88.3% Value Diminution from CAFO

Concentrated Animal Feeding Operations and Proximate Property Values, Abstract, by John A. Kilpatrick
The Appraisal Journal, July 2001,Volume LXIX Number 3
http://www.pmac.net/AM/property_values.html

University of Missouri Study:
Following the methodology of the Minnesota study, researchers at the University of Missouri were able to quantify both the average value impact of a CAFO and the impact by distance. An average vacant parcel within 3 miles of a CAFO experienced a value loss of about 6.6%. However, if that parcel was located within one-tenth of a mile from the CAFO (the minimum unit of measure in the study) and had a residence on it, then the loss in value was estimated at about 88.3%.

Summary and Conclusions:
The above suggests that the establishment of a CAFO may result in value diminution to other nearby properties. The amount of the value loss is typically an inverse function of distance (closer properties diminish more), a function of property type (newer, nicer residences lose more), and a function of property use (farm will lose value due to diminished productivity and comparative marketability to other farm lands). While the appraisal profession has only begun to quantify the loss attributable to CAFOs, it is clear from the above case studies that diminished marketability, loss of use and enjoyment, and loss of exclusivity can result in a diminishment ranging from 50% to nearly 90% of otherwise unimpaired value.

John A. Kilpatrick is a partner and senior analyst with Mundy Associates, LLC, an economic, market, and valuation firm specializing in complex real estate matters headquartered in Seattle, Washington. Contact: Suite 200 Watermark Tower, 1109 First Avenue, Seattle, Washington 98101. (206) 623-2935; fax: (206) 623-2985; email: john@mundyassoc.com.