The Pinelands Development Credit Program: Using Market Mechanisms to Achieve Preservation Goals

The "Pine Barrens" are a UNESCO-designated biosphere reserve encompassing about 1.1 million acres in southern New Jersey. A state agency, the New Jersey Pinelands Commission, in conjunction with county and local governments, works to implement land management and environmental protection goals via a comprehensive management plan. The pinelands development credit (PDC) program is one tool aimed specifically at land preservation outcomes. The PDC program is a regional "transfer of development rights" market allowing landowners to sell their rights to further develop their property and enter their land into permanent protected status. Since the program's inception in 1982, over 55,000 acres of sensitive and rare ecosystem have been protected; the more than 1,200 transactions account for US$63 M of economic value. The PDC program is a clear illustration of the role that financial instruments and market mechanisms can play in achieving environmental protection outcomes. This case study offers an overview of the pinelands area, PDC program, and the transfer of development rights concept before examining the PDC program and its outcomes in greater detail. While the program has been hailed as a success, it will face challenges in the coming years, including a relatively inefficient process for converting PDCs into protected lands and the question of how the program can evolve once eligible lands become more scarce.