How Do Land Markets Anticipate Regulatory Change? Evidence from Canadian Conservation Policy

47 Pages Posted: 24 May 2016 Last revised: 19 Aug 2016

See all articles by Branko Bošković

Branko Bošković

University of Alberta - Department of Marketing, Business Economics & Law

Linda Nøstbakken

Norwegian School of Economics (NHH) - Department of Economics

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Date Written: May 4, 2016

Abstract

Regulation often evolves, and affected consumers or firms may adjust their behavior in anticipation of potential changes to regulation. Using shifting land use regulation boundaries and oil lease prices from Canada, we estimate the effect of anticipated regulatory change on the value of land. We find that anticipated rezoning decreases the price of unregulated leases. Based on our estimates, not accounting for anticipation underestimates the total cost of the regulation by nearly one-third. Overall, the evidence suggests that anticipation effects are significant and that the cost of anticipated regulation is capitalized into land values.

Keywords: Regulation, anticipation, land values, zoning, oil leases, endangered species

JEL Classification: Q58, D44, Q52, Q30

Suggested Citation

Bošković, Branko and Nøstbakken, Linda, How Do Land Markets Anticipate Regulatory Change? Evidence from Canadian Conservation Policy (May 4, 2016). NHH Dept. of Economics Discussion Paper No. 9/2016. Available at SSRN: https://ssrn.com/abstract=2783317 or http://dx.doi.org/10.2139/ssrn.2783317

Branko Bošković

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada

Linda Nøstbakken (Contact Author)

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway
+47-55959134 (Phone)

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