Sofia F. Franco

Welfare Effects of Anti-Sprawl Policies in the Presence of Urban Decline

This paper extends first-best analysis of anti-sprawl policies, such as development taxes, and examines the welfare effects of development taxes in the presence of urban decline at the city core. We find that anti-sprawl policies generate several important feedbacks within the urban system, generating additional welfare gains and affecting the level of urban decline and suburban sprawl. Further, the optimal development tax exceeds the (first-best) Pigouvian level, irrespective of whether or not revenues are returned lump-sum to all landowners or earmarked for urban decline mitigation.

The uneasy case for lower parking standards

Minimum parking requirements are the norm for urban and suburban development in the United States (Davidson and Dolnick (2002)). The justification for parking space requirements is that overflow parking will occupy nearby street or off-street parking. Shoup (1999) and Willson (1995) provides cases where there is reason to believe that parking space requirements have forced parcel developers to place more parking than they would in the absence of parking requirements. If the effect of parking minimums is to significantly increase the land area devoted to parking, then the increase in impervious surfaces would likely cause water quality degradation, increased flooding, and decreased groundwater recharge. However, to our knowledge the existing literature does not test the effect of parking minimums on the amount of lot space devoted to parking beyond a few case studies. This paper tests the hypothesis that parking space requirements cause an oversupply of parking by examining the implicit marginal value of land allocated to parking spaces. This is an indirect test of the effects of parking requirements that is similar to Glaeser and Gyourko (2003). A simple theoretical model shows that the marginal value of additional parking to the sale price should be equal to the cost of land plus the cost of parking construction. We estimate the marginal values of parking and lot area with spatial methods using a large data set from the Los Angeles area non-residential property sales and find that for most of the property types the marginal value of parking is significantly below that of the parcel area. This evidence supports the contention that minimum parking requirements significantly increase the amount of parcel area devoted to parking.

The Effects of Cultural Heritage on Residential Property Values: Evidence from Lisbon, Portugal

This paper examines the impact of historic amenities on residential housing prices in the city of Lisbon, Portugal. Our study is directed towards identifying the spatial variation of amenity values for churches, palaces, lithic (stone) architecture and other historic amenities via the housing market, making use of both global and local spatial hedonic models. Our empirical evidence reveals that different types of historic and landmark amenities provide different housing premiums. While having a local non-landmark church within 100 meters increases housing prices by approximately 4.2%, higher concentrations of non-landmark churches within 1000 meters yield negative effects in the order of 0.1% of prices with landmark churches having a greater negative impact around 3.4%. In contrast, higher concentration of both landmark and non-landmark lithic structures positively influence housing prices in the order of 2.9% and 0.7% respectively. Global estimates indicate a negative effect of protected zones, however this significance is lost when accounting for heterogeneity within these areas. We see that the designation of historic zones may counteract negative effects on property values of nearby neglected buildings in historic neighborhoods by setting additional regulations ensuring that dilapidated buildings do not damage the city’s beauty or erode its historic heritage. Further, our results from a geographically weighted regression specification indicate the presence of spatial non-stationarity in the effects of different historic amenities across the city of Lisbon with variation between historic and more modern areas.

The Determinants of Non-Residential Real Estate Values with Special Reference to Local Environmental Goods

This paper presents the results of an empirical study of the determinants of non-residential real estate values in Los Angeles County. The data base consists of 13, 370 property transactions from 1996 to 2005. Separate spatial econometric models are developed for industrial, commercial, retail and office properties. The study focus on the impact on property values of local amenities. Our analytical results provide insights on how amenities may affect non-residential properties values and how the impact may differ across property types. Our empirical results offer evidence that explicitly modeling spatial dependence is necessary for hedonic non-residential property models where there is interest in local amenities. We also show that it is also important to account for the temporal dimension since ignoring it can lead to misinterpretation of the real measure of spatial dependence over time. Moreover, we find that in general amenities that are jointly valuable to firms and household, such as parks or air quality have either weak or non-robust effects on nonresidential values. However, the fact that the joint amenities coastal access and crime appear to have stable correlations across specifications would be consistent with a higher firm than household valuation. In contrast, those amenities that are likely only valued by firms, such as transportation access and proximity to concentrations of skilled workers have robust and significant correlations with non-residential values. JEL codes: R52, H23

