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Land Markets Anticipate Future Regulatory Boundary Changes

Author

Listed:
  • Branko Bošković

    (Shopify, Inc)

  • Linda Nøstbakken

    (Statistics Norway, Research Department)

Abstract

Environmental policies vary across space, and a growing body of empirical research compares land prices across administrative boundaries to estimate the causal effects of local policies. However, this approach can be confounded if the market anticipates the boundaries may change and land prices respond accordingly. We propose a way to separately identify the effect of local policy and the market’s beliefs that boundaries may change, and we apply this approach to Canadian land prices and wildlife protection zones in Alberta. We find that anticipation matters: market expectations that land will become protected reduces land prices by nearly one-quarter, and empirical analysis that omits anticipation underestimates the cost of regulation by one-third.

Suggested Citation

  • Branko Bošković & Linda Nøstbakken, 2025. "Land Markets Anticipate Future Regulatory Boundary Changes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 88(3), pages 589-630, March.
  • Handle: RePEc:kap:enreec:v:88:y:2025:i:3:d:10.1007_s10640-024-00941-3
    DOI: 10.1007/s10640-024-00941-3
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    More about this item

    Keywords

    Anticipation; Environmental regulation; Border discontinuity; Land values; Endangered species;
    All these keywords.

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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