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How do land markets anticipate regulatory change? Evidence from Canadian Conservation policy

Author

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  • Boskovic, Branko

    (University of Alberta)

  • Nøstbakken, Linda

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

Abstract

Regulation often evolves, and affected consumers or firms may adjust their behavior in anticipation of potential changes to regulation. Using shifting land use regulation boundaries and oil lease prices from Canada, we estimate the effect of anticipated regulatory change on the value of land. We find that anticipated rezoning decreases the price of unregulated leases. Based on our estimates, not accounting for anticipation underestimates the total cost of the regulation by nearly one-third. Overall, the evidence suggests that anticipation effects are significant and that the cost of anticipated regulation is capitalized into land values.

Suggested Citation

  • Boskovic, Branko & Nøstbakken, Linda, 2016. "How do land markets anticipate regulatory change? Evidence from Canadian Conservation policy," Discussion Paper Series in Economics 9/2016, Norwegian School of Economics, Department of Economics, revised 17 Aug 2016.
    • Handle: RePEc:hhs:nhheco:2016_009
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    More about this item

    Keywords

    Regulation; anticipation; land values; zoning; oil leases; endangered species.;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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