Rural gentrification and networks of capital accumulation

Abstract

A spatial reorganization of agriculture has been underway throughout the 20th century, and this reorganization has accelerated in the context of neoliberal trade arrangements such as NAFTA and the European Union. Global production networks now characterize today’s agricultural industry resulting in devalorized rural production spaces in specific locales. At the same time, surplus capital accumulated in contemporary global cities and regional urban centers continuously seeks out new spaces for investment in potentially profitable rent gaps. These parallel forces stimulate the re-purposing of rural industrial spaces from agricultural to residential uses in much the same way as occurred in former manufacturing neighborhoods in many urban centers. Using Jackson, Wyoming as a case study, this paper illustrates these processes through a framework based largely on theorizations of gentrification in urban contexts. In doing so, the case study brings supply side explanations of gentrification more explicitly into the United States’ rural gentrification literature and further highlights how contemporary processes of rural gentrification represent new geographies of capital accumulation. The Jackson case study further demonstrates the ways in which these flows of capital produce rural space in a relational sense by linking the local rural to the national and global through complex networks of capital investment operating at multiple scales.

Keywords

Relational rurality rent gap rural gentrification

Introduction

Significant demographic and economic changes have transformed rural regions of the global north over the last 40 years including farm consolidation, suburban/exurban sprawl, decentralization of manufacturing, and widespread population loss. Since the 1970s, however, certain rural regions, particularly in the United States, have experienced a renaissance of sorts as population loss slowed (or even reversed in many areas), and new economic activities became more common in rural areas (Champion, 1988; Dillman, 1979; Fuguitt, 1985; Fuguitt and Beale, 1996; McGranahan, 1998). New patterns of domestic migration have been widely documented in the academic literature beginning in the 1970s and accelerating in particular rural places since the 1990s (Beale, 1977; Johnson and Cromartie, 2006). These new migration streams are focused on specific rural destinations characterized by natural amenities (scenic vistas, waterfront, mountains, etc.) or recreational opportunities (skiing, hiking, fishing, golf, etc.), and in-migrants are drawn as much to rural places as they are to rural experiences (Hines, 2012). These “counter-urbanizing” amenity migration streams have been studied extensively in the rural geography and sociology literatures, and scholars exploring these processes have begun to use gentrification as a framework for their analyses (Chi and Marcouiller, 2012; Ghose, 2004; Gosnell and Abrams, 2010; Hines, 2010; Lekies et al., 2015; Nelson, 2006; Nelson et al., 2010).

Rural gentrification as a concept can trace its roots back at least 30 years to the mid-1980s when scholars in the United Kingdom first borrowed gentrification as a conceptual framework to examine changes taking place in the British countryside (Little, 1987; Phillips, 1993). Given its longer history, it is no surprise that the concept of rural gentrification is more theoretically developed in the UK context (see, e.g., Phillips, 2004, 2010). Beginning in the late 1990s and early 2000s, scholars examining the “rural rebound” in the United States extended the gentrification framework to add understanding to changes taking place in what some have described as the post-productivist countryside (Darling, 2005; Ghose, 2004). The US-based literature, to date, however, has emphasized demand-side explanations of the phenomenon. Footloose individuals/households seek out specific rural destinations precisely for the quality of life attributes perceived to be more available in rural settings including access to nature, tranquility, slower pace of life, and recreational opportunities. These demand-side understandings of rural gentrification are quite similar to those of urban scholars following David Ley’s cultural explanations of urban gentrification: individuals seek out urban residences in order to consume particular place-based attributes commonly found in urban neighborhoods (restaurants, shopping, nightlife, etc.) enhancing their quality of life (Ley, 1994). As Hamnett (1991) so aptly illustrates, however, there are both supply-side and demand-side explanations for urban gentrification, and both contribute in important ways to our understanding of these complex processes and the ways they reshape cities. The tendency for the existing rural gentrification literature to emphasize demand-side explanations, particularly work based in the United States, presents a significant research gap, yet it is clear that global circuits of capital have tremendous potential to increase the supply of potentially gentrifiable spaces in rural regions.

In this paper, we respond to this gap in the rural gentrification literature by more explicitly mapping supply-side explanations of gentrification onto rural spaces in the American West. Through a detailed case study of recent development in Jackson, Wyoming, we illustrate how restructuring in agriculture operating on national and international scales creates a sizeable (and increasing) rent-gap between the return from using rural lands for one purpose (agriculture) and the potential return after converting these lands to alternative purposes (residential). As this gap widened over time between capitalized ground rent under agriculture and potential ground rent after residential development, the logical outcome was a redeployment of agricultural capital (ranch lands) to residential uses, resulting in a dramatically transformed rural landscape characterized by “new build” gentrification (Shucksmith and Watkins, 1991; Smith and Phillips, 2001; Phillips, 2002). By extending these supply-side explanations of gentrification onto rural spaces, this paper makes three significant contributions to existing geographic literature. First, we broaden our theoretical understanding of rural gentrification as a phenomenon in ways that align more closely with the urban gentrification literature. Second, we bring the US-based rural gentrification literature more explicitly into the theorizations of rural gentrification developed by scholars in the United Kingdom. And third, the emphasis on supply-side explanations of rural gentrification brings to light new geographies of accumulation characteristic within contemporary capitalism. In this way, the paper shows quite clearly that although rural regions may be remote in the strict sense of Euclidean distance, rural spaces are intricately tied in a relational sense to the webs of global capitalism (Heley and Jones, 2012; Woods, 2012).

