Do Growth Controls Matter?

Empirical evidence shows that the effects of local land use regulations aimed at reducing growth are evident in land values and housing prices. In areas having growth controls, the value of undeveloped land tends to decrease, while that of developed land increases. While the efficiency of land use controls is unclear, they are likely to be inefficient due to major costs such as wasteful decentralization and increased travel time and distance. The paper also outlines how to conduct an empirical test of whether a growth control ordinance is efficient.

Numerous empirical studies are reviewed and critiqued, including: studies that conclude zoning is not justified on efficiency grounds, and that spillovers and land use constraints do not affect property values; studies that show spillovers and zoning do make a difference; studies that examine whether land use controls themselves are a constraint by looking at both undeveloped land values and values of single-family residences; research on intermetropolitan housing price differentials due to growth controls or to monopoly government structure; and studies that evaluate the efficiency of land use controls.

The author concludes that empirical economic research is ambiguous regarding arguments that land use controls are ineffective and unnecessary, but that most growth controls do in fact impose a net cost on society.