TITLE:
Expansive Urban Growth Boundary
AUTHORS:
Tomoru Hiramatsu
KEYWORDS:
Urban Growth Boundary, Centralization and Suburbanization, Computable General Equilibrium
JOURNAL NAME:
Modern Economy,
Vol.5 No.7,
June
25,
2014
ABSTRACT: Intuitively, increasing
the available land, which is an economic resource, should improve social
welfare. However, traditional economic models of urban economy show that an
urban growth boundary (UGB) policy, which restricts land availability, actually
improves social welfare by reducing the negative externalities imposed by
congestion. Nevertheless, recent studies have found that a UGB policy is not
always welfare improving. This paper examines both expansive and restrictive
UGB regimes using the Chicago metropolitan statistical area as an example. The
simulation results presented herein show that an expansive UGB positively
affects social welfare, while a restrictive UGB improves social welfare if open
spaces are considered and vacant land outside the UGB registers a moderate fall
in value. Further, the proportion of absentee landlords is an important
determinant of welfare gains, since their gain (or loss) from a UGB policy in
the real estate market is a drain from the urban economy. Moreover, a
restrictive UGB leads to centralized land use, while an expansive UGB results
in moderate suburbanization. Finally, gasoline consumption decreases under a
restrictive UGB but increases under an expansive UGB because vehicle miles
travelled increase as the city expands outward.