The remainder of this paper is divided into five sections. The literature review (Rural gentrification, amenity migration, and the demand for rural living and Origins of the rent gap sections) provides a summary of the existing rural gentrification literature highlighting the key lines of inquiry and its primary focus on demand side understandings of the phenomenon. In addition, the literature draws from the urban gentrification literature to illustrate key components of the rent gap and different ways in which rent gaps can emerge over time. Case study: Methods and context section describes the data sources and case study methodology used in the analysis before Agricultural restructuring and the creation of gentrifiable rural space section traces agricultural restructuring from the middle of the 20th century through the present paying particular attention to the cattle industry (the primary form of agriculture in the case study region), land prices, and global forces contributing to its changing structure. The agricultural restructuring serves as a backdrop for a case study (Capitalizing on the ranching-residential rent gap – A case study of 3 Creek Ranch section) describing the history of a large luxury residential development in the region. We situate this development within supply-side understandings of gentrification by demonstrating how devalued ranchlands were repurposed to alternative uses allowing for greater levels of capital accumulation and producing a gentrified rural landscape through national and global networks of capital investment. The final concluding section offers an epilogue of sorts illustrating the ways in which rural space has now become yet another locus for cycles of capital investment, accumulation, crisis, and subsequent reinvestment continuously producing rural space in a relational sense (Woods, 2009, 2012).

Rural gentrification, amenity migration, and the demand for rural living

Scholars working in the United Kingdom were the first to extend the conceptual framework of gentrification into the rural setting in the 1980s (Little, 1987). Given this longer history, it is not surprising that the theoretical development of the concept is much more developed in the UK scholarship owing much to the work of Martin Phillips, the British geographer who has most thoroughly theorized rural gentrification. Using illustrations from two Berkshire villages, Phillips (2002) draws explicit connections between the epistemological and ontological debates of urban-based gentrification scholars and the phenomenon’s manifestations in rural areas. Phillips (2004) has also situated dimensions of rural gentrification within Soja’s secondspace and thirdspace concepts. Of particular relevance to this paper is scholarship examining the different causes of gentrification in the countryside, as these lines of inquiry inevitably lead one into the supply-side versus demand-side explanations of the phenomenon (Hamnett, 2003; Ley, 1994; Rose, 1989; Smith, 1979). As with the literature from the United States reviewed below, there are numerous examples in the British scholarship adopting a demand-side framework. These works typically describe the expanding professional class, particularly in southeast England, and the creation a large pool of well-off professionals with certain nostalgia for rural settings (Cloke and Thrift, 1990; Phillips, 1993; Smith and Phillips, 2001). Members of this professional class have been some of the principal drivers of rural gentrification, as they seek out their “piece of the country” in much the same way as urban professionals wanting residential options closer to the urban core created a demand for gentrified neighborhoods within cities (Rose, 1989; Zukin, 1987).

At the same time, though not in quite the same volume, scholars working in Europe identified how the intersection of demographic and economic forces have combined to produce gentrifiable spaces in rural regions. Decades of emigration and rural to urban migration have left behind a large supply of under-utilized or even abandoned housing, and this is particularly the case in countries such as Ireland (Gkartzios and Scott, 2012; Stockdale, 2010) but also evident in England and even Spain (Barke, 2007; Solana-Solana, 2010). In addition to these demographic processes, economic restructuring and the reorganization of agriculture has produced additional gentrifiable properties in the form of old farm houses, barns ripe for conversion, and even undeveloped agricultural lands prime for housing development in various forms including “new build” gentrification (Shucksmith and Watkins, 1991; Smith and Phillips, 2001; Phillips, 2002). Again, these lines of inquiry are quite similar to those of urban scholars who describe how economic restructuring has produced a supply of gentrifiable properties and spaces (workers’ homes, warehouses, factories, etc.) in the urban landscape (Curran, 2004, 2007; Hamnett, 2009; Smith, 1979; Smith and DeFilippis, 1999) that become attractive spaces for capital investment. As the gap widens between capitalized land rent under current conditions and potential rents should these properties be re-purposed to residential uses, the likelihood of gentrification increases (Hamnett, 2009; Smith, 1979).

US scholars interested in similar socioeconomic dynamics were slower to adopt the gentrification framework in their analyses choosing instead to frame their work as “amenity migration,” “counter-urbanization,” “the Rural Renaissance,” or “the Rural Rebound.” The reluctance on the part of US rural scholars to borrow the gentrification concept and vocabulary from the body of urban-based literature may in part be due to particular disciplinary proclivities (Phillips and Smith, 2018). Much of the US scholarship on rural demographic and economic changes emerges from the fields of Rural Sociology and Natural Resource Management, two disciplines with a much larger presence in the United States than Geography but less apt to use the gentrification concept. Given these different disciplinary orientations, it is not surprising that the US scholarship focuses on somewhat different questions.¹ A largely descriptive body of work attempts to characterize the “typical” places most likely to receive amenity led migration and development (Crawford et al., 2013; Löffler and Steinicke, 2006, 2007; McGranahan, 1999, 2008), while another substantial body of work largely from the field of Rural Sociology examines questions surrounding conflicts between “newcomers” and “old-timers” in rural communities (Armstrong and Stedman, 2013; Krannich and Greider, 1990; Krannich et al., 2006; Ooi et al., 2015). Consistent with these disciplinary orientations, the Natural Resource Management literature tends to focus on the ecological impacts of migration and housing development in amenity destinations (Chi and Marcouiller, 2012, 2013; Gill et al., 2010; Kondo et al., 2012; Theobald et al., 1996).

By 2004 and 2005, the gentrification terminology began to enter the US scholarship on rural socioeconomic change. Ghose (2004) appears to be the first person working in the US context to use the term “rural gentrification” explicitly in her work on Missoula, Montana which examines the arrival of upper class migrants into this small university town nestled in the northern Rockies. Gentrification certainly provides an appropriate conceptual framework for her case study of change in Missoula, but her use of the concept is entirely based in demand-side explanations of the phenomena. Ghose’s work illustrates how footloose upper-middleclass professionals are seeking out the quality of life characteristics found in the small town and surrounding wilderness. Similarly, work done in Washington State relies on demand-side explanations of rural gentrification by showing how affluent in-migrants to rural amenity destinations actively seek the calm and private lifestyles available in these idyllic rural communities (Kondo et al., 2012).

