The Investment Incentive Effects of Land
GEOFFREY K. TURNBULL
Department of Economics, Georgia State University, P.O. Box 3992, Atlanta, GA 30302-3992, USA
This paper provides an overview and synthesis of the results from recent studies of how different types of land
use regulations affect land development incentives. The presentation is nontechnical and focuses on uncovering
general principles for the dynamic effects of such policies. It explains why the risk of regulation leads to faster
development of unregulated land and how the effect on structural densities reﬂects the underlying pattern of
growth in the demand for land by competing uses. It also discusses how the general pattern of timing and
density responses for regulated property reﬂect the same growth patterns in demand.
Key Words: land development, land use regulation, regulatory risk, takings
Recent research on land use restrictions emphasizes the role of regulation adopted over
time in the urban development process. The intertemporal perspective of this work
reveals how regulation alters the pace and pattern of land development across the urban
area, with varying effects on both regulated and unregulated property reﬂecting the
pattern of growth or decline in the underlying demands for land by competing land uses.
The results are novel in that they fundamentally differ from the implications of static
analyses, yet this survey reveals that they are surprisingly robust across the different
types of land use regulations studied. This paper summarizes and discusses the results of
a series of recent papers studying development prohibition, development moratoria,
restrictions on allowed use, and development fees.
It provides a self-contained dis-
cussion of key results and relationships that is geared to the nontechnical specialist,
especially to individuals with a policy perspective.
One goal of this survey is to stimulate further research on the issues surrounding the
design and evaluation of regulation in a dynamic context, including new effort to derive
robust dynamic efﬁciency rules. Another goal is to stimulate interest in making the
dynamic land development literature more accessible to an audience that needs to
incorporate dynamic insights into their world-view: economists and planners with policy
interests and those who teach them.
The underlying theme of this paper is that policy design and evaluation requires a ﬁrm
grounding in how urban capital and real estate markets respond to different types of land
The Journal of Real Estate Finance and Economics, 31:4, 357–395, 2005
2005 Springer Science + Business Media, Inc. Manufactured in The Netherlands.