Working Paper: CEPR ID: DP14546
Authors: Hans Koster
Abstract: I measure the economic effects of greenbelts that prohibit new construction beyond a predefined urban fringe and therefore act as urban growth boundaries. I focus on England, where 13% of the land is designated as greenbelt land. I provide reduced-form evidence and estimate a quantitative equilibrium model that includes amenities, housing supply, a traffic congestion externality, agglomeration forces, productivity, and household location choices. Greenbelt policy generates positive amenity effects, but also strongly reduces housing supply. I find that greenbelts increase welfare because amenity effects are sufficiently strong. At the same time, however, greenbelts decrease housing affordability by limiting housing supply.
Keywords: Housing Supply Constraints; Greenbelts; Urban Growth Boundary; Open Space
JEL Codes: R52; R13; R30; R41; H41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| housing supply (R31) | housing affordability (R31) |
| greenbelt policy (R52) | welfare (I38) |
| greenbelt policy (R52) | income reduction (H53) |
| greenbelt policy (R52) | housing supply (R31) |
| greenbelt policy (R52) | housing prices (R31) |