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Definition
Transfer of development rights is a technique that is used to make less of a development in some areas compared to more development in other areas. This is a program that allows land owners to not own and sell the property as a whole, but simply own and sell the rights. The area that will have less developments is called the sending area and the area that goes through more developments is called the receiving areas. Through this technique of transfer of growth rights that implements different functions of areas, communities are able to benefit the most out of whichever area they live in. The sending areas are usually environmentally sensitive, which include wildlife habitat, historic landmarks, agriculture land, or whatever is important to the community. The receiving areas are usually places that is open to develop because they are in close proximity to workplace, school, shopping center, and urban services.

Purpose
The purpose of TDR is "to facilitate the geographic movement of the right to develop from locations where it is not desired to areas where it is desired." In other words, it is to ensure open space for planning goals without causing financial burdens or restrict needed developments for landowners. If it is well administered, TDR generates cost-effective and efficient developments. It could reduce prospect of litigation over preservation policies and avoid the use of municipal funds to purchase land while helping to ensure preservation goals. Then, the municipality can increase its tax base, but does not have to settle for less preservation than it really wants.

Methods
There are two methods of transferring development rights. One method is when the TDR program allows the landlord to sell the development rights to another person to develop. Then, the developer is able to use those rights to increase density on another piece of property at another location. "After selling the development rights, a landowner still retains title and all other rights to the land. These other permits include farming, forestry, some recreational uses, and other non-intensive uses."

The second method is the government establishing TDR Bank to transfer development rights to people who want to buy it. In this case, people who wish to develop a land will buy the rights from the local government.

For example, there is a land in a "conservation" zoning district that is zoned to permit one dwelling per acre. Through TDR, the rights to develop 20 dwellings on 20 acres could be transferred to another land. The 20 welling units density could be added to the density that is already allowable in a tract in a specific residential zone. In that specific district, a 15 acre parcel would permit 60 dwelling under the quarter-acre zoning. However, with the added development rights from the conservation district, a total of 80 dwellings could be constructed on the parcel in the residential zone. For the conservation district, however, under the most common TDR model, the 20 acres in this district could not be developed at all. Its economic use value would have been realized by sale of the right to develop it.

Effects on Climate-warming Emissions
TDR programs can serve as tools to reduce climate-warming emissions. Land owners sell development rights of their rural or exurban properties, which eradicates the risk of developing that specific piece of land. It serves to protect resources that the community wants to preserve, which includes farmland and forests. Protecting and preserving certain areas can reduce green house gas (GHG) emissions, but also “local land use and housing patterns can significantly influence climate-warming emissions.” In comparison to those of urban cities, houses in rural areas and low-density suburbs are far from their jobs, stores, and services. In other words, residents of these areas are more sparsely populated in single family homes, and consume more gasoline for transportation, heating, cooling, lighting, and appliances than those living in urban multifamily homes, such as apartments. King county of Washington is a successful example of a significant reduction of GHG emissions through the TDR program. By transferring development from suburban areas to urban neighborhoods, King County reduced 272 metric tons per single family housing unit over 30 years.

An ideal case for a successful GHG reducing TDR exchange is when rural or low-density residents sells the right to build single family homes, and developers in the urban areas increase a floor in a multifamily residence. Not all TDR exchanges, however, yield reduces GHG emissions. For example, in lower density TDR receiving sites in suburban parts of King County had slightly higher household transportation GHG emissions than the national average. This illustrates that simply changing the location of single family homes in rural areas to single family homes in urban cities may have little or no effect in reducing GHG emissions. Furthermore, TDR is not a one-sided transaction. This means that although land in the “sending” sites is eliminated from the risk of development, and the sale of development rights reduces the “odds of development from some indeterminate level to zero.” As for “receiving” sites, the purchase of development rights “increases from zero to 100 percent.”