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Estimating the Economic Value of Zoning Reform

Author

Listed:
  • Santosh Anagol
  • Fernando Ferreira
  • Jonah Rexer

Abstract

We estimate the economic value of zoning reform in São Paulo, which altered maximum permitted construction along transportation corridors. Developers increased filings for multifamily construction in blocks affected by the reform, leading to more housing supply and lower housing prices in neighborhoods that allow more densification. Our equilibrium model of housing markets estimates an aggregate 1.6 percent increase in housing stock and a 0.4 percent reduction in prices, resulting in large housing wealth transfers from current to future homeowners. The reform produced welfare gains of 0.65 percent of city GDP, mostly due to developer profits and consumer gains from the newly built environment.

Suggested Citation

  • Santosh Anagol & Fernando Ferreira & Jonah Rexer, 2026. "Estimating the Economic Value of Zoning Reform," American Economic Journal: Economic Policy, American Economic Association, vol. 18(3), pages 235-274, August.
    • Handle: RePEc:aea:aejpol:v:18:y:2026:i:3:p:235-74
    DOI: 10.1257/pol.20230542
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    More about this item

    JEL classification:

    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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