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The role of demand in land re-development

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  • Carozzi, Felipe

Abstract

Vacant, previously-developed land in cities can generate negative externalities on surrounding areas, and is often the target of policies to promote re-development. This paper provides estimates of the price sensitivity of land re-development, a crucial parameter for the success of these policies. My estimates measure how prices affect long-run conversion of unused or underused previously developed land in England. The empirical strategy uses school test scores and admission district boundaries in a boundary discontinuity design to generate variation in housing demand that is orthogonal to re-development costs. Results show that the probability of re-development is effectively sensitive to housing prices. Estimates indicate that a 1% increase in prices leads to a 0.07 percentage point reduction in the fraction of hectares containing brownfield land. Price differences or substantial subsidies could lead to a significant amount of re-development in the long run. This is confirmed by observed land use changes between 2007 and 2011 being disproportionately concentrated in high price areas.

Suggested Citation

  • Carozzi, Felipe, 2020. "The role of demand in land re-development," LSE Research Online Documents on Economics 103690, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:103690
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    File URL: http://eprints.lse.ac.uk/103690/
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    More about this item

    Keywords

    land re-development; Brownfields; land supply;
    All these keywords.

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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