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External benefits of brownfield redevelopment: an applied urban general equilbirum analysis

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  • Vermeer, Niels
  • Vermeulen, Wouter

Abstract

Does brownfield redevelopment warrant government support? We explore several external benefits in an urban general equilibrium framework. Preferences are modelled such that demand for housing units in the city is downward sloping, which yields a more general setup than the extreme open and closed city cases. We shed light on the relative importance of general equilibrium effects of nonmarginal redevelopment projects and we isolate the external benefits of the removal of a local nuisance, the exploitation of agglomeration economies and the preservation of open space at the urban fringe. A numerical application indicates that local nuisance and agglomeration effects may push social returns significantly beyond the value of redeveloped land that accrues to its owner. However, depending on the price elasticity of urban housing demand and the strength of agglomeration economies, the amount of preserved greenfield land may be small and it only generates additional benefits to the extent that direct land use policies fail to internalize its value as open space.

Suggested Citation

  • Vermeer, Niels & Vermeulen, Wouter, 2012. "External benefits of brownfield redevelopment: an applied urban general equilbirum analysis," LSE Research Online Documents on Economics 58337, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:58337
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    File URL: http://eprints.lse.ac.uk/58337/
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    References listed on IDEAS

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    1. Alex Anas & Richard Arnott & Kenneth A. Small, 1998. "Urban Spatial Structure," Journal of Economic Literature, American Economic Association, vol. 36(3), pages 1426-1464, September.
    2. Satyajit Chatterjee, 2006. "A quantitative assessment of the role of agglomeration economies in the spatial concentration of U.S. employment," Working Papers 06-20, Federal Reserve Bank of Philadelphia.
    3. Richard J. Arnott & Joseph E. Stiglitz, 1979. "Aggregate Land Rents, Expenditure on Public Goods, and Optimal City Size," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(4), pages 471-500.
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    Cited by:

    1. I-Chun Chen & Yeng-Chieh Tsai & Hwong-Wen Ma, 2016. "Toward Sustainable Brownfield Redevelopment Using Life-Cycle Thinking," Sustainability, MDPI, vol. 8(10), pages 1-15, October.

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    More about this item

    Keywords

    brownfield redevelopment; land use externalities; urban general equilibrium; benefit-cost analysis;
    All these keywords.

    JEL classification:

    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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