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Is Water Policy Limiting Residential Growth? Evidence from California

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  • Ellen Hanak

Abstract

Rapid population growth and increasing water costs have led western states to condition development on long-term water availability. Using original survey data, this paper examines the effects of water screening policies on California’s housing supply from 1994 to 2003. Panel regressions indicate that these policies significantly slowed housing growth. However, impact fees based on the costs of residential water connections do not have this effect and may constitute a preferred policy. To enhance the social efficiency of screening policies, regulators should encourage the adoption of conservation-oriented water rates, which are associated with significant savings in residential water use.

Suggested Citation

  • Ellen Hanak, 2008. "Is Water Policy Limiting Residential Growth? Evidence from California," Land Economics, University of Wisconsin Press, vol. 84(1), pages 31-50.
    • Handle: RePEc:uwp:landec:v:84:y:2008:i:1:p:31-50
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    References listed on IDEAS

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    1. Ellen Hanak & Ada Chen, 2007. "Wet Growth: Effects Of Water Policies On Land Use In The American West," Journal of Regional Science, Wiley Blackwell, vol. 47(1), pages 85-108, February.
    2. Larry D. Singell & Jane H. Lillydahl, 1990. "An Empirical Examination of the Effect of Impact Fees on the Housing Market," Land Economics, University of Wisconsin Press, vol. 66(1), pages 82-92.
    3. Timmins, Christopher, 2002. "Does the Median Voter Consume Too Much Water? Analyzing the Redistributive Role of Residential Water Bills," National Tax Journal, National Tax Association;National Tax Journal, vol. 55(4), pages 687-702, December.
    4. Stavins, Robert & Hanemann, W. Michael & Olmstead, Sheila, 2005. "Do Consumers React to the Shape of Supply? Water Demand under Heterogeneous Price Structures," RFF Working Paper Series dp-05-29, Resources for the Future.
    5. Engle, Robert & Navarro, Peter & Carson, Richard, 1992. "On the theory of growth controls," Journal of Urban Economics, Elsevier, vol. 32(3), pages 269-283, November.
    6. Brueckner, Jan K., 1997. "Infrastructure financing and urban development:: The economics of impact fees," Journal of Public Economics, Elsevier, vol. 66(3), pages 383-407, December.
    7. Yinger, John, 1998. "The Incidence of Development Fees and Special Assessments," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(1), pages 23-41, March.
    8. Gregory Burge & Keith Ihlanfeldt, 2006. "The Effects Of Impact Fees On Multifamily Housing Construction," Journal of Regional Science, Wiley Blackwell, vol. 46(1), pages 5-23, February.
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    Cited by:

    1. Ellen Hanak & Ada Chen, 2007. "Wet Growth: Effects Of Water Policies On Land Use In The American West," Journal of Regional Science, Wiley Blackwell, vol. 47(1), pages 85-108, February.
    2. Ralph McLaughlin, 2012. "New housing supply elasticity in Australia: a comparison of dwelling types," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 48(2), pages 595-618, April.

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    More about this item

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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