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Time is money: An empirical examination of the effects of regulatory delay on residential subdivision development

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  • Wrenn, Douglas H.
  • Irwin, Elena G.

Abstract

Variation in regulatory costs over time and across different types of investment projects creates risk for developers who hold land. These so-called implicit costs, which arise as a result of regulatory delay in the land development process, are hypothesized to be potentially large, but empirical evidence of their influence on development outcomes is limited. Using a unique micro-level data set on parcel-level subdivision development that includes data on the timing of subdivision approvals, we test the effects of implicit costs that arise as a result of increased subdivision approval times on the timing and pattern of residential subdivision development. Consistent with theory, we find that these regulation-induced implicit costs reduce the probability of subdivision development on any given parcel. In addition, we find that systematic variation in regulation-induced implicit costs across space has reduced development in more heavily regulated urbanized areas intended for development and intensified development in less regulated exurban areas located farther away. The results provide a new explanation of scattered, low-density urban development as the result of optimal land development with multiple development options and heterogeneous regulatory costs.

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  • Wrenn, Douglas H. & Irwin, Elena G., 2015. "Time is money: An empirical examination of the effects of regulatory delay on residential subdivision development," Regional Science and Urban Economics, Elsevier, vol. 51(C), pages 25-36.
    • Handle: RePEc:eee:regeco:v:51:y:2015:i:c:p:25-36
    DOI: 10.1016/j.regsciurbeco.2014.12.004
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    Cited by:

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    3. Ferris, Jeffrey & David, Newburn, 2014. "Residential Development And The Effect Of Forest Conservation Policy," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170337, Agricultural and Applied Economics Association.
    4. Douglas H. Wrenn & H. Allen Klaiber & David A. Newburn, 2017. "Confronting Price Endogeneity in a Duration Model of Residential Subdivision Development," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 32(3), pages 661-682, April.
    5. Wendong Zhang & Douglas H. Wrenn & Elena G. Irwin, 2017. "Spatial Heterogeneity, Accessibility, and Zoning: An Empirical Investigation of Leapfrog Development," Journal of Economic Geography, Oxford University Press, vol. 17(3), pages 547-570.
    6. Li, Xiaoyu & Gopalakrishnan, Sathya & Klaiber, Allen, 2018. "To Build or Not to Build: Examining Coastal Vulnerability via Residential Development in North Carolina," 2018 Annual Meeting, August 5-7, Washington, D.C. 274443, Agricultural and Applied Economics Association.
    7. Wang, Haoluan, 2017. "Land Conservation for Open Space: The Impact of Neighbors and the Natural Environment," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258125, Agricultural and Applied Economics Association.
    8. Li, Sheng & Nadolnyak, Denis & Hartarska, Valentina, 2019. "Agricultural land conversion: Impacts of economic and natural risk factors in a coastal area," Land Use Policy, Elsevier, vol. 80(C), pages 380-390.
    9. Newburn, David & Ferris, Jeffrey, "undated". "The Effect of Downzoning on Spatial Development Patterns," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170446, Agricultural and Applied Economics Association.
    10. Wrenn, Douglas H. & Klaiber, Allen & Newburn, David, 2018. "Price Based Policies for Managing Residential Development and Impacts on Water Quality," 2018 Annual Meeting, August 5-7, Washington, D.C. 274029, Agricultural and Applied Economics Association.
    11. Chen, Yong & Irwin, Elena G. & Jayaprakash, Ciriyam & Irwin, Nicholas B., 2017. "Market thinness, income sorting and leapfrog development across the urban-rural gradient," Regional Science and Urban Economics, Elsevier, vol. 66(C), pages 213-223.
    12. Wrenn, Douglas H. & Klaiber, H. Allen & Newburn, David A., 2019. "Price based policies for managing residential development: Impacts on water quality," Resource and Energy Economics, Elsevier, vol. 58(C).
    13. Wrenn, Douglas H. & Klaiber, Allen & Newburn, David, 2017. "Price-Based Policies for Managing Residential Land Development: Impacts on Water Quality," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258578, Agricultural and Applied Economics Association.
    14. Wrenn, Douglas H. & Sam, Abdoul G., 2014. "Geographically and temporally weighted likelihood regression: Exploring the spatiotemporal determinants of land use change," Regional Science and Urban Economics, Elsevier, vol. 44(C), pages 60-74.
    15. Carmen Carrión-Flores & Elena G. Irwin, 2017. "A fixed effects logit model of rural land conversion and zoning," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 58(1), pages 181-208, January.

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    More about this item

    Keywords

    Land development; Land use regulations; Urban spatial structure;
    All these keywords.

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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