The Growing Importance and Value Implications of Recreational Hunting

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					JOURNAL OF REAL ESTATE RESEARCH                                                                      1

The Growing Importance and                                                         John S. Baen*

Value Implications of
Recreational Hunting Leases to
Agricultural Land Investors†

     Abstract. This study considers the evolution and explosive growth of recreational hunting
     leases in America. The traditional European practice of leasing rural lands for the exclusive
     rights of tenants to hunt and fish is now an important revenue source for American
     agricultural land investors/owners. Hunting lease income can enhance value to the point
     that recreation becomes the highest and best use of rural land for both the market and
     income approaches to valuation. This study offers new perspectives for valuing the income
     component from recreational leases as a percentage of market value and proposes a hunting
     lease index for landowners and tenants to consider.

The value implications of hunting lease revenues to America’s rural property owners are
a subject worthy of research since agricultural lands are the predominant use of land in
the United States. Farmland represents an estimated two thirds of all private land, 878
million acres (Geisler, 1995). It is likely that some of these private lands will become
private recreational areas in the future. The general public has indicated a willingness to
pay for uncrowded conditions on private land, in contrast to more crowded conditions in
the U.S. national park system. The private marketplace (private leases on private lands)
for recreational purposes is a classic case of resource allocations for supply uncertainty in
the option price literature, as presented by MacDonald, Murdock and White (1987),
Bartik and Smith (1984), Bishop (1982), Milon, Gressel and Mulkey (1984), and others.
   The market value of agricultural land is quantifiable through traditional appraisal
approaches: market approach, income approach and cost approach. Included in the
market value per acre are income components and/or “market drivers” that are difficult
to quantify or explain, which include, but are not limited to:
     • income from farming/ranching operations (a function of quality of soil,
       rainfall, commodity prices, management, etc.);
     • the perceived present value of development potential of land to a “higher
       use” (a function of location, distance to urban areas, supply, demand, etc.);
     • tax benefits and income-sheltering;
     • intangibles, such as pride of ownership;
     • mineral rights income/potential;
     • recreational and lifestyle land uses.

 1997 Agricultural Real Estate award, sponsored by Hancock Agricultural Investments.
*FIREL Department, College of Business Administration, University of North Texas, PO Box 310410,
Denton, Texas 76203.

400                                                  JOURNAL OF REAL ESTATE RESEARCH

   The purposes of this study is to attempt to quantify the recreational component of the
“market value” price per acre for agricultural lands by using hunting leases. Recreational/
hunting rights leasing rates provide some insight into the recreational value perceived
and/or consumed by investors of rural land purchased, but not leased to others.
   There are two indicators of increased demand in the future for private park land. First,
in 1989 there were 270 million visits by people to federal parks and recreational areas
(Houston Chronicle, 1996). Second, access fees were scheduled by the national parks to
increase 100% to 166% during 1997–98, due to increasing demands, along with a
government policy shift to make public parks self funding. As the number of visitors on
public lands increases, the quality of the visits by many is considered diminished. As
demand and crowding increase, it follows there will be increasing opportunities for
private landowners. There are also proposals to consider limiting the number of persons
per day into public parks, as well as hunting on public lands, and utilizing annual
lotteries to allocate the natural resources.
   The widespread use of hunting leases in the South and southwestern U.S. is perhaps the
best measure of the growth and “market value” of recreational leases and/or access fees to
private lands. There are some indications that private parks and wildlife areas are currently
being operated on a “for profit” basis (Forbes, 1996) as a property's highest and best use.
Hunting “leases” as they are called, also generally allow the tenants, and their guests, the
following range of related recreational activities included in their written “hunting” leases
or access permits: camping; bird watching; fishing; hiking; off-road vehicle operation.
   “Hunting lease” revenues are income, in addition to agricultural or timber activities,
on private lands. On many farms and ranches the annual sustained income from hunting
greatly exceeds the income from cattle and/or farming operations. In Texas, “hunting
lease” income often far exceeds agricultural income and therefore “recreational” use
becomes by definition the highest and best use of the land:
      In appraising real property: The reasonably probable and legal use of property,
      which is physically possible, appropriately supported, financially feasible, and
      that results in the highest value. (Appraisal Standards Board, 1996)
   Rural land, within reasonable commuting distances from metropolitan areas, is often
classified as “farm or ranch land” and operated as a tax shelter for its owners under
Internal Revenue Service guidelines. Often the underlying primary motivation of the
owners is for the personal consumptive use of the recreational attributes of the land.
While comparable sales are the predominant method of valuation for recreational/rural
properties, the market approach only indirectly captures the “recreational value” along
with all other land components. This study analyzes these hard-to-quantify attributes by
considering contemporary market lease rates for hunting/recreational rights. The growth
in hunting leases also creates new questions that must be addressed by professional
appraisers of these properties. These issues will also be discussed in this study.

