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Property Value Capitalization And Municipal Open Space Referenda

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  • Ed Balsdon

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    (Department of Economics, San Diego State University)

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    Abstract

    Billions of dollars have been approved through referenda over the last decade for the acquisition and conservation of private land by municipal governments along the densely populated corridor of the Northeast. This paper first applies the theory of property price capitalization to a public good, “open space”, that can both provide amenities and constrain the supply of new housing. A set of predictions that distinguish homeowner-voters’ incentives to exercise a form of monopoly power over the housing market from demand for the environmental good are based on: (1) the appeal of open space measures to renters, (2) the impact on demand from conservation in neighboring communities, and (3) the relationship between demand for open space and the quality of another locally provided good, public schools. The results indicate a significant degree of demand for open space is being motivated by a simple desire to constrain housing supply and bid up property values, and therefore offer a cautionary note that environmental policy can be used to pursue other goals.

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    File URL: http://www-rohan.sdsu.edu/dept/econ/WPSeries/07_03.pdf
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    Bibliographic Info

    Paper provided by San Diego State University, Department of Economics in its series Working Papers with number 0019.

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    Length: 24 pages
    Date of creation: Mar 2007
    Date of revision:
    Handle: RePEc:sds:wpaper:0019

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    1. Holger Sieg & V. Kerry Smith & H. Spencer Banzhaf & Randy Walsh, . "Estimating the General Equilibrium Benefits of Large Changes in Spatially Delineated Public Goods," GSIA Working Papers 2003-07, Carnegie Mellon University, Tepper School of Business.
    2. Fischel, William A., 2001. "Homevoters, Municipal Corporate Governance, and the Benefit View of the Property Tax," National Tax Journal, National Tax Association, vol. 54(n. 1), pages 157-74, March.
    3. Elena G. Irwin, 2002. "The Effects of Open Space on Residential Property Values," Land Economics, University of Wisconsin Press, vol. 78(4), pages 465-480.
    4. Oates, Wallace E, 1969. "The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 77(6), pages 957-71, Nov./Dec..
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    7. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
    8. Balsdon, Ed & Brunner, Eric J. & Rueben, Kim, 2003. "Private demands for public capital: evidence from school bond referenda," Journal of Urban Economics, Elsevier, vol. 54(3), pages 610-638, November.
    9. Kotchen, Matthew J. & Powers, Shawn M., 2006. "Explaining the appearance and success of voter referenda for open-space conservation," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 373-390, July.
    10. Uwasu, Michinori & Nelson, Erik & Polasky, Stephen, 2005. "Voting on Open Space: An Analysis of the Decision to Hold a Referendum and of Referendum Results," Staff Papers 13837, University of Minnesota, Department of Applied Economics.
    11. Kenneth Y. Chay & Michael Greenstone, 1998. "Does Air Quality Matter? Evidence from the Housing Market," NBER Working Papers 6826, National Bureau of Economic Research, Inc.
    12. Brunner, Eric & Balsdon, Ed, 2004. "Intergenerational conflict and the political economy of school spending," Journal of Urban Economics, Elsevier, vol. 56(2), pages 369-388, September.
    13. Thomas J. Miceli & Kathleen Segerson, 2011. "Regulatory Takings," Working papers 2011-16, University of Connecticut, Department of Economics.
    14. Brueckner, Jan K. & Joo, Man-Soo, 1991. "Voting with capitalization," Regional Science and Urban Economics, Elsevier, vol. 21(3), pages 453-467, November.
    15. Deacon, Robert T & Shapiro, Perry, 1975. "Private Preference for Collective Goods Revealed Through Voting on Referenda," American Economic Review, American Economic Association, vol. 65(5), pages 943-55, December.
    16. Bates, Laurie J. & Santerre, Rexford E., 2001. "The Public Demand for Open Space: The Case of Connecticut Communities," Journal of Urban Economics, Elsevier, vol. 50(1), pages 97-111, July.
    17. Oates, Wallace E. & Schwab, Robert M., 1988. "Economic competition among jurisdictions: efficiency enhancing or distortion inducing?," Journal of Public Economics, Elsevier, vol. 35(3), pages 333-354, April.
    18. Starrett, David A, 1981. "Land Value Capitalization in Local Public Finance," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 306-27, April.
    19. Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-96, June.
    20. Banzhaf, H. Spencer & Walsh, Randy, 2006. "Do People Vote with Their Feet? An Empirical Test of Environmental Gentrification," Discussion Papers dp-06-10, Resources For the Future.
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