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The Effects of Critical Habitat Designation on Housing Supply: An Analysis of California Housing Construction Activity

  • Jeffrey E. Zabel
  • Robert W. Paterson

Under the Endangered Species Act, the U.S. Fish and Wildlife Service is required to designate critical habitat (CH) for listed species. Designation could result in modification to or delay of residential development projects within habitat boundaries, generating concern over potential housing market impacts. This paper draws upon a large data set of municipal-level (FIPS) building permit issuances and critical habitat designations (CHDs) in California over a 13-year period to identify changes in the spatial and temporal pattern of development activity associated with CHD. We find that the proposal of the median-sized CH results in a 23.5 percent decrease in the supply of housing permits in the short run and a 37.0 percent decrease in the long run. The results indicate the proposal of CH acts as a signal that all development in that FIPS will be more costly. We also find that the impact varies across the two periods in which CH is designated and by the number of years relative to when CH was first proposed. Copyright Blackwell Publishers, 2006

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Article provided by Wiley Blackwell in its journal Journal of Regional Science.

Volume (Year): 46 (2006)
Issue (Month): 1 ()
Pages: 67-95

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Handle: RePEc:bla:jregsc:v:46:y:2006:i:1:p:67-95
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  1. Brueckner, Jan K., 1987. "The structure of urban equilibria: A unified treatment of the muth-mills model," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 20, pages 821-845 Elsevier.
  2. John M. Quigley & Steven Raphael, 2005. "Regulation and the High Cost of Housing in California," American Economic Review, American Economic Association, vol. 95(2), pages 323-328, May.
  3. Meese, Richard A & Wallace, Nancy E, 1997. "The Construction of Residential Housing Price Indices: A Comparison of Repeat-Sales, Hedonic-Regression and Hybrid Approaches," The Journal of Real Estate Finance and Economics, Springer, vol. 14(1-2), pages 51-73, Jan.-Marc.
  4. DiPasquale, Denise, 1999. "Why Don't We Know More about Housing Supply?," The Journal of Real Estate Finance and Economics, Springer, vol. 18(1), pages 9-23, January.
  5. Mayer, Christopher J. & Somerville, C. Tsuriel, 2000. "Residential Construction: Using the Urban Growth Model to Estimate Housing Supply," Journal of Urban Economics, Elsevier, vol. 48(1), pages 85-109, July.
  6. DiPasquale Denise & Wheaton William C., 1994. "Housing Market Dynamics and the Future of Housing Prices," Journal of Urban Economics, Elsevier, vol. 35(1), pages 1-27, January.
  7. Christopher J. Mayer & C. Tsuriel Somerville, . "Land Use Regulation and New Construction," Zell/Lurie Center Working Papers 331, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
  8. Stephen Malpezzi, 1994. "Housing Prices, Externalities, and Regulation in U.S. Metropolitan Areas," Wisconsin-Madison CULER working papers 94-08, University of Wisconsin Center for Urban Land Economic Research.
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