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Title: The Welfare Effects of Greenbelt Policy: Evidence from England

Author(s): Hans R.A. Koster

Publication Date: March 2020

Keyword(s): Gravity, greenbelts, Housing, open space, supply constraints and urban growth boundary

Programme Area(s): International Trade and Regional Economics and Public Economics

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 estimate a quantitative general equilibrium model that includes amenities, housing construction, a traffic congestion externality, agglomeration forces, productivity and household location choices. To identify causal effects of greenbelt land, I construct counterfactual greenbelts, use greenbelt land in 1973, or focus on areas within a km of greenbelt boundaries. Greenbelt policy appears to generate positive amenity effects, but also strongly reduces housing supply. I find the greenbelts seem to increase welfare, as the equivalent income increase of workers is 0.3% and land rents increase by about 6.5%. Whether greenbelts benefit workers critically depends on the presence of spillovers and greenbelt amenities.

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Bibliographic Reference

Koster, H. 2020. 'The Welfare Effects of Greenbelt Policy: Evidence from England'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14546