The most widely published US scholars engaging questions of rural gentrification have focused primarily on outcomes of the processes rather than theorizing its causes. From the geography literature, the work of Nelson and Nelson has highlighted how many gentrified rural spaces often rely on pools of flexible, precarious, and often undocumented Latino labor who are rendered invisible in mainstream constructions of the rural idyll (Nelson and Nelson, 2011; Nelson et al., 2010, 2014, 2015). From anthropology, work based in central Montana shows how gentrification of amenity destinations is in part driven by a dissatisfaction with urban living in a modern world. In-migrants to rural amenity destinations, the primary drivers of rural gentrification, are in search of a more authentic lived experience they perceive is available in these small town destination communities (Hines, 2010, 2012). Again, this perspective emphasizes the demand-side drivers of gentrification.

Origins of the rent gap

Despite the potential for supply-side frameworks to expand our understandings of rural gentrification, these perspectives have largely remained outside US scholarship. Nonetheless, key theoretical concepts from the rent gap literature offer potentially insightful ways to examine processes of rural gentrification and forces that combine to produce rent gaps in rural regions. According to Smith, “under its present land use, a site or neighborhood is able to capitalize a certain quantity of ground rent. For reasons of location, usually, such an area may be able to capitalize higher quantities of ground rent under a different land use. Potential ground rent is the amount that could be capitalized under the land’s “highest and best use.” This concept is particularly important in explaining gentrification” (Smith, 1979: 543). A rent gap then develops as the difference between capitalized land rent and potential land rent widens.

Geographic scale also plays an important role in understanding the differences between capitalized and potential ground rent. Capitalized ground rents are largely influenced by localized parcel-specific characteristics such as the quality of the built structure or an individual owner’s willingness or ability to invest in maintenance or property improvements. In contrast, factors operating at a neighborhood or even regional scale play a bigger role in driving potential rents (O'Sullivan, 2002). For example, a neighborhood emerging as “hip” or an expanding regional economy can play a large role in driving up potential land rents resulting in rent gaps.

Hammel (1999) provides a detailed account of how rent gaps can develop over time through historical analysis of several parcels in Minneapolis, Minnesota illuminating two distinct processes resulting in rent gaps. Minneapolis, particularly during the post-War period, experienced significant investment on the urban fringe. Simultaneously, certain neighborhoods in the urban core demonstrated clear evidence of disinvestment and decline. In some locations, capitalized land rent actually decreased while potential land rent rose, and this combination of circumstances is congruous with Smith’s (1979) initial theorization of the rent gap. However, Hammel also identifies areas where rent gaps emerge when capitalized land rents remain stable, but potential land rents rise dramatically through significant investment in other nearby areas of the urban landscape. In such instances, rent gaps rise not through absolute decline in capitalized land rent but rather through relative decline when measured against some alternative land use. Moreover, Hammel’s (1999) case further illustrates how processes operating at a regional scale are effectively driving up potential land rents whereas the capitalized land rents are influenced to a greater degree by more localized factors.

These supply-side frameworks reliant of concepts such as the rent gap provide unique insights into gentrification in an urban context, yet rural gentrification scholars have been slow to extend such frameworks to the countryside, particularly those scholars working in the rural United States. Darling (2005) provides one exception. Using the explicit language of the rent gap, Darling (2005) presents a detailed case study of communities in the Adirondacks of New York State. She examines gentrifying lake properties in this area with access to large expanses of wilderness landscapes. She shows how a state conservation policy effectively limits the supply of property available for development producing valuable “recreational nature” attracting gentrifiers, and this work is revealing on several levels. First, the limited supply of lakefront property resulting from the state policy effectively creates a rent gap. Second, Darling’s case illustrates some of the differences between urban and rural manifestations of the rent gap. Third, by highlighting the role of tourism and second home owners, she shows how there is a unique temporal character to the ways in which gentrification can capitalize on de- or under-valued property (see also Bryson and Wyckoff, 2010). Fourth, by extending the supply side understandings of rural gentrification to a case from the United States, she is able to show the heterogeneity in forms of rural gentrification when compared with work from the United Kingdom similarly framed within supply-side theorizations.

A detailed case study of agricultural restructuring and the subsequent construction of an exclusive residential development in the area surrounding Jackson, Wyoming demonstrates the relevance of the rent gap as a force driving rural gentrification. Moreover, extending supply-side frameworks to rural gentrification further illuminates the complex ways in which rural space is produced and reproduced relationally (Heley and Jones, 2012; Woods, 2012) through networks of capital investment, flows of migrants, and both supply-side and demand-side drivers of gentrification.

Case study: Methods and context

Jackson, Wyoming provides an ideal setting in which to examine rural gentrification in a supply-side framework. First settled in the late 19th century, Jackson was originally home to a few unsuccessful miners and trappers before cattle and sheep ranching supported the first permanent foothold in the valley situated at the base the Teton Mountain range. While agriculture and other resource-based activities provided an early economic base for the area, recreation has also played an important role for well over 100 years. Shortly after the Civil War, President Grant established Yellowstone National Park—the first national park in the United States, and in 1929, President Roosevelt created Grand Teton National Park immediately to the south of Yellowstone (Lee, 1972). Given its proximity to these important natural treasures, Jackson has long been a gateway community for travelers seeking to explore these vast natural landscapes, and it is precisely these types of rural amenities the existing rural gentrification literature highlights with its emphasis on demand side explanations of the process.

The case study of Jackson that follows draws upon evidence gathered through mixed methodologies to illustrate how transformations in the cattle industry coupled with rising demand for housing driven by amenity migration have produced expanding rent gaps in the area. Footloose capital generated through investments operating at a global scale has identified these potentially profitable rent gaps initiating cycles of investment and conversion of agricultural land to residential uses. We draw on historical data from the US Census of Agriculture from 1969 to 2012 to document structural change in the US cattle industry and we trace these changes down to the local scale in Teton County, Wyoming. We supplement the Census of Agriculture data with additional data drawn from the Census of Population and Housing and the American Community Survey from the same time-period. In addition, Teton County, Wyoming maintains a publically available GIS database containing detailed information for each land parcel in the county. For each parcel, the interactive database includes information about property transactions, warranty deeds, construction permits, mortgages, and surveyors’ affidavits (www.tetonwyo.org/gis). We compile individual parcel histories from this interactive digital database for select parcels in the luxury development, 3 Creeks Ranch²—a quintessential example of new build gentrification. Finally, when necessary, we supplement the information available from the two censuses and the parcel database with material from various financial service trade journals, regional histories, and corporate websites. Combined these materials provide convincing evidence of the ways agricultural restructuring and growing demand for rural living combine to generate expanding rent gaps profitable for external sources of capital.

