Paper by Hans Koster forthcoming in The Economic Journal

The findings of the paper contribute to the debate on whether we should expand urban development beyond city limits or concentrate it within existing urban areas. The results of the paper suggest that favouring inner-city development is preferred over sacrificing green spaces.

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.

Article citation and access to full article:

Hans Koster, The Welfare Effects of Greenbelt Policy: Evidence from England, The Economic Journal, Volume 134, Issue 657, January 2024, Pages 363–401, doi.org/10.1093/ej/uead077.

Blog and The Economist

In this blog post Koster briefly explains what the advantages and disadvantages are of these so called green belts. Koster's research paper on green belt policy was also mentioned in The Economist article 'Britain’s green belt is choking the economy. The public likes, but badly misunderstands, the anti-sprawl policy. It’s time to rethink it' (August 2023).