Exurban Development

50 Pages Posted: 12 Mar 2011 Last revised: 5 May 2014

See all articles by David A. Newburn

David A. Newburn

University of Maryland - Department of Agricultural & Resource Economics

Peter Berck

University of California, Berkeley - Department of Agricultural & Resource Economics

Date Written: March 9, 2011

Abstract

Exurbia, the rural area beyond the built-up urban and contiguous suburban area, is being developed rapidly with attendant losses in habitat and ecosystem services. This paper analyzes a spatial dynamic model with two production technologies for residential development - municipal sewer service for suburban development and septic systems for exurban development. In outlying agricultural areas, the additional sewer extension costs can significantly reduce the value of agricultural land in suburban use. Exurban development, while at lower density, can occur immediately and requires only the onsite conversion costs of septic systems. Hence, the willingness to pay for exurban use from households with higher preferences for lot size may exceed the agricultural landowner’s reservation price on future suburban use for a range of distances from the city boundary. This results in a “feasible zone” for exurban leapfrog development and another fundamental reason for scattered development in the urban-rural fringe.

Keywords: exurban development, dynamic closed city model

JEL Classification: Q15, R14

Suggested Citation

Newburn, David Allen and Berck, Peter, Exurban Development (March 9, 2011). Available at SSRN: https://ssrn.com/abstract=1782169 or http://dx.doi.org/10.2139/ssrn.1782169

David Allen Newburn (Contact Author)

University of Maryland - Department of Agricultural & Resource Economics ( email )

Symmons Hall, Rm 2200
University of Maryland
College Park, MD 20742-5535
United States

Peter Berck

University of California, Berkeley - Department of Agricultural & Resource Economics ( email )

Berkeley, CA 94720
United States

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