these attitudes toward farming can have on the propensity of farmers to sell their land is demonstrated by the Agricultural Manpower and Training o Needs Survey conducted by the Department of Agriculture in 1972. Far-mers interviewed, were asked to l i s t the occupation they would like their sons to choose. According to their responses to this question the farmers were divided into the following three groups: group A - those who would like their sons to choose agriculture; group B - those who did not want their sons to choose agriculture; and group C - those who expressed no preference. The farmers were then questioned as to their attitudes toward selling their portions of their farms. The response of each group to these questions is presented in Table XVI. It -!is clear that the propensity of farmers to sell their land is influenced considerably by their attitudes toward farming as a way of l i f e . Both group B and group C show consistently higher positive respon-ses to selling portions of their land. Group B also consistently shows the highest rate of positive response. Consequently the prices such operators are willing to refuse to retain their land for agriculture are not accurate reflections of the 57 TABLE XVI ATTITUDE OF FARMERS TO SELLING PORTIONS OF THEIR FARMS Group A* (percent) Group B* (percent) Group C* (percent) Total (percent) Cleared Land Yes (sell) 8.5 25.0 16.3 14.8 No (not sell) 90.2 73.4 82.7 84.0 Not Applicable 1.3 1.6 1.0 1.2 TOTAL 100.0 100.0 100.0 100.0 Woodlot Yes (sell) 11.8 21.9 18.7 16.7 No (not sell) 85.6 76.5 80.3 81.6 Not Applicable 2.6 1.6 1.0 1.7 TOTAL 100.0 100.0 100.0 100.0 Homesite Yes (sell) 6.5 17.2 13.8 11.7 No (not sell) 92.2 82.8 84.7 87.1 Not Applicable 1.3 - 1.5 1.2 TOTAL 100.0 100.0 100.0 100.0 Other Land Yes (sell) 9.8 20.3 14.3 13.6 No (not sell) 86.3 78.1 81.3 82.6 Not Applicable 3.9 1.6 4.4 3.8 TOTAL 100.0 100.0 100.0 100.0 58 true value of this land for agricultural production. Rather they are reflections of existing tenure arrangements and the attitudes which have risen out of the historical socio-economic position of farming within the province of New Brunswick. The high average net income per acre reported by the New Brunswick farms in Table III, suggests that in the absence of these tenure problems New Brunswick agriculture would compete well with presently imported production and show growth potential instead of the present decline in production. However, the negative attitude toward farming as a way of l i f e has resulted in an almost complete lack of new entry into the industry. Thus the true potential of this land to provide employment and income within the province is not f u l l y developed. Further-more, the unrealistically low price at which operators of small non-viable farm units are willing to sell a l l or part of their land, f a c i l i -tates i t s conversion to urban uses and encourages this use to occur in a low density fashion. The Problem of Externalities One of the major factors that prevents the market mechanism from producing a short-run optimum allocation of agricultural land, li e s in the fact that the vast majority of this land is under the control of private individuals who have the right to use and dispose of i t as they desire. It is only understandable that these individual owners will u t i l i z e their land in such a way as to provide themselves with a maximum of private bene-f i t s . Unfortunately, the maximization of individual benefits, whether monetary or non-monetary satisfactions, may not be congruent with the maximization of the welfare of society Cat large. This problem exists 59 because associated with any use of agricultural land, there are both costs and benefits above and beyond those which accrue directly to the owner of the land. Because these external costs and benefits do not accrue directly to the owners of these lands they are seldom taken into consideration when decisions concerning the use of these lands are made. If the external costs associated with any particular use of agricultural land out-weigh the external benefits, an over-allocation of land to that use will be made by individual owners making land-use decisions neglecting these (costs and benefits. Likewise, an under-allocation will occur where the external benefits out-y^eigh the external costs. ; When urban and agricultural uses of land compete to obtain agricultural acreages, both of these conditions are present and acting together cause a serious misallocation of this resource. On the one hand a use such as private residential housing-which is responsible for a great majority of the encroachment onto agricultural land in New Brunswick-produces.; almost no external benefits but is responsible for many external costs when i t occurs in the haphazard, low density pattern which is common in New Brunswick. Agricultural uses, on the other hand, produce many external benefits but when properly conducted produce few external costs. Examples of costs to society as a result of the location of low density housing on agricultural land have appeared everywhere in New Brunswick within recent years. The pollution of ground and surface water by unserviced rural subdivisions and ribbon developments is becoming a major problem in some areas. This has led to demands by 60 residents of these areas for provincial help in the financing of water and sewer systems. Because of the physical layout of this type of development, and it s distance from existing water and sewer f a c i l i t i e s , the unit costs of such installations are more than residents of these areas can support themselves. As a result the rest of the population will be forced to bear some of the burden. The costs of busing ever increasing numbers of children over large distances, to schools located in the municipal centers are also rising, along with costs associated with the provision of police, f i r e , and ambulance services to these areas. Again part of these costs are shared by society as a whole. An important external cost of this type of residential develop-ment is related to the destruction of rural seenery which has resulted from i t . Although these costs may at f i r s t glance appear to be some-what intangible, in New Brunswick they have a great potential to des-troy the monetary well-being of many. Beautiful rural scenery is a very important amenity resource which enables New Brunswick to attract thousands of tourists each year. As a result of this a b i l i t y the wel-fare of many residents of the province depends on the additional revenue brought into the region by the tourist industry. If, however, through the individual decisions of many private land owners, this scenery is cluttered with ribbon developments and haphazard subdivisions a large portion of the province's attraction for tourists will be destroyed. This is an excellent example of how land-use decisions made by private land owners can effect the welfare of the larger society while they alone 61 