Land Markets Anticipate Future Regulatory Boundary Changes

Branko Bošković () and Linda Nøstbakken ()
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Branko Bošković: Shopify, Inc
Linda Nøstbakken: Statistics Norway, Research Department

Environmental & Resource Economics, 2025, vol. 88, issue 3, No 2, 589-630

Abstract: Abstract Environmental policies vary across space, and a growing body of empirical research compares land prices across administrative boundaries to estimate the causal effects of local policies. However, this approach can be confounded if the market anticipates the boundaries may change and land prices respond accordingly. We propose a way to separately identify the effect of local policy and the market’s beliefs that boundaries may change, and we apply this approach to Canadian land prices and wildlife protection zones in Alberta. We find that anticipation matters: market expectations that land will become protected reduces land prices by nearly one-quarter, and empirical analysis that omits anticipation underestimates the cost of regulation by one-third.

Keywords: Anticipation; Environmental regulation; Border discontinuity; Land values; Endangered species (search for similar items in EconPapers)
JEL-codes: D84 Q5 R3 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10640-024-00941-3

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