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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, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:sercdp:0143
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    More about this item

    Keywords

    Designation; difference-in-difference; RDD-DD; England; gentrification; heritage; property value;
    All these keywords.

    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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