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Urban Sprawl: The Role of Land-Use Regulation and Fiscal Competition

English title Urban Sprawl: The Role of Land-Use Regulation and Fiscal Competition
Applicant von Ehrlich Maximilian
Number 162589
Funding scheme Project funding (Div. I-III)
Research institution Departement Volkswirtschaftslehre Universität Bern
Institution of higher education University of Berne - BE
Main discipline Economics
Start/End 01.01.2016 - 30.04.2018
Approved amount 248'060.42
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Keywords (4)

Land-use regulation; Urban sprawl; Tax competition; Local taxes

Lay Summary (German)

Lead
Mit welchen Instrumenten können Gemeinden neue Bewohner attrahieren? Inwiefern werden diese Instrumente durch die lokalen Gebietskörperschaften strategisch genützt? Antworten auf diese Fragen können wichtige Erkenntnisse zum Muster der Zersiedelung und Ihrer Bestimmungsfaktoren liefern.
Lay summary

In den letzten 40 Jahren ist das Phänomen der Zersiedelung der Landschaft in den meisten entwickelten Ländern zu einem wichtigen Thema geworden. Der Anstieg der Zersiedelung geht typischerweise mit steigenden Einkommen und einer substantiellen Reduktion der Transportkosten einher. In der Schweiz ist die Reduktion des Zersiedelungsprozesses in den letzten Jahren auch zu einem politischen Anliegen geworden, wie sich in zwei Volksinitiativen zur Einwanderung und zu Zweitwohnungen gezeigt hat.

In diesem Projekt untersuchen wir, wie Gebietskörperschaften in einer dezentral organisierten Verwaltung die Zersiedelung beeinflussen. Dabei betrachten wir zwei Instrumente: (i) Lokale Einkommenssteuern bestimmen die Nettoeinkommen der ansässigen Haushalte und können daher einen Anreiz schaffen neues Land auszuschreiben um die Steuerbasis in der Gemeinde zu verbreitern. (ii) Durch Bebauungspläne und Nutzungsvorschriften werden der Landnutzung quantitative und qualitative Restriktionen auferlegt. Diese beiden Instrumente werden von lokalen Gebietskörperschaften unabhängig gewählt und können den Zersiedelungsprozess sowohl verstärken als auch abschwächen. Wir untersuchen Interaktionen zwischen den beiden Instrumenten und deren Konsequenzen für die Zersiedelung in einem Modellrahmen der Wettbewerb zwischen lokalen Gebietskörperschaften abbildet.

Direct link to Lay Summary Last update: 26.11.2015

Lay Summary (English)

Lead
What are the main instruments available to municipalities to attract new residents? Are they used strategically? How do households react to these strategies? Answering these questions allows us to gain valuable insights into the spatial patterns of urban sprawl - the spreading of urban developments on undeveloped land near a city - and its determinants.
Lay summary

During the last 40 years, the phenomenon of urban sprawl has progressively become more important in most developed countries. Its surge has typically been associated to rising incomes coupled with a substantial reduction of transportation costs, which allowed individuals to move from compact urban centres to less densely populated areas. In recent years, sprawl has become a major political concern in Switzerland with voters approving two controversial popular initiatives restricting mass immigration and the construction of new second homes. The promoters of these initiatives aimed, among other things, at limiting the potential demand for housing that stems from migration influxes and, in particular, by limiting the land take for new construction of investment homes in the more touristic parts of Switzerland.

In this project we consider the impact of two instruments through which administrative units in a decentralized government might affect sprawl patterns. The first instrument is local income taxes, which affect individuals’ net incomes across administrative units and which may provide incentives to municipalities to permit land for residential development. The second instrument is regulatory constraints – such as zoning restrictions. These are independently implemented within the local jurisdictions and can either hamper or facilitate urban sprawl. We investigate the complementarity of these two instruments in a setting in which local authorities compete against each other to attract residents, and assess their impact on urban sprawl.

Direct link to Lay Summary Last update: 26.11.2015

Responsible applicant and co-applicants

Employees

Publications

Publication
Institutional settings and urban sprawl: Evidence from Europe
Ehrlich Maximilian V., Hilber Christian A.L., Schöni Olivier (2017), Institutional settings and urban sprawl: Evidence from Europe, in Journal of Housing Economics, 1-15.