Agricultural restructuring and the creation of gentrifiable rural space

Widespread structural changes in US agriculture began in the early 20th century, and these changes are well-documented in histories of rural America (see for example Conkin, 2008). Through the early history of agriculture in the US from the 1700s until the late 1800s, there was little differentiation among farms. A typical farm produced a diverse array of products including livestock (hogs, sheep, and cattle), milking cows, poultry, vegetables, and grains (corn, wheat, hay, etc.). Family members and a small number of hired workers made up the large agricultural labor force, and during this period, there were limited opportunities for economies of scale. Technology simply did not exist for widespread capital-labor substitution because the earliest tractors powered by steam were cumbersome and not adaptable to widely varied farm conditions in different regions of the United States (Olmstead and Rhode, 2001).

The arrival of capital in the form of tractors, other farm machinery, and fertilizer had a dramatic effect on the structure of agriculture and rural landscapes. Between 1910 and 1970, the number of farms in the United States decreased from 6.3 million to 2.9 million (54% decrease). Simultaneously, farm acreage increased from 878 million to 1102 million (25% increase), the number of tractors increased by over 4.6 million, and fertilizer use increased nearly sevenfold (Lyson, 2004). This restructuring of agriculture resulted in an increase in average farm size from 138 acres in 1910 to 373 in 1970, and average farm size varied considerably from region to region. It is no coincidence that also during this stretch, the US population shifted from a decidedly rural majority (60%) in 1900 to a predominantly urban population (74%) by 1970. Thus, significant capital investment in the agricultural sector resulted in considerable farm consolidation and rural demographic restructuring. These processes of agricultural consolidation alone could produce a supply of gentrifiable properties in the form of old farm houses vacated by former farm operators as shown by Stockdale’s (2010) work in Scotland.

Cattle and sheep ranching, the principal agricultural activities in much of Wyoming, have also undergone significant reorganization in the last several decades driven by rising production in other regions of the United States and increased international competition from Canada and Mexico under NAFTA. These forces of restructuring produce further supplies of former ranchlands ripe for “new build” gentrification. Nationally, the sheep industry peaked in 1942 when 49 million head were reported. By 1979, the national sheep herd had declined by over 80% to only 9 million (Stillman et al., 1990), and the national inventory has remained roughly at that level for the last 25-plus years (Dohner, 2001).

According to the Census of Agriculture the numbers of sheep in Wyoming and Teton County have also dropped dramatically. In 1982, there were over a million sheep in the state; in 1992, there were still roughly 921,000 head. However, by 2002, there were fewer than half as many, at less than 460,000 and a decade later, there were only 355,000 sheep in the state as a whole (US Census of Agriculture, 1978, 1992, 2002, 2012).³ In Teton County, the sheep inventory has fallen even more precipitously over the same time-period. Sheep, which numbered 1354 (on six farms) in 2002, dropped to 301 (on five farms) in 2007. By 2012, the total number of sheep in Teton county was suppressed given that only two farms in the county reported having any sheep at all (US Census of Agriculture, 2012).

While raising sheep has played an important role in the agricultural history of Wyoming and the northern Rocky Mountain region, today, cattle ranching dominates agricultural production across the state, and historically cattle was the main form of agriculture in Teton County. In 2001, cattle accounted for nearly 75% of all agricultural enterprises in the state producing 652 million pounds of beef (Foulke et al., 2006). Like other agricultural commodities, US cattle production has experienced consolidation over the last century. Today, small cattle ranch operations remain most common with more than 90% of operations reporting cattle having herds of less than 100 head. Despite their large number, these smallest operations account for less than 20% of all cattle sales. In contrast, ranches with over 500 head of cattle account for fewer than 2% of all operations yet represent over 60% of all sales.

The consolidation of cattle production into fewer larger farms that took place over the last three to four decades was an economically rational outcome given the trend toward globalization that has come to characterize the agricultural industry. Following the Nixon Administration’s decision to free the US dollar from the gold standard, agricultural production became considerably more global. Beef imports rose steadily from the late 1970s until NAFTA went into effect in 1994. Under NAFTA, beef imports primarily from Canada and Mexico increased more rapidly, and today beef imports are six times greater than they were in the 1970s (Figure 1).

Figure 1.

Value of beef imports to the United States, 1967–2014. Source: US Foreign Agricultural Service: http://apps.fas.usda.gov. Accessed 2 May, 2017.

While beef imports were increasing, the real price of beef was decreasing. Beginning in the 1970s, cattle sales in the United States began to plateau while the real price producers were able to command in the increasingly global market steadily decreased from over $1000 per head in 1978 to a low of $612 per head in 1997. Thus, in the face of increasing international competition, flat levels of production, and decreasing prices, cattle producers had little choice but to seek economies of scale. Larger operations are able to keep per unit production costs lower with the biggest producers in the West and South able to hold per unit costs below $600 (Short, 2001). By the 1990s, cattle producers in the United States faced a simple yet troublesome choice to “get big or get out.”

These challenging market conditions initiated considerable transformation in the cattle industry in Teton County. In 1969, Teton County was home to 63 ranching operations and sold 10,689 cattle and calves (US Census of Agriculture, 1969). In 1992, at the onset of the “Rural Rebound” and on the eve of NAFTA, Teton County cattle sales peaked at 12,665 head albeit from only 43 ranches (a 32% reduction in the number of ranches) (US Census of Agriculture, 1992). The most recent Census of Agriculture of 2012 reports continued declining sales on even fewer ranches with only 6077 cattle sold from only 37 ranches (US Census of Agriculture, 2012). These shifts in the local cattle industry are reflected in relatively stagnant capitalized land rents as measured by the value per acre of agricultural land and buildings (Figure 2). Values for agricultural lands in Teton County have fluctuated somewhat over the last 40 years, but the 2012 Census of Agriculture reports that agricultural lands and buildings in the County are valued at an average of $3181 per acre, roughly equal to the value reported in 1970 after controlling for inflation. Here, we see an example of how local scale parcel specific attributes can influence capitalized land rent (O’Sullivan, 2002). In the urban case, such parcel-specific attributes might include the quality of the actual structure or access to investment capital. Teton County’s climate presents distinct challenges to agricultural operations. Long winters and high altitudes severely limit the growing season (Curtis and Grimes, 2004). Furthermore, limited grazing permits on nearby public lands reduce the potential for individual ranch operators to increase the scale of their production. These challenging place-specific factors severely limit the capitalized land rent for agricultural operations in Teton County.

