Discussion paper

DP14546 The Welfare Effects of Greenbelt Policy: Evidence from England

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.

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Citation

Koster, H (2020), “DP14546 The Welfare Effects of Greenbelt Policy: Evidence from England”, CEPR Press Discussion Paper No. 14546. https://new.cepr.org/publications/dp14546