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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. Christian A. L. Hilber & Charles Palmer & Edward W. Pinchbeck, 2017. "The Energy Costs of Historic Preservation," SERC Discussion Papers 0217, Spatial Economics Research Centre, LSE.
    5. Kristoffer Moeller, 2013. "Culturally clustered or in the cloud? Location of internet start-ups in Berlin," ERSA conference papers ersa13p455, European Regional Science Association.
    6. Waights, Sevrin, 2018. "Does gentrification displace poor households? An ‘identification-via-interaction’ approach," LSE Research Online Documents on Economics 88691, London School of Economics and Political Science, LSE Library.
    7. 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.
    8. Hans R.A. Koster & Jan Rouwendal, 2017. "Historic Amenities and Housing Externalities: Evidence from the Netherlands," Economic Journal, Royal Economic Society, vol. 127(605), pages 396-420, October.
    9. 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.
    10. repec:oup:cesifo:v:64:y:2018:i:2:p:216-240. is not listed on IDEAS
    11. Gabriel M. Ahlfeldt & Wolfgang Maennig & Felix J. Richter, 2017. "Zoning in reunified Berlin," Working Papers 059, Chair for Economic Policy, University of Hamburg.
    12. Mark van Duijn & Jan Rouwendal, 2015. "Sorting based on Urban Heritage and Income: Evidence from the Amsterdam Metropolitan Area," Tinbergen Institute Discussion Papers 15-030/VIII, Tinbergen Institute, revised 19 Mar 2018.
    13. Felix Richter, 2014. "Winner Picking in Urban Revitalization Policies: Empirical Evidence from Berlin," ERSA conference papers ersa14p1424, European Regional Science Association.
    14. 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.
    15. Sevrin Waights, 2016. "The Preservation of Historic Districts - Is it Worth it?," SERC Discussion Papers 0202, Spatial Economics Research Centre, LSE.
    16. ., 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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