Economics of Greenfield Urban Planning

J. Vernon Henderson, Francisco Libano-Monteiro, Martina Manara, Guy Michaels and Tanner Regan

No 11860, CESifo Working Paper Series from CESifo

Abstract: Urban planning has shaped cities for millennia, demarcating property rights and mitigating coordination failures, but its rigidities often conflict with market-driven development, which reflects preferences. Although planning is widespread in high-income countries, rapidly growing cities in the developing world are characterized by urban informality. Despite its importance, urban planning lacks an economic framework to evaluate planners' choices. This paper offers a starting framework and applies it to a flagship project in Dar es Salaam, Tanzania, which partitioned greenfield land on the urban fringe into more than 36,000 formal plots that people purchased and built homes on. To study this project, we assemble a novel dataset using administrative records, satellite imagery, and primary surveys. We develop and estimate a dynamic model in which planning design constrains the decisions of households of varying incomes to sort into formal areas. This model complements our reduced-form analysis, which uses within-neighborhood variation and spatial RD to study planning choices' effects. We find that the project secured property rights and access, raised land values relative to unplanned areas, and attracted highly educated owners. Within project areas, access to main paved roads, gridded layouts, and natural amenities are valued; plot development and public service provision have been slow; and the price elasticity of bare land with respect to plot size is -0.5. Counterfactual analysis using the model shows that while land value maximization involves the provision of larger plots, welfare maximization entails the provision of smaller plots to serve more lower-income people.

Keywords: urban planning; economic development; Africa. (search for similar items in EconPapers)
JEL-codes: O18 O21 R14 R31 R58 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-dev and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.ifo.de/DocDL/cesifo1_wp11860.pdf (application/pdf)

Related works:
Working Paper: Economics of greenfield urban planning (2025)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_11860

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().