Figure 2.

Relative change in median home value and value of agricultural land and buildings per acre in Teton County, Wyoming, 1970–2012 (Census of Agriculture, 1969, 1974, 1978, 1982, 1992, 1997, 2002, 2007, 2012; US Census of Population and Housing, 1970, 1980, 1990; US Census Bureau, 2000, 2012).

Despite the lack of inflationary pressures on agricultural land in the Teton Valley, land costs are still markedly more expensive when compared with alternative locations in the larger region. Statewide, the average value of agricultural land per acre in Wyoming is $680 (US Census of Agriculture, 2012). In neighboring Colorado, two counties (Sedgewick and Phillips Counties) home to large cattle operations currently report average values per acre of $1271 and $1117, respectively (US Census of Agriculture, 2012). Agricultural land costs per acre 3–5 times greater in Teton County severely constrain the possibilities for ranching operations to pursue economies of scale and increase the pressure to repurpose agricultural capital toward alternative uses. Thus, just as the spatial reorganization of manufacturing produced gentrifiable spaces in the form of old factories and abandoned warehouses in urban environments, similar forces of agricultural restructuring are generating gentrifiable lands in certain rural locations.

Layered on top of these agricultural shifts are new demographic pressures facing rural communities, as the well-documented Rural Renaissance of the 1970s and Rural Rebound of the 1990s brought new residents to rural regions, particularly regions characterized by high levels of natural amenities and access to recreational resources (Champion, 1988; Fuguitt and Beale, 1996; McGranahan, 1999). Since 1970, the population in Teton County has more than tripled with a growth rate of 369% compared to statewide growth of 75% (American Community Survey, 2011; US Census of Population and Housing, 1970). The most rapid growth took place in the 1990s, when Census estimates indicate net migration rate of 19% bringing 2130 new residents to the County (US Census Bureau, 2000). New footloose rural residents bid up the demand for rural residential properties, reflected in rising home prices in new destination communities (see Figure 2). According to the US Decennial Census, in 1970, Teton County’s average home value was already 1.8 times higher than that of the state of Wyoming ($127k vs. $70k in inflation adjusted 2002 dollars). The most recent American Community Survey (US Census Bureau, 2014) reveals the gap in average home values had expanded to nearly $400k, and was 3.6 times greater in Teton County compared with the state ($539.5k vs. $149.8k, respectively in inflation adjusted 2002 dollars). Increasing population growth and housing costs reflect the regional or neighborhood characteristics that can drive potential land rent up (O’Sullivan, 2002).

Figure 2 presents both median home value and per acre value of agricultural lands for Teton County from 1970 through 2012, normalized to a 1970 benchmark. It is clear that over time, a wide gap has opened between the increasing potential rents associated with residential space and the capitalized rents for existing agricultural land uses. Of note in the Teton County case is the fact that this rent gap is not a function of de-valuation of existing capital, as values for agricultural lands in Teton County are roughly the same in 2012 as they were in 1970. Rather, the rent gap produced in this instance is generated by the rapidly increasing potential rents should capital (ranchlands in this case) be redeployed to residential uses. In this light, the processes creating gentrifying pressures in the rural Teton County case share much in common with those transforming certain neighborhoods in the urban case of Minneapolis described in Hammel (1999).

There has been a perfect storm brewing in the Jackson, Wyoming region over the past 40 years favoring rural gentrification. Well-documented flows of amenity migrants are searching for the high quality of life often associated with rural living in high amenity destinations such as Jackson, and these migration streams fit nicely within well-studied demand-side understandings of rural gentrification. This paper does not intend to question or challenge these demand-side explanations of rural gentrification. Rather, the discussion above brings to light the parallel set of economic forces, simultaneously producing a supply of gentrifiable properties in many rural regions like Jackson. Just as Hamnett (1991) argues both supply and demand-side explanations are necessary to understand the complex geographies of gentrification in urban environments, this paper seeks to more explicitly bring supply-side explanations to the case of rural gentrification. Globalization in the beef industry forced many US beef producers to seek economies of scale to lower per unit production costs by increasing the volume of beef cattle produced (Hoppe, 2014; Short, 2001). Consolidation into fewer but larger production units has been the conventional strategy to achieve these scale economies, yet the efficacy of such strategies varies considerably across space. Physical geography characteristics present severe constraints on the ability to intensify ranching operations given the high altitude and short growing season. Surrounded by National Parks and National Forest (see Figure 3), there is simply no private land available in the area into which existing cattle producers can expand. Furthermore, purchasing existing ranch operations within the county is prohibitively expensive given the inflated per acre costs for agricultural land relative to nearby areas both within and adjacent to Wyoming. Thus, strategies involving scale economies in cattle production are difficult if not impossible. Rising residential demand in the greater Teton Region, however, has produced a sizeable rent gap between returns available to productive resources (land) used for agricultural pursuits, and the potential returns available should these resources be re-purposed as residential spaces, and footloose surplus capital has identified these rural destinations as potentially profitable locations for investment.

Figure 3.

Case study location of Jackson, Wyoming and 3 Creek Ranch.