Justification for Research
      • There is an “open market” or “market value” for hunting/recreational access
        rights to private lands that has not yet been discussed in academic journals or
        noted in the real estate appraisal literature. These potential revenues have
        important value implications for agricultural landowners/investors.

VOLUME 14, NUMBER 3, 1997
IMPLICATIONS OF RECREATIONAL HUNTING LEASES                                            401

     • The market for recreational access rights to private lands is a very “inefficient
       market” due to a general lack of leasing market information availability between
       tenants and landowners. There are many agricultural landowners who may not
       be aware that hunting /recreational rights and/or access to private lands is a
       potential source of additional income to farming and other operations. This is
       due in part to the fact that, quite often, farming tenants are subleasing
       recreational rights to third parties without full knowledge of the owners as to the
       extent or the revenues involved.
     • Hunting /recreational rights may actually cause some diminished land value,
       due to long-term hunting leases that can limit other uses of the land. This study
       may also have use in valuation and damage calculations among multiple users
       who may have formal simultaneous access rights that are in conflict. (See
       Exhibit 1.) Valuation of various land components can be difficult without
       adequate data.

History of Hunting, Leases and Literature Review
Hunting leases, which originated in central Europe and the United Kingdom, were
perceived to have value due to the reservation of shooting rights by the “Royals” who
owned the game in the forest which had sporting, as well as economic, value as
marketable commodities (venison, etc.). Indeed, “free” hunting rights may have been an
important consideration for colonists coming to America in the 16th and 17th centuries,
because the concept of the common man having the opportunity to hunt was unheard of
in Europe, except in the case of illegal poaching of the “King’s” deer.
   The first formal hunting lease of record, having paying tenants, occurred in 1800 and
involved a ten-year lease to English gentry for all the game on the Albergeldie Estate in
Scotland (Whitehead, 1980). Another formal lease appeared in England in 1812 and
included exclusive rights under a “License to Hunt, Shoot, and Fish” in the Forest of
Essex (Tomlins, 1812).

                                       Exhibit 1
                    Possible Simultaneous Land Users of Rural Lands
                                                             Document of “Ownership”
Land Tenure or “Right”               Owner/User                 or Land Use Rights

Landowner                           Owner                   Deed
Agricultural Use                    Tenant Farmer           Agricultural Lease
**Hunting/Recreational Use          Hunters/Campers         Lease from Landowner or
                                                            Sublease from Tenant
Oil and Gas Operator                Oil Company             Mineral Deed or
                                                            Oil and Gas Lease
Pipelines                           Transmission Co.        Easement
Power Lines, etc.                   Transmission Co.        Easement
Airport Noise or Air Rights Zones   Airport Boards          Easement
Timber                              Timber Co.              Long-Term Crop or Timber Deed
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                                       Exhibit 2
                      Shooting Estates Market Analysis in Scotland
                                   Ten-Year                             Price/Acre   Stag/Year
                          Size       Avg.        Avg.                     British     British
Class     Estate        (Acres)   Stags/Year   Hind/Year      Price      Sterling     Sterling

A       Glen Lochay      20,000       86           49        600,000        30         6,976
A       Inrermearan      19,000       56           20        550,000        29         9,821
A       Innerwick         5,583       21           54        375,000        67         6,944
B       Landale          12,000       30           23        800,000        67        26,944
B       Kinlock          18,000       19           10        350,000        19        18,421
B       Dalchully
           and Coul      5,000        15           20        335,000            67    22,333

Source: information extracted and recompiled from an article by Hanson (1986)

   In modern Europe, the importance of hunting rights is central to the marketing and
valuation of large estates. Hanson (1986) stresses the importance of the quality and
quantity of stag hunting on a sustained annual basis as the central issue in the valuation
of rural lands in Scotland as indicated in Exhibit 2.

Hunting Land Valuation Perspectives
Market value and land appraisals in Europe seem to capture the value of the hunting in
four ways:

      • Class of Shooting Estate
            A = highest and best use of hunting with little other agricultural income;
            B = mixed use with agricultural income being significant;
            C = pure agricultural use.
      • Number of Stags (Red Deer) harvested over a ten-year average. The average
        number of Hinds (female cull deer) is less significant to value than an
        indication of size of a sustainable deer herd and ratio of males/females on a
        given property.
      • Price/Acre (in British Pounds)
            The lower the price/acre indicates recreation is highest and best use.
      • Price/Stag/Year indicates the present value of that property right (varies due
        to other income from agriculture, improvements, location, etc.).

