Recent work in regional science, geography, and urban economics has advanced spatial modeling of land markets and land use by incorporating greater spatial complexity, including multiple sources of spatial heterogeneity, multiple spatial scales, and spatial dynamics. Doing so has required a move away from relying solely on analytical models to partial or full reliance on computational methods that can account for these added features of spatial complexity. In the first part of the paper, we review economic models of urban land development that have incorporated greater spatial complexity, focusing on spatial simulation models with spatial endogenous feedbacks and multiple sources of spatial heterogeneity. The second part of the paper presents a spatial simulation model of exurban land development using an auction model to represent household bidding that extends the traditional Capozza and Helsley (1990) model of urban growth to account for spatial dynamics in the form of local land use spillovers and spatially heterogeneous land characteristics.

The need for models that forecast land use change spans many disciplines and encompasses many approaches. Pattern-based models were the first in which projections of change at specific locations in actual landscapes could be predicted. In contrast, recent economic models have modeled the underlying behavioral process that produces land use change. This paper combines attributes from each approach into a hybrid model using a multiple discrete continuous extreme value formulation that allows for multiple conversion types, while also estimating the intensity of each type of conversion, which is an important but often overlooked dimension. We demonstrate the simulation routine, which successfully predicts a majority of growth by type, time, and location at a disaggregated scale, for a three-county region in Maryland.

A regression discontinuity approach is used to measure the impact of public-goods creating programs in a declining inner city neighborhood of Worcester Massachusetts. Using GIS data, we develop a hedonic model of residential sales, using a parcel-level GIS tax assessment and land use database linked to property sales data for the years 1988 through 2007, to test the effect of the creation of a new high-performing public school, as well as other locational amenities and disamenities on neighborhood housing prices, by comparing properties adjacent to either side of the school catchment area boundary.

This study examines the effectiveness of growth management policies on influencing future patterns of exurban and suburban development. We initially estimate a spatially explicit model of residential development with parcel data in Sonoma County, California. This estimated model is then used to simulate the effect of urban growth boundaries (UGBs) versus allowing municipal sewer service expansion. The UGB policy decreases the amount of suburban development but is less effective in managing exurban development. The downzoning policy in agricultural and resource areas reduces the amount of exurban development, but only partially due to the prevalence of grandfathered lots in rural areas.

Rapid urbanization enhances the desirability of policies for preserving open space but policies intended to preserve open space may extend the urban boundary and create leapfrog development. We investigate this potential conflict between open space preservation and urban sprawl conceptually and empirically using data from the Baltimore-Washington suburbs. In accord with previous theoretical and empirical results, the estimated econometric model indicates that both zoning and forest planting requirements contribute to sprawl by increasing the amount of land needed to accommodate the current number of households. These results point to a conflict between preserving open space incorporated into private building lots or internal to subdivisions and public open space at the urban fringe.

Dutch coastal land markets are characterized by high amenity values but are threatened by potential coastal hazards, leading to high potential damage costs from flooding. Yet, Dutch residents generally perceive low or no flood risk. Using an agent-based land market model and Dutch survey data on risk perceptions and location preferences, this paper explores the patterns of land development and land rents produced by buyers with low, highly skewed risk perceptions. We find that, compared to representative agent and uniform risk perception models, the skewed risk perception distribution produces substantially more, high-valued development in risky coastal zones, potentially creating economically significant risks triggered by the current Dutch flood protection policy.

Forest managers in developing countries enforce extraction restrictions to limit forest degradation. In response, villagers may displace some of their extraction to other forests, which generates “leakage” of degradation. Managers also implement poverty alleviation projects to compensate for lost resource access or to induce conservation. We develop a model of spatial joint production of bees and fuelwood that is based on forest-compatible projects such as beekeeping in Thailand, Tanzania, and Mexico. We demonstrate that managers can better determine the amount and pattern of degradation by choosing the location of both enforcement and the forest-based activity.

This paper extends first-best analysis of anti-sprawl policies, such as development taxes, and examines the welfare effects of development taxes in the presence of urban decline at the city core. We find that anti-sprawl policies generate several important feedbacks within the urban system, generating additional welfare gains and affecting the level of urban decline and suburban sprawl. Further, the optimal development tax exceeds the (first-best) Pigouvian level, irrespective of whether or not revenues are returned lump-sum to all landowners or earmarked for urban decline mitigation.

Policymakers in the Brazilian Amazon face the challenge of meeting environmental and developmental goals as cities and towns within these tropical forests continue to face migration pressure. Alternative government planning strategies have been implemented to address forest clearing in conjunction with meeting social agendas. This paper uses panel estimation methods to investigate the impact of settlement design on land use. Results indicate that new settlement designs developed to further social interaction have had a negative impact on land cover and land use transformation. Thus, while new settlement designs appear to positively impact stated social goals, including greater contact between families and access to water and services, these social advances have come at the expense of environmental goals.

This study examines the drivers of land use in a shifting cultivation system with forest fallow. Forest fallow provides on-farm soil quality benefits, local hydrological regulation, and global public goods. An optimal control model demonstrates that farmers have an incentive to fallow less than is socially optimal, though market failures limiting crop production can have a countervailing effect by encouraging fallow. An econometric model estimated using data from the Brazilian Amazon suggests that fallowing does not result from internalization of local fallow services but instead is associated with poor market access and labor and liquidity constraints.