Capitalizing on the ranching-residential rent gap—A case study of 3 Creek Ranch

Cattle ranching is long associated with the American West, deeply embedded in the cultural iconography of the region, and the history of Jackson Hole has strong ties to the industry. The fur trade first brought whites to the region as early as 1807, and mineral prospectors plied their trade in the Snake River and its tributaries in the mid-19th century. These first activities were short-lived, however, and it was not until the 1880s that Anglos began to establish permanent settlements in the area under the provisions of the Homestead Act. Accounts indicate that the first three homesteaders arrived in Jackson 1884, and by 1888 the population in Jackson included 20 men, 2 women, and 1 child (Daugherty, 1999). Given the key role of homesteading in this initial settlement, it is not surprising that 70% of the workforce listed farming or farm labor as their occupation, and cattle ranching was the primary agricultural pursuit at the dawn of the 20th century (Daugherty, 1999). By 1910, members of the Wyoming Stockgrowers Association from Jackson reported nearly 11,000 cattle in the area, likely an undercount because not all Jackson ranchers were members of the association (Daugherty, 1999).

Historical accounts of these early homesteaders identify several individuals with the last name “Wilson” residing in the area in the late 19th century, and today a small settlement just west of Jackson bears this name in honor of the early homesteading family. Effie Wilson, was rumored to be the first child of European descent born in the Jackson area (Anderson, 2015), and in the early part of the 20th century, Effie and her husband, Earl Simpson, owned and operated a large ranch in an area referred to today as “South Park,” a few miles southwest of the town of Jackson. During this period, most ranchers practiced “Mountain-Valley” ranching, a process involving cattle grazing on upslope public lands during the summer months and returning the herd to valley bottoms in the winter to feed on hay. Effie and Earl used their South Park ranch primarily in this fashion, but decided to sell the ranch and the associated grazing rights in the late 1930s (3creekranch-jh.com, 2015b), as the industry went through a very difficult period brought on both by a series of harsh winters and declining beef prices.

In 1939, Earl and Effie sold their ranch to the Frew family from Pittsburgh, business associates of Andrew Carnegie (Anderson, 2015; Pitz, 2011) demonstrating that there is a long history of outside capital taking an interest in area. The Frews continued to run a cow-calf operation on the roughly 700 acre ranch taking advantage of the range rights to public lands for grazing cattle in the summer months they acquired when they purchased the ranch. As avid fishermen, the Frews also enjoyed world class fishing opportunities found in the three creeks that flow through the property. With the exception of a short change in ownership following World War II, the ranch was under Frew ownership until 2002 (3creekranch-jh.com, 2015b) when the South Park ranch was sold to a new ownership group and re-purposed into residential and recreational space.

As the rural studies literature indicates, beginning in the 1970s rural space began to take on multiple meanings. No longer was rurality solely associated with agriculture and resource extraction. Rather, in the latter part of the 20th century, a post-productivist rurality became more common, as rural regions became associated with serenity, quality of life, and natural amenities (Gosnell and Abrams, 2010; Marsden, 1995; Roche and Argent, 2015). These shifts accelerated in the 1990s during the “Rural Rebound” as advancements in telecommunications technologies rendered the rural “less rural.” With the aid of courier services such as Federal Express, electronic communication, and regional jet service, rural regions once viewed as isolated and removed became more closely connected to the global economy (Beyers and Nelson, 2000).⁴ This combination of factors bid up demand for rural residences, particularly in places with large endowments of environmental amenities like Jackson. By 2002, the rising demand for residential real estate in high amenity areas like Jackson and the acute lack of supply of developable land in the area had combined to produce a sizable gap. As the gap widened, outside sources of capital took note, and in June of 2002, a team of investors including local real estate developers from Jackson as well as Farallon Capital, a hedge fund based in San Francisco (though incorporated in tax-friendly Delaware) paid $75million to acquire the 710 acre ranch and develop it as 3 Creek Ranch—a private development featuring golf, fly fishing, conservation lands, and very high end residences. At approximately $105,000 per acre, this sale was rumored to be the highest amount ever paid per acre for a ranch in the state of Wyoming (3creekranch-jh.com, 2015a). The $105,000 per acre price was more than thirty times the current value per acre of agricultural lands in Teton County according to the 2002 Census of Agriculture.

Despite this record price and putting two-thirds of the lands (over 400 acres) under conservation easements, Farallon saw this investment as a potentially very lucrative deal. Farallon has global reach investing funds on behalf of high net-worth individuals, institutional endowments, and pension plans. Farallon manages over $21billion in assets for a wide array of clients including Yale University, Stanford University (endowment investing), the State of New Mexico Employee pension fund, Delaware Employees Retirement System, the State of New Jersey, and the Doris Duke Charitable Foundation (Donde, 2010; Morris, 2004; Williamson, 2010). Farallon manages a diverse portfolio of both short- and long-term investments and has been involved in a wide array of activities ranging from mineral development in Australia (Whitfield, 2013) to health clubs in New York City (Holman, 2009). At one point, the fund owned a controlling share in PT Bank Central Asia, the largest retail bank in Indonesia (Mapes, 2002), and the fund held a minority share of Martha Stewart enterprises (Taub, 2002). While employing a diversified investment strategy, Farallon explicitly identifies real estate as one of its core strategic areas, and Smith’s (1979) description of the rent gap echoes through Farallon’s own description of their real estate strategy.

This strategy pursues investments in fee simple real estate, leaseholds, mortgages, or other real estate-related assets, especially in cases where redevelopment, leasing, and addition of management expertise can add value. Farallon invests across a broad range of real estate assets and at various points in the capital structure of a real estate transaction. Investments typically involve the purchase of assets that we believe are undervalued or inefficiently managed or financed, in particular assets that are valued at a significant discount to replacement cost or can be developed to higher and better uses. Farallon often partners with experienced local developers who are involved in day-to-day management and oversight of specific real estate projects. (http://www.faralloncapital.com/core-strategies/, emphasis added)

In other words, Farallon Capital actively seeks rent gaps by searching for real estate opportunities that are undervalued, yet provide potentially lucrative return for their high net-worth clients after redevelopment toward better uses. In the case of the 3 Creek Ranch in Jackson, Wyoming, Farallon identified a relatively large, under-valued parcel of formerly agricultural capital (ranchlands) and redeveloped it for recreational and residential uses to be marketed to a very elite segment of upper class consumers producing an exclusive and gentrified rural landscape. Similar examples of “new build” gentrification driven by large investments of corporate capital into former industrial spaces have been identified along the Thames in London (Davidson and Lees, 2005, 2010) and along Suzhou Creek in Shanghai (He, 2010), showing how profitable rent gaps are attractive to footloose capital regardless of urban or rural location.