   The hunting lease concept apparently came to the U.S. with German immigrants in the
early 1930s (Sasser, 1995) when the first formal lease appeared in central Texas.
Approximately 98% of Texas is privately owned. Very little public land available, com-
bined with a rapid growth in urban population has resulted in the rapid development of
a free market for hunting leases. During the 1980s, Texas land under hunting leases
expanded 19.6% from 30.6 million to 36.6 million acres to accommodate an estimated
one million hunters/year (see Exhibit 3). Over the last two decades the hunting lease
system has spread rapidly through the southeast and western states as well (Sasser, 1995).

VOLUME 14, NUMBER 3, 1997
IMPLICATIONS OF RECREATIONAL HUNTING LEASES                                                   403

                                     Exhibit 3
                         Current Demand for Hunting/Fishing
                      (Annual Licenses Issued in Top Fifteen States in 1996)

State                            Total Licenses Issued*                        Hunting Only

Texas                                  2,613,000                                 913,000
Pennsylvania                           1,355,000                                 879,000
Michigan                               1,824,000                                 934,000
New York                               1,706,000                                 642,000
Tennessee                                860,000                                 408,000
Wisconsin                              1,474,000                                 665,000
California                             2,722,000                                 515,000
Missouri                               1,209,000                                 552,000
Ohio                                   1,231,000                                 479,000
Virginia                               1,029,000                                 392,000
Minnesota                              1,508,000                                 588,000
Louisiana                              1,031,000                                 323,000
Georgia                                1,087,000                                 403,000
Oregon                                   658,000                                 293,000
North Carolina                         1,557,000                                 370,000
Total                                 21,894,000                               8,356,000

*Many states offer both combination hunting and fishing licenses and hunting-only licenses.
Demand function, which is based upon fixed supply of land, includes hunting on private and
public lands.

Source: U.S. Fish and Wildlife Service 1986 National Survey

   While there is an overabundance of white-tailed deer and other huntable species in
many areas of the U.S., the quality of the trophy often appears to be as important a
factor in land leasing rates as the absolute number of game animals in the region. In fact,
there has been research conducted by McBryde and Henicke (1994) that relates the
estimated market exchange price for buck deer relative to the Boone and Crocket world
record book. Their research indicates the value (or access to land via lease, guided hunt,
etc.) of a mature trophy deer ranges from $1400 to $6500 (in an animal unit based solely
on the size of the animal’s antlers) (see Exhibit 4). Highly managed elk ranches are
receiving $9500/hunter for trophy animals (Livestock Weekly, 1996) which is up con-
siderably (171%) from $3500 / hunter from these same properties in 1992 (Wolfe, 1992).
   How this relates to land value per acre is dependent upon several factors including, but
not limited to, density of deer population, quality of deer herd, ranch conditions, soil,
management of land and hunting leases, and the marketing capability of landowner/
   In some areas, the importance of wildlife resources relative to land values and total
farm income, has resulted in many rural landowners building 8-ft high game fences to
better manage their herds. The cost of $12,000–$15,000 per mile to construct “game
proof ” fences to keep animals in, as well as genetically inferior animals out, is an
indication of “perceived” income, value added, or income potential from hunting-related
access fees. A recent study (Texas Agricultural Statistics Service, 1996) compiled a list of
more than 1233 highly managed, high-fenced operations in 194 of 254 counties in Texas.
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                                                  Exhibit 4
                     Estimated Market Exchange Prices, by Gross Boone and Crocket Score
                                (Package Hunt for White-Tailed Deer in Texas)



Exchange Price ($)





                                           Gross Boone and Crocket Score

Source: McBryde and Henicke (1994)

   There has been very little published in regard to the value implication of hunting lease
revenues as it relates specifically to land values. The Texas Real Estate Research Center
(1988) plotted deer densities (see Exhibit 5) and concluded, generally, that hunting leases
are such a prominent factor in the rural land market that “game populations can directly
affect some land values.” Unfortunately no leasing data or land sales information was
offered to support this generally accepted notion in the marketplace.

The Economic Benefits of Leasing to Landowners
There are both direct and indirect economic benefits when landowners lease land for
hunting. Many rural “weekend places” are often purchased by urban dwellers for both
investment and personal use. The hunting benefits include:
                     • Consumptive (used by the owner):
                         —owners’ friends/relatives;
                         —business associates entertainment;1
                         —more than 750 million pounds of wild meat are consumed per year in the
                           U.S. (@ $1.75/pound=$1.3 billion/year (The Council for Wildlife Con-
                           servation and Education Inc.);
                         —annually shed deer horns and found skulls have a ready market that range
                           between $75–$425/set (Geryak, 1997) based on quality and condition.

