Does tenure review in New Zealand's South Island give rise to rents?

Abstract

We examine land prices arising from tenure review of South Island high country pastoral leases. Tenure review splits the leasehold – part is converted to freehold ownership, and part is converted to public conservation land. The Crown sells its residual interest in the most developable part of a leasehold, and buys the lessee’s interest in the part with conservation value. Of the 77 runs that completed tenure review from 1992-2008, at least 28 new landowners have on-sold 176 parcels of newly freeheld land. In gross, these 28 new owners paid the Crown $6.9M to freehold, and have realized $134 million after on-selling 45,266ha, 44% of their new freeholds.