The Impact of Recreational Homes on Agricultural Land Use

When nonresidents purchase agricultural properties, the land use decision can make farmland operate below potential, still allowing for tax credits. We empirically investigate how nonresident ownership affects the agricultural land use decisions in upstate New York. A difference-in-difference matching approach shows a causal link between purchases by nonresidents and a loss of 11% of acreage to a lower-productivity use. A generalization shows this conversion counts for one-seventh of the decreased agricultural land in intensive uses in similar counties. Perhaps a simple opportunistic use of the tax-credit criteria, this phenomenon contradicts the policy’s objective and might impose other consequences on rural communities.