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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.

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Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0143.

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Date of creation: Sep 2013
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Handle: RePEc:cep:sercdp:0143
Contact details of provider: Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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

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Find related papers by 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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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. 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.
  3. Gabriel Ahlfeldt & Nancy Holman, 2015. "Distinctively different: A new approach to valuing architectural amenities," ERSA conference papers ersa15p61, European Regional Science Association.
  4. 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.
  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. Ahlfeldt, Gabriel & Koutroumpis, Pantelis & Valletti, Tommaso, 2016. "Speed 2.0 - Evaluating access to universal digital highways," CEPR Discussion Papers 11046, C.E.P.R. Discussion Papers.
  7. Felix Richter, 2014. "Winner Picking in Urban Revitalization Policies: Empirical Evidence from Berlin," ERSA conference papers ersa14p1424, European Regional Science Association.
  8. Hans R.A. Koster & Jan Rouwendal, 2015. "Historic Amenities and Housing Externalities: Evidence from The Netherlands," Tinbergen Institute Discussion Papers 15-023/VIII, Tinbergen Institute.

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