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The Investment Incentive Effects of Land Use Regulations

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  • Geoffrey Turnbull

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    Abstract

    This paper provides an overview and synthesis of the results from recent studies of how different types of land use regulations affect land development incentives. The presentation is nontechnical and focuses on uncovering general principles for the dynamic effects of such policies. It explains why the risk of regulation leads to faster development of unregulated land and how the effect on structural densities reflects the underlying pattern of growth in the demand for land by competing uses. It also discusses how the general pattern of timing and density responses for regulated property reflect the same growth patterns in demand. Copyright Springer Science + Business Media, Inc. 2005

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    File URL: http://hdl.handle.net/10.1007/s11146-005-3288-y
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    Article provided by Springer in its journal The Journal of Real Estate Finance and Economics.

    Volume (Year): 31 (2005)
    Issue (Month): 4 (December)
    Pages: 357-395

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    Handle: RePEc:kap:jrefec:v:31:y:2005:i:4:p:357-395
    DOI: 10.1007/s11146-005-3288-y
    Contact details of provider: Web page: http://www.springer.com

    Order Information: Web: http://www.springer.com/economics/regional+science/journal/11146/PS2

    Keywords: land development; land use regulation; regulatory risk; takings;

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    1. Geltner, David & Riddiough, Timothy & Stojanovic, Srdjan, 1996. "Insights on the Effect of Land Use Choice: The Perpetual Option on the Best of Two Underlying Assets," Journal of Urban Economics, Elsevier, vol. 39(1), pages 20-50, January.
    2. Robert T. Deacon & Henning Bohn, 2000. "Ownership Risk, Investment, and the Use of Natural Resources," American Economic Review, American Economic Association, vol. 90(3), pages 526-549, June.
    3. Anderson, John E., 1986. "Property taxes and the timing of urban land development," Regional Science and Urban Economics, Elsevier, vol. 16(4), pages 483-492, November.
    4. Brueckner, Jan K., 1997. "Infrastructure financing and urban development:: The economics of impact fees," Journal of Public Economics, Elsevier, vol. 66(3), pages 383-407, December.
    5. Thomas J Miceli & C. F Sirmans & Geoffrey K Turnbull, 2003. "Land Ownership Risk and Urban Development," Journal of Regional Science, Wiley Blackwell, vol. 43(1), pages 73-94.
    6. Ellson, Richard & McDermott, John, 1987. "Zoning uncertainty and the urban land development firm," Journal of Urban Economics, Elsevier, vol. 22(2), pages 209-222, September.
    7. Geoffrey K. Turnbull, 2002. "Land Development under the Threat of Taking," Southern Economic Journal, Southern Economic Association, vol. 69(2), pages 290-308, October.
    8. Fujita, Masahisa, 1982. "Spatial patterns of residential development," Journal of Urban Economics, Elsevier, vol. 12(1), pages 22-52, July.
    9. Mills, David E., 2001. "Land value taxation," Regional Science and Urban Economics, Elsevier, vol. 31(6), pages 765-770, November.
    10. Alchian, Armen A. & Demsetz, Harold, 1973. "The Property Right Paradigm," The Journal of Economic History, Cambridge University Press, vol. 33(01), pages 16-27, March.
    11. Riddiough, Timothy J., 1997. "The Economic Consequences of Regulatory Taking Risk on Land Value and Development Activity," Journal of Urban Economics, Elsevier, vol. 41(1), pages 56-77, January.
    12. Miceli, Thomas J. & Sirmans, C. F. & Turnbull, Geoffrey K., 2000. "The Dynamic Effects of Land Title Systems," Journal of Urban Economics, Elsevier, vol. 47(3), pages 370-389, May.
    13. Sinn, Hans-Werner, 1986. "Vacant land and the role of government intervention," Regional Science and Urban Economics, Elsevier, vol. 16(3), pages 353-357, August.
    14. Kanemoto, Yoshitsugu, 1985. "Housing as an asset and the effects of property taxation on the residential development process," Journal of Urban Economics, Elsevier, vol. 17(2), pages 145-166, March.
    15. Matthew Baker & Thomas Miceli & C. F. Sirmans & Geoffrey K. Turnbull, 2001. "Property Rights by Squatting: Land Ownership Risk and Adverse Possession Statutes," Land Economics, University of Wisconsin Press, vol. 77(3), pages 360-370.
    16. Titman, Sheridan, 1985. "Urban Land Prices under Uncertainty," American Economic Review, American Economic Association, vol. 75(3), pages 505-514, June.
    17. Turnbull, Geoffrey K., 1991. "A comparative dynamic analysis of zoning in a growing city," Journal of Urban Economics, Elsevier, vol. 29(2), pages 235-248, March.
    18. Lawrence Blume & Daniel L. Rubinfeld & Perry Shapiro, 1984. "The Taking of Land: When Should Compensation Be Paid?," The Quarterly Journal of Economics, Oxford University Press, vol. 99(1), pages 71-92.
    19. Wheaton, William C., 1982. "Urban residential growth under perfect foresight," Journal of Urban Economics, Elsevier, vol. 12(1), pages 1-21, July.
    20. Arnott, Richard J & Lewis, Frank D, 1979. "The Transition of Land to Urban Use," Journal of Political Economy, University of Chicago Press, vol. 87(1), pages 161-169, February.
    21. Turnbull, Geoffrey K., 2004. "Urban growth controls: transitional dynamics of development fees and growth boundaries," Journal of Urban Economics, Elsevier, vol. 55(2), pages 215-237, March.
    22. Besley, Timothy, 1995. "Property Rights and Investment Incentives: Theory and Evidence from Ghana," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 903-937, October.
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    Cited by:

    1. Lyytikäinen, Teemu, 2009. "Three-rate property taxation and housing construction," Journal of Urban Economics, Elsevier, vol. 65(3), pages 305-313, May.
    2. Tan Lee & Jyh-Bang Jou, 2010. "Urban Spatial Development: a Real Options Approach," The Journal of Real Estate Finance and Economics, Springer, vol. 40(2), pages 161-187, February.
    3. John M. Quigley & Aaron M. Swoboda, 2010. "Land use regulation with durable capital," Journal of Economic Geography, Oxford University Press, vol. 10(1), pages 9-26, January.
    4. Miceli, Thomas J. & Sirmans, C.F., 2007. "The holdout problem, urban sprawl, and eminent domain," Journal of Housing Economics, Elsevier, vol. 16(3-4), pages 309-319, November.
    5. Lee, Tan & Jou, Jyh-Bang, 2007. "The regulation of optimal development density," Journal of Housing Economics, Elsevier, vol. 16(1), pages 21-36, March.
    6. Maria A. Cunha-e-Sa & Sofia F. Franco, 2012. "Urban Containment: An Effective Tool for Environmental Protection?," FEUNL Working Paper Series wp563, Universidade Nova de Lisboa, Faculdade de Economia.
    7. A. Navarro, Ignacio & Turnbull, Geoffrey K., 2010. "The Legacy Effect of Squatter Settlements on Urban Redevelopment," WIDER Working Paper Series 025, World Institute for Development Economic Research (UNU-WIDER).
    8. Asaf Friedman Arch, 2014. "Sustainable Urban Renewal: The Tel Aviv Dilemma," Sustainability, MDPI, Open Access Journal, vol. 6(5), pages 1-11, April.
    9. Jyh-Bang Jou & Tan (Charlene) Lee, 2009. "How Does a Development Moratorium Affect Development Timing Choices and Land Values?," The Journal of Real Estate Finance and Economics, Springer, vol. 39(3), pages 301-315, October.
    10. Nishihara, Michi, 2012. "Real option valuation of abandoned farmland," Review of Financial Economics, Elsevier, vol. 21(4), pages 188-192.
    11. Jou, Jyh-Bang, 2012. "Efficient growth boundaries in the presence of population externalities and stochastic rents," The Quarterly Review of Economics and Finance, Elsevier, vol. 52(4), pages 349-357.
    12. Ignacio Navarro & Geoffrey Turnbull, 2014. "Property Rights and Urban Development: Initial Title Quality Matters Even When it No Longer Matters," The Journal of Real Estate Finance and Economics, Springer, vol. 49(1), pages 1-22, July.

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