benefit from these decisions. Because of the haphazard way in which r e s i d e n t i a l development takes place within the rural areas of New Brunswick, and because the agricultural land is divided into many non-viable units, much more land is economically destroyed for agriculture than that which is actually purchased for residential purposes. For example, the selling of lots for residential development by one owner of a non-viable farm-unit may restrict the expansion of an adjacent non-viable farm, thus destroying its value for viable agricultural production even i f i t remains free from buildings. Furthermore, residential development adjacent to operating farms (as was indicated by the results of the survey conducted by the Agricultural Resources Study outlined in Cahpter II) may cause the abandonment of land because of the dmpact of nuisances related to this development. Thus while each person who constructs a residence on agricultural land need only pay for the lot he builds on, the external costs of his actions can destroy much more land than he has competed for in the market. Obviously i f he and the other builders in the area were required to pay for a l l the land which is economically destroyed as a result of their combined decisions, the propensity to make such land-use decisions would be considerably less. Finally, i t is evident that farmers are not the only ones who earn a living as the result of the existence of an agricultural land base. Farm machinery, f e r t i l i z e r , food processing, insurance^finance, lumber and many other companies, along with their employees depend to various degrees upon the existence of a viable agriculture industry-and 62 thus on the agricultural land base for their profits and incomes. g Examination of the 1965 input-output table for New Brunswick, reveals that for every person employed in primary agriculture, .87 people were employed in industries providing inputs to agriculture. For every dollar of gross domestic product produced in agriculture, two dollars more were produced in industries supporting i t . Finally, for every dollar of household income generated by agriculture $1.38 was produced by supporting industries. When we consider that for every 1000 dollars of output in agri-culture, 1578 dollars of G.D.P. is created, i t is obvious that any re-duction of the amount of agricultural land under cultivation will have an impact on many more people than those who control this land-use decision. In a province where unemployment is acute and millions of dollars have been spend, often unsuccessfully, to create new job opportunities, we cannot afford to unnecessarily waste the potential of the agricultural resource base to, provide employment and incomes. While i t can be argued that the residential construction industry also provides external benefits to a l l those who depend upon i t and in-dustries supporting i t for their incomes, the improtant point here is that although land for agriculture in New Brunswick is limited, there is no shortage of land for residential construction. This industry would undoubtedly continue even i f i t were restricted from using agricul-tural land. All of these externalities must be considered as external costs related to the use of agricultural land for low density haphazard 63 residential development or external benefits produced when this land is retained for agriculture. However, when private owners of agricultural land are faced with the decision of whether to sell i t for urban pruposes or maintain i t for agricultural production, these externalities are seldom considered. Their decision is made by comparing the present value of future net returns from using this land for agriculture with the present value of future net returns from using the land for urban pur-poses. The owners future net returns from agricultural use are affected only by his yields, costs of production and the market price for his product. Although he may count as part of his returns a l l the non-market satisfactions he receives from owning or living on agricultural land, he does not consider a l l the benefits which are external to him. Likewise, the price urban users of this land must pay to obtain i t does not represent the f u l l cost that results from their actions. Under these circumstances, the market mechanism will allocate more agricultural land to urban uses than is in the interests of society as a whole. Summary . The foregoing analysis has pointed to improper tenure adjustments and related socio-economic problems of New Brunswick agriculture and external costs associated with low density haphazard residential develop-ment as factors which impair the market's a b i l i t y to produce a short-run optimum allocation of this land between urban and agricultural uses. Working together, these factors produce both an under-estimate of the value of this land for agricultural production and an unrealistically low 64 cost for those wishing to use i t for urban purposes. We have not attemp-ted to estimate the magnitude of the impact these factors have on the prices agricultural and urban uses are willing to pay to obtain agricul-tural land and thus the magnitude of the misallocation. However, given the relatively low opportunity cost of directing urban growth onto non-agricultural land in a more orderly manner, i t seems prudent to take steps to eliminate the potentially high external costs of this growth as i t now occurs in New Brunswick. The Long-run Demand for Agricultural Land Even i f i t were somehow possible to adjust the present market price of agricultural land to properly reflect i t s true short-run value to society in light of the factors we have outlined thus far, i t is un-likely that the allocation so produced would be a long-run optimum. The factors we have outlined so far a l l deal with values that accrue to present generations as the result of the existence of agricultural land. However because of the i r r e v e r s i b i l i t y of this type of land use decision, the options for food production and the a b i l i t y of the land to support human populations in the future is either preserved or restricted by land-use decisions made in the present. Unfortunately, the value future generations (i.e. generations beyond the time horizon of present owners of agricultural land) may attach to the preservation of agricultural land now is not reflected in the present,price agricultural producers are willing to pay for farm land, since these generations obviously have no way of affecting present prices. There are several considerations which may cause the long-run 65 demand for agricultural land to be greater and therefore incompatible with even an optimal short-run allocation. (1) Per capita consumption of food can only be expected to rise in the future. Presently, millions of people throughout the world are starving and under-nourished, yet they lack the financial means to make their demands f e l t in world markets for food