DP11146 Game of zones: The political economy of conservation areas

Author(s): Gabriel Ahlfeldt, Kristoffer Möller, Sevrin Waights, Nicolai Wendland
Publication Date: March 2016
Keyword(s): Designation, Difference-in-Differences, England, Gentrification, Heritage, Property Value
JEL(s): H23, H31, R40, R58
Programme Areas: Public Economics, International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=11146

We develop and test a simple theory of the conservation area designation process in which we postulate that the level of designation is chosen to comply with interests of local homeowners. Conservation areas provide benefits to local homeowners by reducing uncertainty regarding the future of their area. At the same time, the restrictions impose a cost by limiting the degree to which properties can be altered. In line with our model predictions we find that an increase in preferences for historic character by the local pop-ulation increases the likelihood of a designation, and that new designations at the margin are not associat-ed with significant house price capitalisation effects.