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Land-use regulations and property values in Portland, Oregon: A regression discontinuity design approach

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  • Grout, Cyrus A.
  • Jaeger, William K.
  • Plantinga, Andrew J.

Abstract

Over the past two decades, the tension between public and private interests in the use of land has given rise to state-level legislation seeking to limit government controls on private property. In 2004, voters in Oregon approved Measure 37, which required payments to private landowners for reductions in the value of their property resulting from land-use regulations. The central economic question behind Measure 37 and compensation statutes adopted in other states is, what is the effect of land-use regulations on property values? Economists investigating this question have typically estimated hedonic property value models with regulations included as exogenous regressors. This approach is likely to be invalid if the parcel characteristics that determine property values also influence the government's decision about how to implement regulations. We use Regression Discontinuity Design (RDD) to study the effect of the Portland, Oregon, Urban Growth Boundary (UGB) on property values. RDD provides an unbiased estimate of the treatment effect under relatively mild conditions and is well-suited to our application because the UGB defines a sharp treatment threshold. We find a price differential on the western and southern sides of the Portland metropolitan area ranging from $30,000 to at least $140,000, but no price differential on the eastern side. Support for Measure 37 was fueled by price differences such as these among parcels subject to different regulations, but one must be careful not to view current price differentials as evidence that regulations have reduced property values.

Suggested Citation

  • Grout, Cyrus A. & Jaeger, William K. & Plantinga, Andrew J., 2011. "Land-use regulations and property values in Portland, Oregon: A regression discontinuity design approach," Regional Science and Urban Economics, Elsevier, vol. 41(2), pages 98-107, March.
  • Handle: RePEc:eee:regeco:v:41:y:2011:i:2:p:98-107
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    References listed on IDEAS

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    Cited by:

    1. Solé-Ollé, Albert & Viladecans-Marsal, Elisabet, 2013. "Do political parties matter for local land use policies?," Journal of Urban Economics, Elsevier, vol. 78(C), pages 42-56.
    2. Steven F. Koch & Jeffrey S. Racine, 2016. "Healthcare facility choice and user fee abolition: regression discontinuity in a multinomial choice setting," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 179(4), pages 927-950, October.
    3. repec:eee:regeco:v:65:y:2017:i:c:p:104-115 is not listed on IDEAS
    4. repec:eee:ecolet:v:164:y:2018:i:c:p:58-61 is not listed on IDEAS
    5. Ay, Jean-Sauveur & Latruffe, Laure, 2013. "The Empirical Content of the Present Value Model: A survey of the instrumental uses of farmland prices," Working Papers 157112, Factor Markets, Centre for European Policy Studies.
    6. Dempsey, Judith A. & Plantinga, Andrew J., 2013. "How well do urban growth boundaries contain development? Results for Oregon using a difference-in-difference estimator," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 996-1007.
    7. Seong-Hoon Cho & Seung Gyu Kim & Roland K. Roberts & Dayton M. Lambert & Taeyoung Kim, 2015. "Effects of Land-Related Policies on Land Development during a Real Estate Boom and a Recession," Growth and Change, Wiley Blackwell, vol. 46(2), pages 218-232, June.
    8. Richard J. Vyn, 2015. "The Effect of Agricultural Zoning on Rural Residential Property Values: An Application to Ontario's Greenbelt," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 63(3), pages 281-307, September.
    9. Broch, Stine Wamberg & Strange, Niels & Jacobsen, Jette B. & Wilson, Kerrie A., 2013. "Farmers' willingness to provide ecosystem services and effects of their spatial distribution," Ecological Economics, Elsevier, vol. 92(C), pages 78-86.
    10. Koster, Hans R.A. & van Ommeren, Jos & Rietveld, Piet, 2012. "Bombs, boundaries and buildings," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 631-641.
    11. Hidano, Noboru & Hoshino, Tadao & Sugiura, Ayako, 2015. "The effect of seismic hazard risk information on property prices: Evidence from a spatial regression discontinuity design," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 113-122.
    12. Millard-Ball, Adam, 2012. "Do city climate plans reduce emissions?," Journal of Urban Economics, Elsevier, vol. 71(3), pages 289-311.
    13. Jinlong Gao & Yehua Dennis Wei & Wen Chen & Komali Yenneti, 2015. "Urban Land Expansion and Structural Change in the Yangtze River Delta, China," Sustainability, MDPI, Open Access Journal, vol. 7(8), pages 1-27, July.
    14. Boslett, Andrew & Guilfoos, Todd & Lang, Corey, 2016. "Valuation of expectations: A hedonic study of shale gas development and New York’s moratorium," Journal of Environmental Economics and Management, Elsevier, vol. 77(C), pages 14-30.

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