and thus affect the present allocation of agricultural land. It is possible, however, that in the long-run this presently dormant demand will obtain the resources necessary to influence world food prices and thus the demand for agricul-tural land. (2) We can expect the world population to continue to increase at a rapid rate. Again, this will undoubtedly mean an increase in the world demand for food. (3) There has been in recent years an increasing concern that the period of favourable weather which we have experienced over the past 100 years (the period in which most of our industrial development and the large increases in world population has taken place) may be coming to an end. It has long been recognized that the climatic optimum of the present inter-glacial passed 6000-7000 years ago and has been succeeded-byslow, oscillating cooling, interrupted by milder episodes like the one in the early Middle Ages. From about the 1880's to the 1940's, the mean global temperature increased by some 0.6 degrees C. The subsequent cooling by about 0.3 degrees C. suggests, however, that this warming trend might also be regarded as a temporary interruption of a general cooling trend and that climatic conditions are now returning to a more .'.normal1 s i t u a t i o n . 1 0 Although there is much disagreement about this particular explanation, there is more general agreement on the fact that we can 6 6 expect more variability in the world climate in the future. Certainly everyone has been aware of the abnormal weather patterns which have occurred within the last year-droughts in Britain and California, a severe winter in the Eastern United States and snow and frost in Florida and Bermuda. Obviously i f these trends continue they will have a dramatic effect on the world food suply, and possibly restr i c t further the amount of land which is suitable for agriculture. The question to be asked at this point is whether technological advancement in agricultural production can keep pace with population growth, increased per capita consumption and possible production losses due to climatic effects. While a definite answer to this question would be d i f f i c u l t to provide and certainly beyond our purposes here, a few observations about the nature of such advancements in the past may shed some light on their potential for the future. Basically, the technological advancements made in agriculture in recent years can be broken down into five categories: (a) machinery technology (b) better plant varieties (c) chemical f e r t i l i z e r s (d) chemical sprays for disease and pest control, and (e) better management techniques. Machinery technology has made farming more efficient and reduced the land/labor and output/labor ratios. Also by replacing draft animals on farms, machinery has released much of the crop and pasture land once used to feed these animals to production for human consum-ption. Unfortunately, modern farm machinery is most efficient on a limited range of soils and as a result much land which was formerly 67 farmed with draft animals has been removed from production because i t is too rocky, too h i l l y , too wet or too broken up into small fields to be farmed effic i e n t l y with modern farm machinery. This has had the effect of restricting the quantity of land that is economically viable for agricultural production. Furthermore, mechanized agriculture is highly energy intensive and this factor may constrain i t s use in the future. We should not expect increased productivity'through mechanization to be as important in the future as i t has been in the recent past. The development of new plant varieties in the past has proved very helpful in producing greater yields, reducing susceptibility to disease and pests and adapting crops to specific climates and so i l s . However there may be f i n i t e limits to our a b i l i t i e s to increase production through these methods. Agronomists simply have not been able, for instance, to find a way to breed more than one calf per cow per year. They have had di f -f i c u l t y in adapting certain high-yielding 'miracle' varieties to their new ecological settings in the developing world. Nor have there been any dramatic breakthroughs to increase yields per acre of soybeans, a major source of protein. Soybean yields were in-creased in the U.S..by planting more acres, but idle cropland is quickly vanishing.^ The use of chemical f e r t i l i z e r s has greatly increased yields and facili t a t e d continuous cropping practices, but this is a once and for a l l increase, since once optimum amounts of f e r t i l i z e r are applied, further applications will not improve yields. Chemicals for disease and pest control have also helped to increase yields through a reduction of crop losses d^ue to these two factors. However, the use of both chemical f e r t i l i z e r s and pesticides has caused much concern over the pollution of ground and surface water, along with other ecological side effects. It 68 is quite possible that their use in the future will have to be restricted in the light of these concerns. Finally, management techniques have been developed over recent years that have made farmers more efficient users of the resources avail-able to them, thus increasing yields and reducing production costs. Management practises that allow more intensive farming of agricultural land promise to help increase yields in the future. In the final analysis we find that the two aspects to the "green revolution" which have been responsible for the largest gains in productivity within recent decades-mechanization and the use of chemicals-do not hold great promise for the future. Unless we have major new breakthroughs in the technology of food production, such as biological pest control, aquaculture or laboratory food production, much of the increase in food production needed to meet increased demand in the future will probably have to come from increases in cultivated acreages. A recent paper on the preservation of agricultural land presents this position very well: . . . Agricultural science and technology kept ahead of the exponential increase in population. Looking back we now see that much of the spectacular increase in production was due to replacing the horse by the tractor, a once-for-all release of f e r t i l e lands unlikely to be repeated. Much of i t was due to the f i r s t shock waves of chemical warfare against the pests which were produced by monoculture, and now the pesticides be-came problematic to society . . . The green revolution is already being out stripped by population growth . . . we are at the end of the illusion that land is i n f i n i t e , that energy is unlimited, that science and technology can solve instantly every foolish and unnecessary problem we unthinkingly create.12 In another article we find the following: 69 Several factors in the past decade have worked against adequate supply growth. Technological restraints, both technical