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Game of Zones: The Economics of Conservation Areas

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  • Gabriel M. Ahlfeldt
  • Kristoffer Moeller
  • Sevrin Waights
  • Nicolai Wendland

Abstract

Provided there are positive external benefits attached to the historic character of buildings, owners of properties in designated conservation areas benefit from a reduction in uncertainty regarding the future of their area. At the same time, the restrictions put in place to ensure the preservation of the historic character limit the degree to which properties can be altered and thus impose a cost to their owners. We test a simple theory of the designation process in which we postulate that the optimal level of designation is chosen so as to Pareto-maximize the welfare of local owners. The implication of the model is that a) an increase in preferences for historic character should increase the likelihood of a designation, and b) new designations at the margin should not be associated with significant house price capitalization effects. Our empirical results are in line with these expectations.

Suggested Citation

  • Gabriel M. Ahlfeldt & Kristoffer Moeller & Sevrin Waights & Nicolai Wendland, 2013. "Game of Zones: The Economics of Conservation Areas," SERC Discussion Papers 0143, Spatial Economics Research Centre, LSE.
    • Handle: RePEc:cep:sercdp:0143
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    Cited by:

    1. Mark Van Duijn & Jan Rouwendal & Richard Boersema, 2014. "Transformations of industrial heritage: Insights into external effects on house prices," ERES eres2014_59, European Real Estate Society (ERES).
    2. Gabriel M. Ahlfeldt & Nancy Holman, 2018. "Distinctively Different: A New Approach to Valuing Architectural Amenities," Economic Journal, Royal Economic Society, vol. 128(608), pages 1-33, February.
    3. Garcia-López, Miquel-Àngel & Pasidis, Ilias & Viladecans-Marsal, Elisabet, 2018. "Amphitheaters, cathedrals and operas: The role of historic amenities on suburbanization," CEPR Discussion Papers 13129, C.E.P.R. Discussion Papers.
    4. Cuberes, David & Roberts, Jennifer & Sechel, Cristina, 2019. "Household location in English cities," Regional Science and Urban Economics, Elsevier, vol. 75(C), pages 120-135.
    5. Hilber, Christian A.L. & Palmer, Charles & Pinchbeck, Edward W., 2019. "The energy costs of historic preservation," Journal of Urban Economics, Elsevier, vol. 114(C).
    6. Sevrin Waights, 2019. "The preservation of historic districts—is it worth it?," Journal of Economic Geography, Oxford University Press, vol. 19(2), pages 433-464.
    7. Sevrin Waights, 2018. "Does Gentrification Displace Poor Households? An 'Identification-Via-Interaction' Approach," CEP Discussion Papers dp1540, Centre for Economic Performance, LSE.
    8. Kristoffer Moeller, 2013. "Culturally clustered or in the cloud? Location of internet start-ups in Berlin," ERSA conference papers ersa13p455, European Regional Science Association.
    9. van Vuuren, Aico & Kjellander, Josef & Nilsson, Viktor, 2019. "Refugees and apartment prices: A case study to investigate the attitudes of home buyers," Regional Science and Urban Economics, Elsevier, vol. 77(C), pages 20-37.
    10. Gabriel M. Ahlfeldt & Wolfgang Maennig & Felix J. Richter, 2017. "Zoning in reunified Berlin," Working Papers 059, Chair for Economic Policy, University of Hamburg.
    11. Green, Colin P. & Heywood, John S. & Navarro Paniagua, Maria, 2020. "Did the London congestion charge reduce pollution?," Regional Science and Urban Economics, Elsevier, vol. 84(C).
    12. Gabriel Ahlfeldt & Pantelis Koutroumpis & Tommaso Valletti, 2017. "Speed 2.0: Evaluating Access to Universal Digital Highways," Journal of the European Economic Association, European Economic Association, vol. 15(3), pages 586-625.
    13. Ahlfeldt, Gabriel M., 2018. "Weights to address non‐parallel trends in panel difference‐in‐differences models," LSE Research Online Documents on Economics 87666, London School of Economics and Political Science, LSE Library.
    14. Felix Richter, 2014. "Winner Picking in Urban Revitalization Policies: Empirical Evidence from Berlin," ERSA conference papers ersa14p1424, European Regional Science Association.
    15. Paul Cheshire, 2018. "Broken Market or Broken Policy? The Unintended Consequences of Restrictive Planning," National Institute Economic Review, National Institute of Economic and Social Research, vol. 245(1), pages 9-19, August.
    16. Koster, Hans R.A. & van Ommeren, Jos & Volkhausen, Nicolas, 2018. "Short-term rentals and the housing market: Quasi-experimental evidence from Airbnb in Los Angeles," CEPR Discussion Papers 13094, C.E.P.R. Discussion Papers.
    17. Franco, Sofia F. & Macdonald, Jacob L., 2018. "The effects of cultural heritage on residential property values: Evidence from Lisbon, Portugal," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 35-56.
    18. van Duijn, Mark & Rouwendal, Jan & Boersema, Richard, 2016. "Redevelopment of industrial heritage: Insights into external effects on house prices," Regional Science and Urban Economics, Elsevier, vol. 57(C), pages 91-107.
    19. Gabriel M Ahlfeldt, 2018. "Weights to Address Non-parallel Trends in Panel Difference-in-differences Models," CESifo Economic Studies, CESifo, vol. 64(2), pages 216-240.
    20. Kristoffer Moeller, 2018. "Culturally clustered or in the cloud? How amenities drive firm location decision in Berlin," Journal of Regional Science, Wiley Blackwell, vol. 58(4), pages 728-758, September.
    21. ., 2014. "Urban policies," Chapters, in: Urban Economics and Urban Policy, chapter 8, pages 185-218, Edward Elgar Publishing.

    More about this item

    Keywords

    Designation; difference-in-difference; RDD-DD; England; gentrification; heritage; property value;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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