VOLUME 14, NUMBER 3, 1997
IMPLICATIONS OF RECREATIONAL HUNTING LEASES                                              405

                                        Exhibit 5
                               White-Tailed Deer Densities

One dot = 2,000 deer.
Source: Texas Real Estate Research Center (1988)

     • Leasing revenue on a:
          —per acre basis;
          —per member basis;
          —per day lease basis;
          —guided hunt basis;
          —species basis (some owners lease separately the following species/rights
            simultaneously to various parties: fishing, deer, ducks, quail, etc.
     • Both Consumptive and Leased:
          —leased to others (owner’s right to hunt retained in the lease agreement).

Supply: Landownership of Private Lands for Hunting /Recreational Leases
in the U.S.
Landownership in the US is heavily concentrated. The top half of 1% of the largest
landowners (including corporations) have title to 40% of the nation’s land and the top 5%
own three-quarters of the estimated 878 million acres of agriculture lands (Geisler, 1995).
    From data compiled from McCoy (1996) and Barrett (1997), there are twelve
significant owners controlling over one million acres of land and 102 individuals having
in excess of 100,000 acres of rural lands each. (See Exhibit 6 for a partial list; a complete
list available from author.) A significant number of these entities manage their lands for
406                                                      JOURNAL OF REAL ESTATE RESEARCH

                                  Exhibit 6
         Major U.S. Landowners Having Hunting Lease Income/Potential
                          Land                                          % Lease
                         Holding      Head-                   Prime       for              Type
Companies                (Acres)     quarters      Location    Use      Hunting            Lease

Intern. Paper           6,400,000                             Timber      90               Permits
Georgia Pacific          5,700,000.                            Timber      90               Season
Weyerhaeuser            5,500,000.                            Timber      90               Season
Champion Intern.        5,300,000.                            Timber      90               Season
Boise Cascade           3,100,000.                            Timber      90               Varies
Plum Creek Timber       2,600,000.                            Timber      90               Season
Temple-Inland           2,600,000                             Timber      90               Season
Willamette Industrial   1,800,000                             Timber      90               Permits
Potlatch                1,500,000.                            Timber      90               Permits
Total                   33,800,000
Individuals /
Estates / etc.
R.E. “Ted” Turner       1,300,000.   Roswall,      NM, CO     Cattle-     100     $10,000/ Guilded
                                     GA            MT         Buffalo     100     Elk      Hunts,
Archie Aldis “Red”      1,200,000    Anderson,     CA         Cattle-
  Emmerson                           CA                       Hunting
Henry E. Singleton      1,150,000.   Beverly       NM,
                                     Hills, CA     CA
Pingree Heirs           975,000      Bangor,       ME         Timber
King Ranch              860,000      Kingsville,   TX, FL,    Cattle-     100     $6 - $8 / Leases
                                     TX            KY         Oil                 Acre      and
Huber Family            800,000      Rumson,       ME, TN,    Timber
                                     NJ            KY, MO,

Source: compiled by the author from various sources (McCoy, 1996; Barrett, 1997)

hunting/recreational revenues. Economies-of-scale and expert land management of these
large land holdings maximizes income potential, which includes the marketing and
management of recreational leases and access fees.

The Demand for Hunting Land
Whether on public or private lands, the demand for hunting is perhaps best measured by
the number of licenses issued per state per year. Exhibit 3 presents the number of licenses
in the top fifteen states, which totaled more than nine million hunting licenses in 1996.
What cannot be determined is how many of these are for hunting on private land or
public land and what the demand would be if there were fees charged beyond the cost of
the license (in the form of access fees, hunting club fees and/or leases). A second measure
of demand is found in the price per acre per year for leases in Texas (see Exhibits 7, 8).