and monetary, are currently limiting rapid expansion of food produc-tion. The green.revolution-remarkable per acre yield increases in grain crops-held off disaster for several years, but its limitations soon became apparent. The onset of shortages of the 4 major resources necessary to produce food-land, water, energy and fertilizer-forced the green revolution to a near standstill J 3 While the foregoing has been a very superficial analysis of an area where many experts maintain opposite views, i t does suggest that there is considerable uncertainty as to our a b i l i t i e s to maintain adequate pro-duction to meet future needs from "landless" technological advancements. To guard against this uncertainty i t seems reasonable to protect agricul-tural land from needless destruction by urban development (i.e. when urban development can be directed to non-agricultural land with l i t t l e or no increased cost). Concluding Remarks There are several important conclusions which can be drawn from the discussion presented in this chapter. First, and most importantly, there is no reason to believe that the present practice of allowing the market mechanism to be the sole authority in decisions concerning the utilization of agricultural land will lead to either a short-run or long-run optimum allocation of this resource. Secondly, given the potential costs associated with a short-run misallocation of this land to hapahzard low-density residential develop-ment and the uncertainty regarding the long-run demand for this land, i t seems prudent to design policies to encourage a more rational use of this vital resource. Such policies should, where possible, preserve good 70 agricultural land for agricultural purposes while directing urban growth onto areas that have l i t t l e or no agricultural value. Finally, in New Brunswick, policies designed to preserve agricultural land will produce maximum short-run benefits for the people of the province i f they are combined with programs which will ensure a consolidation of this land into viable economic units and encourage its f u l l and efficient use. 71 CHAPTER V MECHANISMS FOR PRESERVING AGRICULTURAL LAND In recent years, efforts on the part of other jurisdictions to preserve agricultural land have been initiated through the use of a variety of mechanisms. These mechanisms generally f a l l into two cate-gories of theoretical approach; (1),Indirect-those which accept the mar-ket mechanism as the allocator of agricultural land between i t s various uses, but attempt to compensate for market imperfections and therefore produce a more "socially desirable" allocation; and (2) Direct-those which replace the market with a ; public body responsible for determining the "socially desirable" allocation of this land. To aid in the selection of a particular mechanism for use in the province of New Brunswick, we shall analyze a number of mechanisms from each category. Indirect Mechanisms A l i s t of a l l possible indirect mechanisms for preserving agricultural land would be exceedingly long and i t would be impossible to deal with a l l of them here. We will confine our discussion to three approaches which have been proposed most often-preferential assessment, deferred taxation, and the use of large-lot zoning. Preferential assessment has been used for many years in both Canada and the United States and is presently in effect within the province of New Brunswick. This mechanism simply applies the existing tax rate to an assessment of the value of agricultural land when i t is used for agriculture instead of its potential value for urban development. 72 Although this mechanism reduces the tax burden of farmers located close to urban areas, i t does nothing to discourage them from eventually selling their land for urban purposes when the price becomes i r r e s i s t i b l e . "This then is the ultimate weakness of preferential assessment legislation as a tool for agricultural/open space preservation. While i t does provide needed r e l i e f from burdensome, or in some cases impossible, tax loads, i t addresses only one aspect of the farmer's financial p l i g h t . " 1 4 Since this mechanism is already being used in New Brunswick we need not consider i t further. Deferred taxation simply refers to a preferential assessment program in which a penalty or roll-back is assessed when land given this treatment in the past is eventually converted to an urban use. This type of legislation is presently in effect within 18 American states and within the province of Prince Edward Island. The amount of the penalty varies from one jurisdiction to another but is usually the amount of tax deferred during a specified number of years before the use conversion takes place (e.g., 5 years in P.E.I, and 3 years in New Jersey). In some cases deferred tax programs are voluntary but in others a l l bona fide agricultural land is taxed in this manner. Again depending on the j u r i s -15 diction, what is considered a bona fide farm varies. In P.E.I., a l l farmers earning more than 50 per cent of their labor income from the sale of farm products are involuntarily included in the program. In New •I c Jersey, any land owner actively devoting his land to an agricultural use for no less than two successive years may apply to be included in the program. 73 The effectiveness of a deferred tax program for preserving agricultural land will depend upon whether or not the program is compul-sory and the severity of the roll-back penalty. Unless the program is compulsory, only those farmers who are interested in continuing farming in the long-run can be expected to participate, and unless the roll-back penalty is high enough i t is unlikely to be a deterrent to the conversion process. To get some idea of how effective a deferred tax program would be i f applied in New Brunswick we should examine the magnitude of the price increases the program would place on those wishing to purchase agricul-tural land for urban uses. The Keswick Ridge area, approxiamtely 15 miles from Fredericton, has in the past been dominated by apple orchards and dairy farms. However, since the construction of the Mactaquac power dam and a related recreational f a c i l i t y (including an 18 hole golf course, sailing, canoeing, nature t r a i l s , beaches and camping f a c i l i t i e s in the summer along with cross country skiing, tobogganing, and snowmobile t r a i l s in the winter) this area has become a very desirable place to live and has subsequently been invaded by urban-oriented residential development. In a discussion during 1975 with members of the New Brunswick Fruit Growers Association, an apple grower from this area stated that he would be willing to pay from 500-1000 dollars per acre for orchard land. The figure of $500 per acre refers to good cleared land adjacent to his present orcahrds, capable of being planted with the new variety of dwarf root stock tree while the $1000 per acre refers to land presently occupied with a well maintained old style orchard. 