Collaboration

Group / person Country
Types of collaboration
London School of Economics Great Britain and Northern Ireland (Europe)
- in-depth/constructive exchanges on approaches, methods or results
- Publication
- Research Infrastructure
- Exchange of personnel

Scientific events

Active participation

Title Type of contribution Title of article or contribution Date Place Persons involved
Urban Economics Association European Meeting Talk given at a conference Race to the Top in Urban Sprawl: Long-Run Evidence from Switzerland 11.05.2018 Düsseldorf, Germany Hilber Christian;
Swiss Real Estate Congress Talk given at a conference Race to the top in urban sprawl: long-run evidence from Switzerland 23.03.2018 Zurich, Switzerland Schöni Olivier;
Urban Economic Association, Annual Meeting 2017 Talk given at a conference RACE TO THE TOP IN URBAN SPRAWL: LONG-RUN EVIDENCE FROM SWITZERLAND 08.11.2017 Vancouver, Canada Schöni Olivier;


Self-organised

Title Date Place
CRED Seminar 26.02.2018 Bern, Switzerland

Communication with the public

Communication Title Media Place Year
Talks/events/exhibitions Forum Raumwissenschaften German-speaking Switzerland 2016

Associated projects

Number Title Start Funding scheme
142996 Controlling urban sprawl to limit soil consumption (SPROIL) 01.06.2013 NRP 68 Sustainable Use of Soil as a Resource
143440 Determinants of Local Growth Management Regulation and Its Relation to Urban Sprawl. A Spatial Econometric Analysis at the Municipal Level 01.03.2013 Project funding (Div. I-III)

Abstract

In the last 40 years the phenomenon of urban sprawl has progressively gained importance in most of the developed countries. Its surge has typically been associated to rising incomes coupled with the large-scale distribution of the car which, by reducing transportation costs, allowed individuals to move from compact urban centres to less densely populated areas. Recently, sprawl seems to be of major concern in Switzerland, where voters approved two controversial popular initiatives restricting the construction of new second-homes and mass immigration. The promoters of these initiatives aimed, among other things, to dampen the impact of urban sprawl by preserving the Swiss territory and limiting the potential demand for housing that stems from migration influxes. Additionally, on the 1st of Mai 2014 the Swiss Federal Council enacted a new law on land use planning which intends to restrict further development to areas that are already urbanized and to coordinate land use planning across jurisdictions. The aim is to decrease the rate of conversion of agricultural land into building areas and reduce the costs linked to transports, energy, and water provision. In the present project we plan to consider the impact of two instruments through which administrative units in a decentralized government might affect sprawl patterns. The first instrument concerns local income taxes, which affect individuals’ net income across administrative units. The second channel concerns regulatory constraints that are independently implemented within the local jurisdictions. In particular, we investigate the complementarity of these two instruments in a setting in which local authorities compete against each other to attract residents, and assess their impact on urban sprawl. To this end, we will exploit time variation of the tax burden in each Swiss municipality as well as spatial differences in land-use restrictions within and across municipalities. From a theoretical perspective, the effect of these two channels on urban sprawl is not obvious. On the one hand, municipalities offering low tax rates attract wealthy residents, who typically display a preference for higher housing consumption and less restrictive land use. Hence, inter-govern competition may result in inefficiently low land-use regulation on aggregate. On the other hand, administrative units with low taxes and high income residents may tend to adopt more restrictive regulations in order to maximize land prices, avoid urban growth perceived side-effects, and secure housing wealth of the incumbent residents. In this context, we plan to empirically analyse the relevance of different strategies municipalities may pursue, and study the net effect of these two instruments on urban sprawl. Importantly, and in contrast with the existing literature, we plan to develop a variety of “micro” sprawl measures at the municipality level that capture not only the urban size extent and density gradients, but also geometric spatial characteristics of the distribution of buildings inside administrative units. These measures should provide interesting insights on the effect of local taxes and regulatory constraints on different sprawl dimensions. For instance, there could be a tendency to intensify land use at the boundaries, where negative spillover effects pertain mainly to the neighbouring jurisdictions. In particular, the present project aims to contribute to the current literature on sprawl as follows: •Investigate the complementarity of tax and land-use regulation policies. In this regard, we plan to establish whether the degree of land-use regulation is affected by local competition taking place between administrative units. •Evaluate how fiscal and land-use regulation policies affect urban sprawl within municipalities. To this end, we will take into account possible spillovers due to the implementation of tax and regulatory policies in nearby municipalities. •Create a theoretical framework in which individuals sort across administrative units according to fiscal incentives and land-use regulation. •Define and implement sprawl measures at the municipality level and compare them with traditional sprawl measures. Additionally, we will investigate the spatial correlation of these micro measures with other socio-economic variables observed at the municipality level.We pursue these objectives in two different subprojects. The first subproject focuses on the definition, construction and analysis of sprawl measures at the municipality level. The second subproject investigates the impact of local taxation and regulatory constraints on these measures. See Section 2.3 for further details.
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