VOLUME 14, NUMBER 3, 1997
IMPLICATIONS OF RECREATIONAL HUNTING LEASES                                              407

                                       Exhibit 7
           Statistical Analysis 1996 Texas Farm and Ranch Hunting Survey
Question as Survey reads:
1 Do more than half of the landowners in your county recieve hunting lease income ?
             No                     41.5%
             Yes                    28.8%
             Left Blank             29.8%
2 Is more than half of the range or pasture in your county leased for hunting?
             No                     36.9%
             Yes                    33.6%
             Left Blank             29.5%
3 Is more than half of the cropland in your county leased for hunting?
             No                     54.5%
             Yes                    13.2%
             Left Blank             32.3%
4a Do most hunting leases allow twelve month access?
             No                     67.2%
             Yes                    32.8%
4b What is the lease rate per acre?
             Avg.         =          $ 4.24
4c What is the average day lease per gun?
             Avg.         =          $ 95.45 / per day
5a Are most leases for a specific hunting season?
             No                     37.4%
             Yes                    59.5%
             Left Blank             3.1%
5b Lease rate per gun per session?
             Avg.                   $633.75
5c How many acres per gun?
             Avg.                   234.04 acres
D   Deer
               No                   19.1%
               Yes                  80.9%
E   Exotics
               No                   96.9%
               Yes                   3.1%
Pr Predators
               No                   71.2%
               Yes                  28.8%
Q   Quail
               No                   61.3%
               Yes                  38.7%
T   Turkey
               No                   56.7%
               Yes                  43.3%
H   Wild Hog
               No                   66.4%
               Yes                  33.6%
12 Hunting blinds or feeders provided in the lease?
               No                   84.0%
               Yes                  16.0%
13 Are small grains or other grains planted for the benefit of game?
               No                   79.6%
               Yes                  20.4%
14 If yes, please estimate the acre planted as a percent of total hunting lease acres.
   Average                          14.69%
Source: Property Tax Division ,Texas Comptroller of Public Accounts (1996)
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                                    Exhibit 8
      Recreational / Hunting Leases 1996 and Proposed Hunting Lease Index
                            for 115 Counties in Texas
                                  Avg. Mkt        Value of
              Avg.      Value of  Value of        Hunting/
             Lease       Hunting Ranch Land   Rec. Component
              Rate     Component    per             As %
Reporting   per Acre    per Acre1  Acre2           of Mkt     Deer    Trophy
County         ($)         ($)       ($)           Value     Density3 Quality3 Location3

Anderson      5.30      176.00      838.00          21          A        C        B
Argelina      3.28      109.00      875.00          13          B        C        A
Archer        2.87       96.00      323.00          30*         C        B        B
Atascosa      2.66       87.00      650.00          13          C        C        A
Austin        8.00      267.00      700.00          38*         A        B        A
Bexar         6.60      220.00      829.00          26*         A        C        A
Bowie         2.63       88.00      560.00          16          C        C        C
Brazos        7.10      237.00      894.00          26*         B        C        A
Brown         3.17      105.00      450.00          23          A        B        C
Bandera       4.00      133.00    1,028.00          13          A        C        A
Bell          7.32      241.00      750.00          32*         B        C        A
Blanco        4.64      154.00    1,329.00          12          A        C        A
Bosque        4.00      133.00      750.00          18          B        B        A
Brazoria      4.25      141.00    1,000.00          14          B        C        A
Brewster      1.50       50.00       95.00          53**        C        A        C
Brooks        7.00      233.00      400.00          58**        B        A        A
Burnet        2.00       67.00    1,000.00           7          A        C        B
Cass          1.85       62.00      575.00          11          C        C        C
Callahan      1.38       46.00      502.00           9          C        C        C
Cameran       0.50       17.00    1,500.00           1          C        C        C
Chambers      4.75      158.00    1,000.00          16          B        C        A
Crockett      3.50      117.00      300.00          39*         B        A        C
Cherokee      2.38       79.00      838.00           9          B        C        A
Clay          1.00       33.00      403.00           8          C        B        C
Cooke         2.50       83.00      738.00          11          C        C        A
Coleman       3.00      100.00      502.00          20          A        C        C
Colorado      8.00      269.00      850.00          31*         A        C        B
Comal         4.50      150.00      978.00          15          A        C        A
Comanche      2.00       67.00      502.00          13          B        B        B
Coryell       5.31      177.00    1,028.00          17          B        B        A
Culberson     0.80       27.00       45.00          60**        C        A        C
Dimmit        7.50      250.00      400.00          63**        B        A        A
Dewitt        3.00      100.00      850.00          12          C        B        B
Duval         6.75      225.00      400.00          56**        B        A        A
Eastland      7.00      233.00      502.00          46*         B        B        A
Edwards       4.55      152.00      300.00          51**        A        C        B
Erath         3.00      100.00      502.00          20          B        B        A
Fayette       4.00      133.00      850.00          16          B        B        B
Ft Bend       2.95       98.00    1,000.00          10          C        C        A
Freestone     3.12      104.00      750.00          14          A        C        A
Gillespie     3.13      104.00    1,000.00          10          A        C        A
Goliad        5.25      175.00      664.00          26*         C        B        A
Gonzales      1.00       33.00      850.00           4          C        B        A
Hamilton      4.62      154.00      548.00          28*         B        B        B