74 From the property Assessment Branch of the Department of Municipal Affairs i t was determined that land for urban purposes was, at that time, being sold for prices ranging between 3000-5000 dollars per acre. The tax rate at this time was .0293 dollars per hundred dollars of assessed value for the Local Service District and 1.50 per hundred for the province. This is a combined tax rate of 1.5293 dollars per hundred dollars of assessed value. If a deferred tax program were in effect in this area the d i f -ference between the tax paid by agricultural uses and urban uses (assuming the highest and lowest possible extremes)" would be between $30.95 and $68.82 per acre per year. This means that i f a five year roll-back period were employed in the program an additional cost of between $152.95 to $344.10 per acre would be incurred by anyone wishing to convert agricul-tural land to an urban use. These amounts hardly seem sufficient to deter people who are already paying from $3000-$5000 per acre to obtain land in this area. Moreover, an interesting fact emerges from this analysis. The maximum deterent for converting the lowest valued agricultural land can be calcu-lated by subtracting its value in use ($500) from the highest price at which i t is being sold for urban pruposes ($5000) and then multiplying by the combined tax rate (1.5293) and the five year roll-back period. This gives us a value of $344.10. By a similar procedure, the maximum deterent for converting the highest valued agricultural land is found to be only $305.85. In any area, good agricultural land will have a higher value in use than poor agricultural land, however.it is unlikely that there will be 75 a price differential based on soil quality when this land is bid for by urban uses. Other factors, such as location, will be more important determinants of the price urban uses are willing to pay for this land. Therefore i f we assume that there is no direct preference by urban uses for land with a high agricultural use value, a deferred tax program would provide less of a deterrent for conversion of the best agricultural land. The use of a deferred tax program as a means of preserving agricultural land would also raise the question of equity. While the type of development occurring in the Keswick Ridge area has been the • result of a desire by moderate to high income groups to live close to amenities, much of the urban development on agricultural land within the province stems from the actions of low income groups attempting to lower their housing costs by building on low cost land. If a deferred tax program had any impact at a l l , i t would be low income groups who would be restricted from this type of development. Finally, in order for a deferred tax program to have an impact on the conversion process the price el a s t i c i t y of demand by urban-oriented people for this land and the living environment associated with i t would have to be very high. With the relatively small price increase that would result from such a program an elasticity close to in f i n i t y would be neces-sary to alter the amount of land converted by very much. Referring back to Table IV in Chapter II we find that in many of the most active parishes surrounding Fredericton, there was a drop in the number of building permits issued between 1972 and 1974. These drops coincide with large increases in mortgage interest rates and the f i r s t 76 round of fuel price increases following the 1972 energy c r i s i s . The interesting point here is that following 1974, the number of permits issued rises dramatically. This information suggests that while price increases do have an effect on demand in the short-term; in the long-term people adjust, both psychologically and financially to these new prices and return to their original consumption patterns. Today a large portion of the population is unionized and thus able to adjust i t s income in the long-term to counter the effect of price increases. This, accom-panied with the psychological tendency of people to become accustomed to higher prices very quickly, suggests that price deterrents of any kind may have limited effects on changing human consumption patterns in the long-run. A report prepared for the Council of Environmental Quality in the United States, arrives at the following conclusion after a detailed assessment of the effectiveness of various preferential and deferred tax programs presently in effect within nine states: . . . differential assessment laws in general work well to reduce the tax burden on farmers. Acting alone, however, they are not very effective at preserving current uses. It is only when such laws are combined with other effective land use mechanisms in rural areas that they can contribute to successful long-term preservation of open landsJ7 Large-lot zoning has often been suggested as a mechanism for deter-ting the agricultural land conversion process. While accepting the market as the allocator of this land between urban and agricultural uses, this device attempts to change the nature of the process by specifying the minimum size parcel which can be formed by subdivision. The successful use of this device depends upon the minimum lot size established. When minimum lot sizes of between 1-5 acres are used there is evidence that the 77 device has l i t t l e impact on the amount of conversion which takes place. In 1976, for example, the minimum lot size for a dwelling ser-viced by a septic tank was set at one acre within the province of New Brunswick. This action produced l i t t l e change in the price of rural lots; i t merely shifted the standard lot size from a quarter to a half acre to a f u l l acre. If we again consider the land prices quoted for the Keswick Ridge area we find that a minimum lot size of five acres would have an agricultural value of between 2500 and 5000 dollars. However, urban uses are already paying these amounts for lots in this area. This means that in many cases land owners would s t i l l be able to get a better price for their land i f they sell i t in five acre parcels for urban uses. When we consider that the use value of agricultural land for crops other than apples is closer to 200 dollars per acre, very large minimum lot sizes would have to be established in order to deter the conversion process. While this is a definite possibility, i t seems hard to ju s t i f y when other more straight forward zoning methods are available. Direct Mechanisms Within the category of direct mechanisms two basic approaches are available; (1) restrictive agreements; and (2) formal agricultural zoning. We shall look at each of these approaches. Restrictive Agreements: Restrictive agreements are presently being used in California, Pennsylvania, New York and seven other American states for the purpose of preserving agricultural land. Although the programs vary in detail from 78 one state to another, they basically allow owners of