The Effects of Critical Habitat Designation on Housing Supply: An Analysis of California Housing Construction Activity

29 Pages Posted: 8 May 2006

See all articles by Jeffrey E. Zabel

Jeffrey E. Zabel

Tufts University - Department of Economics

Robert W. Paterson

Industrial Economics, Inc.

Abstract

Under the Endangered Species Act, the U.S. Fish and Wildlife Service is required to designate critical habitat (CH) for listed species. Designation could result in modification to or delay of residential development projects within habitat boundaries, generating concern over potential housing market impacts. This paper draws upon a large data set of municipal-level (FIPS) building permit issuances and critical habitat designations (CHDs) in California over a 13-year period to identify changes in the spatial and temporal pattern of development activity associated with CHD. We find that the proposal of the median-sized CH results in a 23.5 percent decrease in the supply of housing permits in the short run and a 37.0 percent decrease in the long run. The results indicate the proposal of CH acts as a signal that all development in that FIPS will be more costly. We also find that the impact varies across the two periods in which CH is designated and by the number of years relative to when CH was first proposed.

Suggested Citation

Zabel, Jeffrey E. and Paterson, Robert W., The Effects of Critical Habitat Designation on Housing Supply: An Analysis of California Housing Construction Activity. Journal of Regional Science, Vol. 46, No. 1, pp. 67-95, February 2006. Available at SSRN: https://ssrn.com/abstract=875056 or http://dx.doi.org/10.1111/j.0022-4146.2006.00433.x

Jeffrey E. Zabel (Contact Author)

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States
617-627-2318 (Phone)
617-627-3917 (Fax)

Robert W. Paterson

Industrial Economics, Inc. ( email )

2067 Massachusetts Avenue
Cambridge, MA 02140-1337
United States

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