VOLUME 14, NUMBER 3, 1997

                             Exhibit 8 (continued)
Hardin       2.50    83.00    1,000.00         8     C   C   C
Harris       2.62    87.00    1,000.00         4     B   C   A
Harrison     3.10   103.00      838.00        12     C   C   A
Hays         4.50   150.00    1,028.00        15     A   C   A
Henderson    6.75   225.00      838.00        27*    A   B   A
Hood         1.00    33.00    1,250.00         3     B   B   B
Houston      2.12    71.00      838.00         9     C   C   B
Irion        2.50    83.00      300.00        28*    C   B   C

Jack         5.75   191.00      403.00        47*    B   A   A
Jeff Davis   1.00    33.00       95.00        35*    C   A   C
Jim Hogg     4.25   142.00      400.00        36*    A   A   C
Jim Wells    3.00   100.00      664.00        15     A   A   C
Karnes       4.25   142.00      978.00        15     B   B   B
Kendall      3.58   119.00    1,329.00         9     A   C   B
Kent         1.79    60.00      246.00        24     C   A   C
Kerr         5.88   196.00    1,329.00        15     A   C   A
Kleberg      5.00   166.00      400.00        42*    A   A   B
Kinney       3.72   124.00      300.00        41*    A   A   B
Lampasas     3.60   120.00      548.00        22     B   C   B
Llano        7.88   263.00    1,000.00        26*    A   C   B
Matagorda    3.50   117.00      750.00        16     B   C   B
Leon         3.00   100.00      989.00        10     A   C   A
Liberty      4.50   150.00    1,000.00        15     B   C   B
Madison      6.75   225.00      989.00        23     B   C   A
Mason        8.00   266.00    1,000.00        27*    A   C   A
McCullloch   5.50   183.00      548.00        33*    A   B   B
McMullen     5.00   166.00      400.00        42*    A   A   B
Marion       3.62   121.00      575.00        21     C   C   C
Menard       3.92   131.00      446.00        29*    A   B   B
Medina       7.50   250.00      723.00        35*    A   C   A
Mills        5.50   183.00      548.00        33*    B   B   B
Mitchell     2.00    67.00      350.00        19     B   B   C
Morris       3.00   100.00      575.00        17     C   C   B
Motley       1.33    44.00      246.00        18     C   C   C
Nacogdoches 3.00    100.00      838.00        12     C   C   B
Nolan        2.25    75.00      350.00        21     A   B   B
Palo Pinto   5.00   167.00    1,250.00        13     B   B   B
Parker       6.75   225.00    1,250.00        18     B   B   B
Panola       2.75    92.00      838.00        11     C   B   C
Polk         2.53    84.00      875.00        10     C   C   B
Real         3.75   125.00      446.00        28*    A   C   B
Red River    3.66   122.00      575.00        21     C   C   B
Refugio      7.00   233.00      664.00        35*    A   A   A
Runnels      5.00   166.00      403.00        42*    C   B   C
Robertson   11.00   366.00      989.00        37*    A   C   A
San Saba     5.50   183.00      548.00        33*    A   B   B
Shackelford  3.83   128.00      403.00        32*    B   B   C
Shelby       2.75    92.00      838.00        11     C   B   C
Smith        4.00   133.00      838.00        16     B   C   B
Starr        2.83    94.00      400.00        24     B   B   B
Stevens      9.75   325.00      403.00        81**   B   B   B
Stonewall    2.00    67.00      246.00        27*    C   B   C
410                                                      JOURNAL OF REAL ESTATE RESEARCH

                                    Exhibit 8 (continued)
                                    Avg. Mkt            Value of
               Avg.       Value of  Value of            Hunting/
              Lease        Hunting Ranch Land       Rec. Component
               Rate      Component    per                 As %
Reporting    per Acre     per Acre1  Acre2               of Mkt     Deer    Trophy
County          ($)          ($)       ($)               Value     Density3 Quality3 Location3

Sutton         3.50       117.00         300.00            39*           A          A         B
Titus          3.50       117.00         575.00            20            C          C         B
Taylor         3.00       100.00         350.00            29*           B          C         B
Terrell        1.83        61.00          95.00            64**          B          A         C
Tom Green      2.77        92.00         300.00            31*           B          B         C
Tyler          1.35        45.00         875.00             5            C          C         C
Uvalde         3.25       108.00         723.00            15            A          B         B
Val Verde      2.50        83.00         300.00            28*           A          B         C
Victoria       7.64       254.00         750.00            34*           A          A         A
Walker         3.65       122.00       1,000.00            12            C          B         C
Willacy       12.50       417.00       1,500.00            28*           A          A         B
Williamson    10.00       333.00       1,028.00            32*           B          A         A
Wharton        5.13       171.00         750.00            23            C          B         B
Wilson         4.00       133.00         978.00            14            C          C         A
Wise           5.75       192.00         978.00            20            C          B         A
Wood           1.50        50.00         575.00             9            C          C         A
Young          3.37       112.00         403.00            28*           B          B         B
Zapata         4.83       161.00         400.00            40*           A          A         C
Zavala         8.50       283.00         723.00            39*           A          A         C
Avg.             5.14     171.00         683.00            25%