agricultural land to surrender the development rights to their land for a specified period of time by entering into an agricultural reserve or d i s t r i c t . In return for opting into the reserve, the owner is given special tax treatment similar to that previously discussed for preferential and deferred tax programs. This type of legislation has several important limitations which ultimately restr i c t i t s effectiveness. Perhaps most important among these is the fact that the program is voluntary. "New York's program, which is now nearly four years old, offers some protection to approximately one and three quarters million acres of prime agricultural land in 119 di s t r i c t s . Impressive as i t i s , i t represents but 12 per cent of the total farmland in the state, and only 25 per cent of what is considered 1 o the "best" farmland." As was the case with the deferred tax program, only farmers interested in continuing farming in the long-term, are likely to participate i f the program poses any obstacle to removing land from the reserve in the future. Therefore those who participate are bound to be those who are least likely to sell their land for urban purposes in any case. A second limitation is that in most cases, this legislation has been l e f t under the control of local and county governments. In California, for example, the use of restrictive agreements has had l i t t l e effect in stopping the conversion process. Because of the f e l x i b i l i t y of the system adopted for opting into the reserves, the consistent a b i l i t y of land owners to persuade local administrators to relieve them of their contract obligations, and the fact that no penalty is assessed when land is removed 79 from the reserve, the program has been reduced to a convenient way for developers to reduce their holding costs while waiting for the right time to develop the land. Obviously, for the program to be effective, i t would have to be made compulsory, removed from the control of local administrations, and definite c r i t e r i a for removing land from the reserve established. These actions, however, would essentially change the program from one of restrictive agreements to one of formal agricultural zoning. Agricultural Zoning: The most impressive use of agricultural zoning for the preservation of agricultural land has been in Hawaii and British Columbia. In both these jurisdictions, agricultural land reserves have been established through legislation at the respective state and provincial levels. Within these reserves, the subdivision or conversion of land to a non-agricultural use is subject to administrative approval. Concurrent with this, Hand Commissions were established to hear applications for the removal of land from the reserves. In both jurisdictions, in order for the Land Commission to allow removal of land from the reserves, the applicant must demonstrate that the land in question is essential to the proposed use. In terms of effectiveness, the use of this mechanism in both Hawaii and British Columbia has been very successful. In the British Columbia case, for example, Table XVII indicates the Department of Agricul-ture's estimates of the amount of prime land lost in British Columbia and the average yearly rate of loss during the twenty years preceeding the implementation of the Land Commission Act. Table XVIII shows the 80 TABLE XVII LOSS OF PRIME AGRICULTURAL LAND IN BRITISH COLUMBIA (acres) AREA 20 YEAR LOSS PER ANNUM LOSS PRINCE GEORGE 26,000 1,300 PEACE RIVER 9,000 450 KAMLOOPS 3,000 150 CARIBOO 10,000 500 OKANAGAN 15,000 750 VANCOUVER ISLAND 65,000 3,250 FRASER VALLEY 57,000 2,850 KOOTENAYS 6,000 300 MISCELLANEOUS 4,000 200 TOTAL 195,000 9,750 Source: B.C. Dept. of Agriculture 81 TABLE XVIII ACRES INCLUDED AND EXCLUDED  from the AGRICULTURAL LAND RESERVE APPEAL TYPE 1974 1975 1976 TOTAL Inclusions 0 14,981 ac. 1,277 ac. 16,258 ac. 9(2) 938 ac. 2,941 ac. 2,307 ac. 6,186 ac. 9(1) 530 ac. 4,392 ac. 3,395 ac. 8,317 ac. 9(7) 0 405 ac. 121 ac. 526 ac. Total Acreage Excluded 1,168 7,738 5,823 15,029 Total A.L.R. acreage at designation: 11 ,661 ,600 Included since designation: + 16,258 Excluded by 9(2): - 6,186 Excluded by 9(1): - 8,317 Excluded by 9(7): - 526 PRESENT A.L.R. Acreage: 11,662,829 Source: B.C. Land Commission 82 quantity of land which was included and excluded from the land reserves during 1974, 1975, and 1976. From this information we find that before the implementation of the Land Commission Act, an average of 9750 acres of prime agricultural land was lost within the province each year, how-ever since implementation this loss has averaged only 5010 acres per year. While this is a reduction by nearly one half of the previous loss rate there is probably also a qualitative difference in these two loss rates. The Department of Agriculture's estimates refer only to the loss of prime land, however, i t seems probable that at least a portion of the exclusions from the reserves were based on the grounds that the land involved had marginal agricultural value. Furthermore, i t was estimated that before the establishment of the reserves, a further 3000 acres of farmland in the Lower Fraser Valley were lost to hobby farms and country estates. Since the Land Commission Act restricts this type of land sub-division, i t is reasonable to assume that this activity has also been reduced. Table XVIII also indicates that over this three year period more land was included in the reserves than was excluded. The key to the successful use of this mechanism in both British Columbia and Hawaii lies in the fact that the power to permit land to be removed from the reserves is in the hands of an independent semi-judicial board acting at the provincial and state levels. These boards are thus able to judge each application free from the influence of local pressure. All too often, agricultural zoning at the local level has been a failure because local councils are continually under the influence of local land owners and tempted by the expectation of higher tax revenues. In 83 Ontario's Niagara f r u i t belt, for example, agricultural zoning at the local level has failed miserably for this very reason. Another advantage of .this mechanism is the high degree of public awareness i t affords each decision to convert agricultural land to an urban use. Thus, the case for excluding any land from the reserves, must not only be made to the satisfaction of the Land Commission, but in the long-run the performance of the Land Commission must meet with the approval of the public at large. Before the impelmentation of the Land Commission Act in British Columbia, thousands of acres of prime agricul-tural land were lost to urban development each year, but because each transaction was conducted in private the pub!ic in general was not aware of the magnitude of the total process. Today, every application to remove land from the reserve and the commission's subsequent decision are matters of public record. This allows