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A financing mode of Urban Rail transit based on land value capture: A case study in Wuhan City

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  • Sun, Jun
  • Chen, Tian
  • Cheng, Zuchen
  • Wang, Cynthia C.
  • Ning, Xin

Abstract

While urban rail transit has gained increasing popularity, there are still many problems related to obtaining financial resources for constructing it in China. It is proved that the Land Value Capture (LVC) theory can provide theoretical support for exploring new financing mode of urban rail transit to solve these problems. This paper reviews the concept of LVC and the existing LVC finance mechanisms, in particular, Joint Development (JD). It is revealed that JD can’t be directly copied and reproduced in mainland China. The characteristics of land acquisition policy as well as the practice of rail transit construction in mainland China are summarized, and based on the findings, the Predetermined Land Reserve Mode (PLR) is proposed. The essence of this proposed mode is to link the reserve of specific land parcels with the relevant rail transit project and ensure it benefits from the predetermined land reserve. Rail transit companies, with the authorizations from the government, can reserve suitable land parcels prior to the planning and construction of the rail transit system so that they can capture the increased land value after the land transfer. PLR is a new finance mechanism based on LVC and it is different from JD under comparative analysis. Analytical results show that PLR has unique advantages. To demonstrate the performance of PLR, a case study of constructing the urban rail transit system in Wuhan City, China, is presented in this paper, and it shows that the PLR is well suited for financing the urban railway systems in cities of mainland China.

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  • Sun, Jun & Chen, Tian & Cheng, Zuchen & Wang, Cynthia C. & Ning, Xin, 2017. "A financing mode of Urban Rail transit based on land value capture: A case study in Wuhan City," Transport Policy, Elsevier, vol. 57(C), pages 59-67.
    • Handle: RePEc:eee:trapol:v:57:y:2017:i:c:p:59-67
    DOI: 10.1016/j.tranpol.2017.03.014
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    3. Zhansheng Liu & Yueyue Jiao & Anxiu Li & Ximei Liu, 2021. "Risk Assessment of Urban Rail Transit PPP Project Construction Based on Bayesian Network," Sustainability, MDPI, vol. 13(20), pages 1-23, October.
    4. Li, Xinjian & Love, Peter E.D. & Luo, Hanbin & Fang, Weili, 2022. "A systemic model for implementing land value capture to support urban rail transit infrastructure projects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 156(C), pages 90-112.
    5. Weihang Gong & Jing (Victor) Li & Mee Kam Ng, 2021. "Deciphering Property Development around High-Speed Railway Stations through Land Value Capture: Case Studies in Shenzhen and Hong Kong," Sustainability, MDPI, vol. 13(22), pages 1-16, November.
    6. Sharma, Rohit & Newman, Peter, 2018. "Can land value capture make PPP's competitive in fares? A Mumbai case study," Transport Policy, Elsevier, vol. 64(C), pages 123-131.
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    8. Wang, Weifang & van Noorloos, Femke & Spit, Tejo, 2020. "Stakeholder power relations in Land Value Capture: comparing public (China) and private (U.S.) dominant regimes," Land Use Policy, Elsevier, vol. 91(C).
    9. Vejchodská, Eliška & Barreira, Ana Paula & Auziņš, Armands & Jürgenson, Evelin & Fowles, Steven & Maliene, Vida, 2022. "Bridging land value capture with land rent narratives," Land Use Policy, Elsevier, vol. 114(C).
    10. Luan, Xiaofan & Li, Zhigang, 2022. "Financialization in the making of the new Wuhan," Land Use Policy, Elsevier, vol. 112(C).
    11. Artioli, Francesca, 2021. "Sale of public land as a financing instrument. The unspoken political choices and distributional effects of land-based solutions," Land Use Policy, Elsevier, vol. 104(C).
    12. Yunyang Ji & Xiaoxin Guo & Shihu Zhong & Lina Wu, 2020. "Land Financialization, Uncoordinated Development of Population Urbanization and Land Urbanization, and Economic Growth: Evidence from China," Land, MDPI, vol. 9(12), pages 1-22, November.
    13. Zhong, Taiyang & Zhang, Xiaoling & Huang, Xianjin & Liu, Fang, 2019. "Blessing or curse? Impact of land finance on rural public infrastructure development," Land Use Policy, Elsevier, vol. 85(C), pages 130-141.

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