Examining the details of the 3 Creek Ranch property with greater specificity highlights the extraordinary potential returns of capitalizing on widening rent gaps and gentrifying rural space. After purchase, the ranch’s new owners put the majority of the 710 acre ranch under conservation easement, removing future development potential from these conserved lands yet enhancing the value of the remaining residential portion of the ranchlands by creating “recreational nature” within the boundaries of the development (Darling, 2005). Access to this privatized recreational nature is sold to upper class homeowners when they custom build residences on one of the 130 lots created from the remaining portion of the former ranchlands not placed under easement.

The residential development of 3 Creek Ranch provides three different tiers of residential options (see Figure 4 and Table 1). The most abundant properties available for sale at 3 Creek are “Cabins” arranged on relatively small lots ranging in size from approximately one-half to three-quarters of an acre. Recent listings of these lots range in price from $750,000 to $1.4million. Cabin lot 144 (2690 W. Kingfisher) was recently listed for $1.395 million, and has been sold.⁵

Figure 4.

Location of 3 Creek Ranch development. Source: http://maps.greenwoodmap.com/tetonwy/mapserver/.

Table 1.

Residential tiers at 3 Creek Ranch.

Type	Number of lots	Size	Recent list prices
Cabin lots	86	0.47–0.78 acre	$750,000–$1.4 million
Estate lots	43	1.5–4.5 acres	$1.35–$4.295 million
Ranch lots	6	35 acres	$4.9–$6.5 million

In the “Estates,” owners can purchase somewhat larger lots, sufficiently sized to accommodate considerably larger homes. For example, the 3 Creek Ranch LLP currently owns an “Estate” lot containing an approximately 9500 square foot single family home at 2765 South Rabbit Brush Lane, with an actual valuation listed in the 2016 property tax records of over $9.7 million (http://www.tetonwyo.org/assess/topics/assessor-list/100084/). Another 7000 square foot Estate home recently sold and had been listed at $14.9 million.⁶ The most exclusive and highest priced properties within the 3 Creek portfolio are the “Ranch” lots comprising 35 acre parcels at the northern edge of the former ranch (see Figure 4). These lots are ideally suited for individuals who want to purchase their own exclusive and private piece of rurality and nature. The Ranches are sized in a fashion similar to other “ranchette” developments common across the rural western United States. Ranchettes are large enough to provide a ranching aesthetic, but much too small to support an economically viable ranching operation (Barry and Huntsinger, 2002; Harner and Benz, 2013; Theobald et al., 1996). Thus, the processes illustrated by the 3 Creek ranch development are emblematic of processes playing out in several pockets of rural gentrification in the region.

As the imagery shown in Figure 4 indicates the 3 Creek development is only partially built though the infrastructure is fully complete as are the golf course and clubhouse. This somewhat subdued visual imagery, however, masks considerable real estate activity in terms of transactions. By the fall of 2013, all of the 135 residential lots had been sold (Anderson, 2015), and many had been sold multiple times given the speculative nature of such high end residential developments and the frenzy of real estate activity that has ensued following the collapse of the housing bubble of 2008–2009. Given the estimated range of values shown in Table 1, Farallon Capital and their partners would have grossed between $230 and $240 million on selling the building lots alone, a threefold return on the initial $75 million investment. Such a rate of return is miraculous considering the real estate bubble burst shortly after Farallon and its partners completed the ranch acquisition and began actually selling property in late 2004 and early 2005. The $230 million estimate is undoubtedly lower than the actual level of return given that 3 Creek also engaged in a limited amount of speculative building in the development and has reacquired certain properties initially sold to individual investors and developers.

According to Teton County clerk’s records, Farallon and its partners under the Ranches at Jackson Hole LLC acquired the ranch property over a 2- to 3-year period from 2002 to 2004. After surveying, platting and subdividing the property, the group started selling lots in late summer 2004. Tracing the transaction histories of a few of the 3 Creek lots illuminates the ways in which processes of rural gentrification capitalize on existing rent gaps by providing new spaces in which to invest surplus capital accumulated in other locations. The three brief histories provided below further illustrate the ways in which networks of national and global capital investment combine to in complex ways to produce the contemporary gentrified rural landscape in Jackson, Wyoming.

Between September of 2004 and March of 2005, the Ranches at Jackson Hole LLC sold two Estate lots and two Cabin lots to a wealthy entrepreneur from Chattanooga, Tennessee, who had made his fortune owning convenience stores across the southeastern United States (utc.edu, 2001; Chattanoogan.com, 2010). The timing of these purchases was quite fortuitous. This absentee investor built a house on one of the Cabin lots before quickly selling it in October of 2006 to another out-of-state owner, and this property has subsequently changed hands once more since 2006 representing the increasing pace of property turn-over as capital seeks out potentially profitable rent gaps in gentrifying rural regions. The Tennessee investor held onto the two Estate lots a bit longer, selling them in the first half of 2007 before real estate prices began their cataclysmic slide. One of these Estate lots (Estate lot #2) was purchased by a New York-based investment banker (Sonomacm.com, 2018) who by 2009 had completed construction on a 6000 square foot, six-bedroom home plus a 900 square foot guesthouse on the 3.15 acre lot. Combined the home and guesthouse have a total assessed value of $7.8 million according to the 2016 Teton County grand list and have been refinanced twice since the original purchase. Teton County property records indicate that there is $4.4 million mortgage against these properties.

The other Estate lot (Estate lot #22) was sold to a local builder who has built an 11,000 square foot six bedroom, nine bathroom home on the parcel. In March of 2013, after receiving the final certificate of occupancy from Teton County, the builder sold the newly completed home to the “Lot 22 3 Creek Ranch, LLP” of which he is a partner. Teton County assessor’s records list the value of the home and lot at over $9.7million and indicate there are no outstanding mortgages or liens on this property.