the public to have a complete knowledge of what is happening and therefore express their approval or disapproval at the ballot box. The complaint which is most often raised in conenction with the use of zoning for the purpose of preserving agricultural land is that i t takes away farmers' development rights without compensation. However this cannot be accepted as a reason for preferring any of the previously discussed mechanisms, since, they too would have this impact i f they were actually effective. Furthermore, the use of Zoning has long been accepted as a "socially desirable" use of police power within urban areas. Owners or urban land zoned for single family dwellings, for example, cannot use their land for high rise apartments simply because that use promises them greater returns. Zoning farmland for agricultural purposes, merely places 84 owners of this land under the same type of constraints that urban land owners have been under for years. Finally, when a system of agricul-tural reserves is established in conjunction with use-value taxation and a farm income stabilization program, farmers will in the long run receive compensation in the form of higher, more stable incomes. The implementation of a Farm Income Assurance Program has been instrumental in obtaining the support of the B.C. Federation of Agriculture for the Land Commission Act in British Columbia. The foregoing discussion has pointed to formal agricultural zoning as being the most effective mechanism for the preservation of agricultural land. It is therefore suggested that this mechanism be seriously considered for adoption within the province of New Brunswick. The basic administrative structure of the British Columbia approach, with agricultural reserves established and administered by a Land Commission operating at the provincial level would seem to be a good model to follow. However, i t should be regarded as a structural model only-detailed deci-sions regarding what land should be included in the reserves, procedures for appointing and discharging Land Commission members, c r i t e r i a for removing land from the reserves, and appeal procedures against Commission decisions, must be tailored to meet New Brunswick circumstances and should be a matter of negotiation between the government, producer organizations and other affected land owners. 85 CHAPTER VI CONCLUSIONS AND RECOMMENDATIONS In this thesis, we have outlined the factors which have been responsible for the dramatic losses of improved land within the province of New Brunswick in the past and have attempted to demonstrate the growing role urban-oriented residential development within the rural areas of the province has played in causing these losses within recent years. We have also demonstrated that we can not rely upon the market mechanism, as i t presently functions, to produce a proper allocation of agricultural land between urban and agricultural uses. Fianlly, after an analysis of the effectiveness of a variety of mechanisms which have been used in different jurisdictions to deal with this problem, we sug-gested that agricultural zoning at the provincial level should be given serious consideration for use within New Brunswick. However, to pursue the single-minded objective of eliminating the conversion of agricultural land to urban uses as a solution to the problem of agricultural land loss in New Brunswick would be a mistake. We have tried to stress throughout this thesis that while urban develop-ment within the rural areas is an increasingly more important factor causing the loss of improved land, the problems of small farm size and an aged farm population continue to be important causes of this loss. Although programs to prevent the needless destruction of this land by urban uses are needed, they only make sense i f a viable agriculture industry continues to exist within the province and uses the available 86 land base as f u l l y as is economically possible. Currently, the Agricul-tural Resources Study is conducting an in depth investigation of the problems of New Brunswick agriculture and will shortly make recommenda-tions geared to improving the v i a b i l i t y and long-term potential of this industry. It is essential. ;the operation of an agricultural land preser-vation mechanism be coordinated with the development proposals of this study. Furthermore, although the emphasis of this thesis has been on the negative impacts of haphazard, low density development within the rural areas of the province, we should not be blind to the fact that this development pattern has had some beneficial aspects. Because the land available for residential development presently includes a l l land within 20-30 miles of urban areas within the province, the total supply is far in excess of the demand and its ownership is in the hands of an extremely large number of individuals. Consequently large developers are unable to control housing markets simply by assembling large parcels of land within urban boundaries. Whereas in many other parts of Canada, new house buyers purchase a unit which has been built on speculation by a developer on land which he has assembled in advance of construction, much of the housing that is built in New Brunswick is either owner-built, sub-contracted by the owner, or built by a small contractor for a pre-determined owner. Furthermore, in many cases the home buyer acquires the building lot f i r s t , and then arranges for construction in the manner and by,whom he prefers. This arrangement allows for an excellent interface between supply and demand, avoiding over-supply or under-supply, and keeps the price of 87 housing reasonably close to its cost of construction. However the key to the success of this process li e s in the a b i l i t y of individuals to acquire building lots on which they can arrange for the construction of the type of housing they require and in the manner they choose. While in recent years, developers who assemble land in advance of construction and build houses on speculation, have become more important within the larger urban centers, individuals s t i l l have the alternative of acquiring lots on the urban fringe and arranging construction themselves. However, with the implementation of agricultural land reserves there will be a restriction of the land which is available for residential development. There are two possible negative impacts which could result from this action. (1) For urban areas surrounded totally by an agricultural land reserve, the land available for urban development will be in the hands of a considerably fewer number of land owners. This opens up the opportunity for a few develoeprs to assemble large parcels and therefore control the available supply. Besides the impact this could have on housing prices, i t will also mean that small builders and contractors who do not own land may be forced out of business. (2) There may be an acceleration of urban sprawl on land sur-rounding urban areas which is not included in the agricultural reserves. It is therefore essential that the impact of the formation of agricultural land reserves on housing prices and spacial patterns be investigated in more detail and action taken to minimize potential prob-lems. If these issues are not dealt with, our attempt to preserve agricultural land will merely replace one problem with another. 