  hunting income capitalized at 3%
  Gilliland (1994)
  See Exhibit 9 for a detailed explanation of these ratings.
* indicates recreational use as significant; ** indicates recreational use as “highest and best use”
by traditional appraisal definition
Source: Author

Landowner and Sportsperson’s Risks
While the rate of return obtained from hunting leases is often low relative to the value of
the asset (income from hunting/acre asset value/acre), there are financial and legal risk
exposures for landowners who lease their lands. The “perceived” risks by landowners may
outweigh the “perceived” financial benefits of the income from these sources. The risk to
landowners leasing their lands for recreational hunting is, however, apparently very low.
   According to the annual outdoor recreation-related injuries rates, there are 6.1 non-
fatal hunting accidents per year per 100,000 participants compared with 3,313 non-fatal
football accidents per year in the U.S. While there appears to be relatively low yields and
low risk from hunting lease activities on many agricultural lands, landowners are still
somewhat at risk from this income stream and should take steps to reduce or eliminate
these risks.
   There are five primary methods of increasing landowner protection from liabilities in
regard to recreational leases. Briefly, the following can be used in any combination to
reduce or eliminate landowner risk altogether:

VOLUME 14, NUMBER 3, 1997
IMPLICATIONS OF RECREATIONAL HUNTING LEASES                                             411

    • Insurance:
         Landowner obtains insurance that specifically covers recreational activities of
         “visitors,” “guests,” tenants, licensees, etc.;
         land tenant obtains insurance (there are several firms that specialize in
         hunting lease insurance).
    • Lease Provisions:2
         Lease prevision may require tenants to obtain hunting lease insurance naming
         the landowner as “coinsured.”
    • Release of Liability and Indemnity Agreements:
         Waivers and releases of liability can be helpful, however difficult to administer
         on large tracts of land for all visitors. Waivers vary by state as to their
         effectiveness in court. It is generally agreed that it is better to have one signed
         than not, in the event of an accident.
    • Landownership Form:
         Some large landowners choose to hold each tract of land in “stand alone”
         separate ownership entities (trusts, corporations, limited liability companies,
    • Master Leases with Sublease Tenants
         There is evidence that some major landowners lease both hunting and
         agricultural rights to one party who then subleases various rights (hunting) to
         other parties. There have not been any known court cases to determine if this
         is an effective risk shield for landowners.

Overview of the Research Methodology
Data were obtained from the 1996 Texas Farm and Ranch Hunting Survey which was
sent randomly to landowners throughout Texas by the office of the Texas Comptroller of
Public Accounts (see the Appendix). Ten landowners in each of the 254 counties of Texas
(2540 surveys) were randomly selected from the local landowner tax rolls.
   The purpose of the survey was to gain information on the relationship (if any) of
private hunting lease income to the valuation of land. Landowners returning surveys
totaled 414 or 16.3%. The information for this research was obtained in the form of the
returned questionnaires in their “raw” form, which included both specific and general-
ized (written responses) to various items on the survey. The questionnaires were sorted by
county (142 counties represented out of 254 total) in the state and descriptive statistics
are presented in Exhibits 7 and 8.
   The total database of recreational leases was then organized to correspond by county
and regional land values published by the Texas Real Estate Research Center (Gilliland,
1994). While there are wide variations in land prices and hunting lease market value per
acre within a county, the objective was to see if a general correlation exists between the
two factors on a county-by-county basis (see Exhibit 8). Hunting lease income per acre,
relative to land value, density of deer, generalized trophy quality, and locational factors
relative to metropolitan urban areas was considered as follows (Exhibit 8.) The hunting
lease component was captured as net operating income (NOI) capitalized at 3% which is
the prevailing “CAP” rate for agricultural properties in the region and assumes no
operating costs to landowners, which is generally true. A proposed hunting lease index
(Exhibit 9) was developed and offers further explanations of variables found in Exhibit 8.
412                                                     JOURNAL OF REAL ESTATE RESEARCH

