OECD Environment Working Papers

This series is designed to make available to a wider readership selected studies on environmental issues prepared for use within the OECD. Authorship is usually collective, but principal authors are named. The papers are generally available only in their original language English or French with a summary in the other if available.


Causes and Consequences of Open Space in U.S. Urban Areas

The provision of open space is at the heart of a complex arbitration of local public finance and urban quality of life. The amount of open space varies substantially across urban areas. This variation raises some natural questions: What determines the amount of open space in an urban area? How does the amount of open space affect housing prices and local tax revenues? How can we assess whether the amount of open space in urban areas is socially optimal? This paper conducts theoretical and empirical analysis to address these issues. The theoretical analysis reveals that price elasticities of housing demand and supply, economies of scale in providing public services, and capitalized and non-capitalized values of environmental benefits from open space are key parameters affecting the optimal amount of open space. The effects of these parameters are tested on the basis of a sample of U.S. urban areas. Empirical results suggest that a significant share of U.S. urban areas has too little open space, in the sense that additional open space conservation could increase land values and social welfare.


Keywords: local public finances, Open space conservation, land values, environmental amenities
JEL: R3: Urban, Rural, Regional, Real Estate, and Transportation Economics / Real Estate Markets, Spatial Production Analysis, and Firm Location; H4: Public Economics / Publicly Provided Goods; Q2: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Renewable Resources and Conservation
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