88 FOOTNOTES ^A. D. Crerar, The Loss of Farmland in the Growth of Metropolitan  Regions in Canada (Montreal: Resources for Tomorrow - Supplementary Volume, 1967), p. 191. J. P. Drozdowski, Agricultural Land Use in Mew Brunswick: A  Direction Towards Policy Formulation (Fredericton: Agricultural Land Planning Section, 1976), p. 10. (MTmeographed) 3 New Brunswick Department of Agriculture, Land Planning Section, Soil Capability for Agriculture (Fredericton, 1977), p. 5. (Mimeographed) N^ew Brunswick Agricultural Resources Study, A Survey of Land Use  in Selected Areas of New Brunswick (Fredericton, 1976), p. 23. (Mimeographed) 5Ibid., p. 17. For the Historical Background in this Chapter I have relied heavily on: D. W. Carr, Maritime Agriculture - A Comparative Regional Analysis, Volume 1, Chapter 11 (Ottawa: Atlantic Development Board, 1967). 7Ibid., p. 95. Q New Brunswick Department of Agriculture, Agriculture and Water  Management in the Saint John River Basin, Volume 2 (Fredericton: Queens Printers, 1974), pp. 7-467. g New Brunswick, Office of the Economic Advisor, New Brunswick  Industry Profiles, Number 9, Agriculture (Fredericton, 1974), pp. 34-36. (Mimeographed) 1 0Derek Winstanley, Brian Emmett and Gil Winstanley, CIimatic  Changes and the World Food Supply (Ottawa: Environmental Systems Branch, Environment Canada, 1974), pp. 14-15. (Mimeographed) ^Hana Umlauf, "Endangered: Our Daily Bread", The World Almanac, 1976, p. 129. 12 Norman Pearson, Why Preserve Farmland (Queens University, Kingston, Ontario: Second Summer Institute in Urban and Regional Planning -Keynote Address, 1974). (Mimeographed) 1 3Umlaf, op. c i t . , p. 129. ^Randall W. Scott, David J. Broewer and Dallas D. Miner (eds), Management and Control of Growth, Volume 111 (Washington: The Urban Land Insittute, 1975), p. 571. 89 15 V. Cranmer, Land Use Programs In Canada - Prince Edward Island (Ottawa: Land Use Planning Branch, Lands Directorate, Environment Canada. 1974), p. 11. ^Scott, Brower, Miner, op. c i t . , p. 57. ^U. S. Council on Environmental Quality, Untaxing Open Space (Washington: U. S. Government Printing Office, 1976), p. i i i . 1 g Scott, Brower, Miner, op. c i t . , p. 58. 90 BIBLIOGRAPHY Barlowe, Raleigh. Land Resource Economics - The Economics of Real  Property. Englewood C l i f f s : Prentice Hall Inc., 1972. Burchell, Robert W. and David Listokin (eds.). Future Land Use - Energy, Environmental and Legal Constraints. New Brunswick, New Jersey: Centre for Urban Policy Research, Rutgers University, 1975. Carr, D. W. Maritime Agriculture - A Comparative Regional Analysis, Volume 1, The Agricultural Potential. Ottawa: Atlantic Develop-ment Board, 1967. Clawson, Marion. Suburban Land Conversion in the United States: An Economic and Governmental Process. Baltimore: The John Hopkins Press, 1971. Cranmer, V. Land Use Programs in Canada - Prince Edward Island. Ottawa: Land Use Planning Branch, Lands Directorate, Environment Canada, 1974. Crerar, A. D. The Loss of Farm Land in the Growth of Metropolitan Regions  in Canada, Supplementary Volume, Resources for Tomorrow. Montreal, 1967. Drozdowski, J. P. Farm Land Tenure in New Brunswick. Fredericton, New Brunswick: Agricultural Land Planning Section, New Brunswick Department of Agriculture, June, 1976. (mimeographed) Drozdowski, J. P. Agricultural Land Use in New Brunswick: A Direction  Towards Policy Formulation. Fredericton, New Brunswick: Agricul-tural Land Planning Section, New Brunswick Department of Agricul-ture, October, 1976. (mimeographed) ' Dummett, W.A. A Planning Assessment of ARDA Farm Enlargement Programs -The New Brunswick Program. Ottawa: Plan Formulation Branch, 1969. Tmimeographed) Jellinek, T. and G. Guerette. Planning 1975 ? Fredericton, New Brunswick: Community Planning Branch, Department of Municipal Affairs, March 1975. Listokin, David (ed.). Land Use Controls: Present Problems and Future  Reform. New Brunswick, New Jersey: Centre for Urban Policy Research, Rutgers University, 1974. Martin, Larry R. G. A Comparative Urban Fringe Study Methodology. Ottawa: Lands Directorate, Environment Canada, February 1975. 91 New Brunswick, Office of the Economic Advisor. New Brunswick Industry  Profile - Number 9 - Agriculturje. Fredericton, New Brunswick, 1974. (mimeographed) New Brunswick Department of Agriculture, Land Planning Section. Agricul- tural Commodity Development Opportunities. Fredericton, New Brunswick, 1976. (mimeographed) New Brunswick, Saint John River Basin Board. Agriculture and Water  Management in the Saint John River Basin, Volumes 1 and 2. Fredericton, New Brunswick: Queens Printer, 1974. New Brunswick, Department of Agriculture, Land Planning Section. Soil  Capability for Agriculture. Fredericton, New Brunswick, 1977. (mimeographed) New Brunswick Agricultural Resources Study. A Survey of Land Use in  Selected Areas of New Brunswick. Fredericton, New Brunswick, 1976. (mimeographed) Ontario, The Ministry of Agriculture and Food. A Strategy for Ontario  Farmland. A Statement by the Ministry of Agriculture and Food. March 1976. Pearson, Norman. Why Preserve Farmland? Queens University, Kingston, Ontario: Second Summer Institute in Urban and Regional Planning, Keynote Address, 1974. (mimeographed) Rawson, Mary. "The Farm Landscape - V i t a l i t y or Disintegration" Forum, November, 1976. Reston G. C. and W. S. Hanlon. "Potato Production Costs and Practices in New Brunswick." Canadian Farm Economics, VIII, 1 (1972), 18-29. Russwurm, Lome H. The Urban Fringe in Canada - Problems, Research Needs, Policy Implications. Ottawa: Report Submitted to the Research Branch, Ministry of State, Urban Affairs, 1973. (mimeographed) Scott, Randall W. with David J. Brower and Dallas D. Miner. Management  and Control of Growth - Issues, Techniques, Problems and Trends. Volumes 1, 11, 111. Washington: The Urban Land Institute, 1975. Sussna, Stephen. Land Use Control - More Effective Approaches. Washington: The Urban Land Institute, 1970. The British Columbia Land Commission. Keeping the Options Open. Vancouver: The British Columbia Land Commission, 1975. Umlauf, Hana. "Endangered: Our Daily Bread." The World Almanac, 1976, 128-132. 92 U. S. Council on Environmental Quality. The Costs of Sprawl - Detailed  Cost Analysis. Washington: U. S. Government Printing Office, 1974. U. S. Council on Environmental Quality. Untaxing Open Space. Washington: U. S. Government Printing Office, 1976. Winstanley, Derek, Brian Emmet and Gil Winstanley. Climatic Changes and the World Food Supply. Ottawa: Environmental Systems Branch, 1974. (mimeographed) 


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