The Effects of Development Constraints on Forest Management at the Urban-Forest Interface

This article develops a model of a forest owner operating in a small, open‐city environment where the rent for developed land is increasing concave in nearby preserved open space and is rising over time, reflecting an upward trend in households’ income. Within this framework we examine how changes in nearby preserved open space and alternative development constraints affect an individual private landowners decisions regarding both regeneration harvests and conversion dates. We also examine how such policies affect development density once conversion from forestry to residential use occurs. We show that when residential rents change over time, the nature of the timber problem at the urban‐forest interface changes because it forces us to allow for the possibility of changes in land use from timber to residential use. As a result, the traditional Faustmann setup is not suitable to study forest management decisions at this interface. We also find that in the presence of rising income, increases in permanently preserved open space hasten regeneration and conversion cuts of a neighboring parcel currently under forest use and leads to lower density development once conversion takes place compared to the case where income is constant. We also find that both a binding development moratorium and a binding minimum‐lot‐size policy can postpone regeneration and conversion cut dates and thus help to protect open space, even if only temporarily. However, the policies do not have the same effects on development density of converted forestland. While the former leads to high‐density development, the latter encourages low‐density development.

Forest Management in an Urbanizing Landscape

This paper aims at building a theoretical framework to examine the impact of development pressure on private owner’s forest management practices, namely, on regeneration and conversion cut dates. As the rent for developed land is rising over time, our model creates the possibility of switching from forestry to residential use at some point in the future, thus departing from the Faustmann’s traditional setup. Comparative statics results with respect to stumpage prices, regeneration costs and urban growth parameters are provided. The results obtained depend on the impact on the opportunity cost of holding the stand and the impact on the opportunity cost of holding the land, generalizing Faustmann’s unambiguous results.

Urban Containment: An Effective Tool for Environmental Protection?

This paper examines the effectiveness of urban containment policies to protect forestland from residential conversion and to increase the provision of forest public goods in the presence of irreversible investments and policy uncertainty. We develop a model of a single landowner that allows for switching between competing land uses (forestry and residential use) at some point in the future. Our results show that urban containment policies can protect (even if temporarily) forestland from being developed but must be supplemented with policies that influence the length and number of harvesting cycles if the goal is to increase nontimber benefits. The threat of a development prohibition creates incentives for preemptive timber harvesting and land conversion. In particular, threatened regulation creates an incentive to shorten rotation cycles to avoid costly land-use restrictions. However, it has an ambiguous effect on forestland conversion as the number of rotation cycles can also be adjusted to maximize the expected returns to land. Finally, in the presence of irreversibility, forestland conversion decisions should be done using real option theory rather than net present value analysis.

Urban Deforestation and Urban Development

This paper has developed a model of a single forest owner operating with perfect foresight in a dynamic open-city environment that allows for switching between alternative competing land uses (forest and urban use) at some point in the future. The model also incorporates external values of an even-aged standing forest in addition to the value of timber when it is harvested. Timber is exploited based on a multiple rotation model a la Faustmann with clear-cut harvesting. In contrast to previous models, our alternative land use to forest land is endogenous. Within this framework, we study the problem of the private owner as well as that of the social planner, when choosing the time to harvest, the time to convert land and the intensity of development. We also examine the extent to which the two-way linkage between urban development and forest management practices (timber production and provision of forest amenities) contributes to economic efficiency and improvements in non-market forest benefits. Finally, we consider policy options available to a regulator seeking to achieve improvements in efficiency including anti-sprawl policies (impact fees and density controls) and forest policies such a yield tax. Numerical simulations illustrate our analytical results.