Recreational hunting leases may have important value implications for agricultural land-
owners in America. While there is an “open market” or “market value” for leasing access
rights to private land, the market appears to be very informal and inefficient. While
leasing rates can vary due to a number of factors unique to individual properties, there
appears to be a wide range of pricing structures (annual leasing, season leases, species
leases, day leases, etc.) that tend to confuse both the landowners and recreational tenants
as to what a fair market price should be for access to private land. The availability and
flow of market information is both fragmented and incomplete and begs for additional
data collection, analysis and research.
   This study indicates both generalized and specific findings as follows:
      • There is a definite market for recreational hunting leases on private land.
      • Approximately 30% of the landowner respondents were unaware of the
        extent or market price of leasing rates in their county.
      • Respondents who leased year around access rights tend to receive higher
        rents than those leasing for the hunting season only.
      • Landowners who offer small grain fields, hunting blinds and feeders receive
        significantly more lease money (50%–100%) per acre from their tenants.
      • Larger landowners tend to have higher per acre lease rates or rates-of-return
        from guided hunts than smaller owners. This may be a function of size,
        management, marketing and/or higher quality hunting.
      • Pasture land (wooded or range land) was more likely to be leased than
        cropland and at a higher rate per acre.
      • A recreational / hunting lease index has been presented for landowners and
        tenants to better judge the leasehold value of the recreational/hunting
        components of agricultural lands. Note: For a complete copy of a proposed
        Hunting Lease, Release of Liability and Indemnity Agreement, please
        contact the author at PO Box 310410, Denton, Texas 76203.

                                       Exhibit 9
                             Proposed Hunting Lease Index
Value of Hunting
Component1                 Deer Densities2          Trophy Quality3              Locational4

A=High >50%
Highest and Best Use       A=High Density           A=High Quality            A=1–2 Hrs Drive
B=Med. 26–49%              B=Med. Density           B=Med. Quality            B=3–5 Hrs Drive
                                                    B+C=90 120
C=Low <25%                 C=Low Density            C=Low Quality             C=6+ Hrs Drive
  hunting / recreational hunting lease value component as a % of market value; hunting /
recreational hunting lease per acre .03 “cap” rate=value of hunting component.
  Low densities can be indicative of very high quality deer. Density can also be manipulated on
individual properties by culling.
  Trophy Quality is as indicated by a reasonable expectation of average mature deer harvested in
terms of the Boone and Crocket (B&C) trophy record system.
  approximate driving time from nearest metropolitan area

VOLUME 14, NUMBER 3, 1997
IMPLICATIONS OF RECREATIONAL HUNTING LEASES                                                          413

                              1996 Texas Farm & Ranch Hunting Survey
                                       Property Tax Division
                                Texas Comptroller of Public Accounts

Name_______________________________________________ Date___________________________________
Farm________________________________________________ Phone_________________________________
Address_____________________________________________ City____________________________________
County______________________________________________ Zip____________________________________
                                                                     Please check the correct box.
Do more than half of the landowners in your county receive hunting lease income?            yes    no
Is more than half of the range or pasture in your county leased for hunting?                yes    no
Is more than half of the cropland in your county leased for hunting?                        yes    no

Typical Hunting Leasing Situations
Do most hunting leases allow 12-month access?          yes What is the lease rate per acre?$_______
Are most leases for a specific hunting season?          yes Lease rate per gun per season $_______
                                                       no   How many acres per gun?           _______
What is the average lease rate per acre for hunting leases on the land classes listed below?
$_______ native pasture $______ improved pasture $______ dry cropland $______ irrigated cropland

Please check all game available on this lease.
                  Alligator          Quail
                  Antelope           Squirrel
                  Deer               Turkey
                  Dove                   Water Fowl
                  Exotics                Wild Hog
                  Pheasant               __________
                  Predators              __________
Please list facilities provided on the lease (examples: cabins, blinds, deer stands, feeders or coolers)

Please check land categories listed below that are hunted.
                  native pasture         improved pasture     dry cropland        irrigated cropland
Are small grains or other grains planted for the benefit of game?           yes    no
If yes, please estimate the acres planted as a percent of total hunting lease acres. ____________%
Are game-proof fences used?        yes      no If yes, number of acres fenced: __________
What is your annual maintenance cost of game-proof fencing per acre? $_____________
What is the total cost to install game-proof fencing? $_______/linear ft or $_______/mile
414                                                    JOURNAL OF REAL ESTATE RESEARCH

 Indeed, the sport (duck hunting) has become the prestigious business trip of the 1990s, right up
there with golf, “They’re out there talking shop, doing deals @ $500 per half-day hunt in the
Hamptons, Long Island, New York,” N. Keates, Wall Street Journal, January 10, 1997, B6.
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VOLUME 14, NUMBER 3, 1997