The final Cabin lot has a more sordid history showing once more how cycles of investment and disinvestment flow through spaces of rural gentrification. In June of 2004, the Ranches at Jackson Hole fully acquired Cabin lot #82, and quickly sold the lot to local residents. In February of the following year, these locals took on a $1million mortgage presumably to finish construction of the 4600 square foot 4 bedroom home certified for occupancy on August 10, 2005. It is unlikely, however, that these local investors ever intended to live in this “Cabin” because on 29 March 2005, they sold the partially complete home to the Tennessee investor. The construction was finalized under this new owner before he sold the property once more in November of 2006 to a couple who listed the 3 Creek address as their home on the mortgage suggesting this property may have been intended as their primary residence rather than a second home. At the time of the purchase, the new owners took on two separate mortgages of $2.45 million (30-year adjustable rate mortgage, interest only for the first 10 years) and a $350 thousand mortgage (10-year term). Two months later, in January of 2007, the new owners took on a third mortgage against the property for $700 thousand (5-year term, variable interest rate) in order to pay off the $350 thousand they had borrowed at the time of the purchase. In January of 2010, their loan was reassigned to Aurora Loan Services (formerly part of Lehman Brothers) as the new owners had fallen behind on their payments. In February of 2010, the 3 Creek Homeowners association filed a $4227 lien on the “Cabin” for not paying homeowner’s association dues, and in March, the Teton County Sheriff issued a notice of default. Foreclosure proceedings ended with Aurora taking ownership in July of 2010, and just 2 months later, a resident of Cheyenne, Wyoming bought the property, assuming a $1.4 million mortgage at the time of purchase. The new owner refinanced the property in March 2012 taking on a $600 thousand mortgage while paying off the original note. By September of 2012, the property was sold once more to a San Francisco-based financier, who now holds a $2.65 million mortgage on the property. This financier is a former partner at Farallon Capital who left the firm in 2010 during the Great Recession (Strasburg and Cimilluca, 2010). These nonlocal owners are still listed as the owners of record, and the property is currently assessed at $3.5 million.

Tracing the transaction histories of these parcels in the 3 Creek development illustrates several key features of rural gentrification in the context of the rent gap. First, rural properties have been identified as lucrative locations for the investment and reinvestment of capital generated in any number of places. Second, the cycles of investment are quite rapid as the pace and frequency of financing, refinancing, and selling of properties like those in the 3 Creek development appears to be accelerating. Third, these geographic processes of investment work to produce rural space in a relational sense (Heley and Jones, 2012; Woods, 2012), as networks of capital investment and mortgage financing linking rural spaces to any number of different locations are critical forces shaping the contemporary gentrified countryside.

Conclusion

Rural regions are undergoing significant transformations as they are increasingly drawn into webs of capital investment operating at a global scale. In the United States, migration dynamics and agricultural restructuring are reshaping rural landscapes and economies. Urban landscapes have witnessed similar cycles of disinvestment and reinvestment since the 1970s in the wake of rising offshore production and growing international trade. Gentrification scholars working in urban environments have recognized how the logics of capital work to produce gentrifiable spaces within cities, and these theoretical understandings have enriched our understanding of gentrification as a process. The cyclical and mobile nature of capital investment, however, does not discriminate between urban and rural locales. Rather, capital’s primary concern is whether or not a new location offers the potential to extract additional surplus value, and many rural communities provide precisely these types of opportunities to generate additional profits. Despite often dramatically visible capital investment in gentrifying rural communities, gentrification scholars working in rural regions, particularly those in the United States, have been slower to apply supply-side explanations based on the logic of capital to the study of rural gentrification. Thus, our understanding of the drivers of rural gentrification remains somewhat partial due to the preponderance of demand-side explanations of the process.

The case study of restructuring beef production in the United States alongside the development history of 3 Creek Ranch in Jackson Hole, Wyoming brings an explicitly supply-side framework to the study of rural gentrification in the United States. The bucolic ranchlands in the “South Park” area of Jackson, Wyoming retain much of their rural aesthetic with open spaces, majestic beauty, and productive trout fisheries. Yet, this excavation of the 3 Creek Ranch development history reveals that the function of these lands has changed dramatically. No longer viable as ranchlands in the context of beef production networks that span the globe, these formerly agricultural lands have been redeployed as newly gentrified residential and recreational spaces. The rising price for residential space in close proximity to pristine natural environments coupled with limited returns from agriculture created a sizeable rent gap between actual returns under agricultural production and potential returns through conversion to residential uses. Farallon Capital identified this lucrative rent gap seeing rural regions like Jackson as “dynamic spaces of capital accumulation providing new opportunities to generate profits and to absorb surpluses of capital…” (Harvey, 2014: 107). The case of 3 Creek Ranch in Jackson Wyoming highlights how growing rent gaps in certain rural regions provide exactly these types of spaces attractive to footloose capital. Capital originating from vastly different locations including wealth management in New York City, convenience stores in the southeastern United States, coalmines in Australia, and banking in Indonesia has now identified rural space such as Jackson, Wyoming as a lucrative opportunity for investment under new regimes of accumulation. It is perfectly fitting that a former partner at Farallon Capital, the firm first responsible for identifying the profitable rural rent gap in the Jackson Hole region, should be the one to reinvest in a 3 Creek Property (cabin lot #82) shortly after it had gone through foreclosure. This transaction demonstrates once more the cyclical nature of investment and disinvestment intrinsic within contemporary capitalism and the ways in which these forces continuously produce and reproduce contemporary landscapes, both urban and rural.

Footnotes

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This work is supported by NSF Grant # 14-21050 as part of the Open Research Area (ORA) project on International Rural Gentrification.

Notes

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Rural gentrification and networks of capital accumulation—A case study of Jackson,Wyoming

Abstract

Keywords

Introduction

Rural gentrification, amenity migration, and the demand for rural living

Origins of the rent gap

Case study: Methods and context

Agricultural restructuring and the creation of gentrifiable rural space

Capitalizing on the ranching-residential rent gap—A case study of 3 Creek Ranch

Conclusion

Footnotes

Declaration of conflicting interests

Funding

Notes

References