Public open-space conservation under a budget constraint

This paper analyzes the fiscal and land value impacts of public open-­‐space conservation in a budget-­‐constrained city. It derives the necessary and sufficient conditions for open-­‐space conservation to increase the level of municipal services and the total land value within the city. The theoretical results, together with the empirical evidence found in the literature, suggest that open-­‐space conservation can increase the level of municipal services and total land value in a significant share of American cities even if it generates no amenities. Open space conservation will likely increase total land values and municipal services in metropolitan areas that have stringent land use regulations, high development densities, and relatively little open space, but will likely reduce municipal services and total land values in small, lightly regulated cities surrounded by rural land and fiscally constrained in providing essential public goods. (H4, R3, Q2). Keywords: Open space, amenity, land value, municipal services, property tax rates ___________________________ *This paper is based on work supported by the U.S. Forest Service Pacific Northwest Research Station under Grant No. 11-­‐JV-­‐11261985-­‐073. Any findings, conclusions or recommendations expressed in this paper are those of the author and do not necessarily reflect the views of the U.S. Forest Service. The author thanks Wenchao Xu and Ralph Alig for their collaboration on the project and for their comments on an earlier version of this manuscript. He also thanks Co-­‐Editor James Hines and two anonymous referees for their constructive comments, which have contributed to a significant improvement of this manuscript.