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Title: A discrete-space urban model with environmental amenities

Author: Tajibaeva, Liaila; Haight, Robert G.; Polasky, Stephen

Year: 2008

Publication: Resource and Energy Economics. 30: 170-196.

Abstract: This paper analyzes the effects of providing environmental amenities associated with open space in a discrete-space urban model and characterizes optimal provision of open space across a metropolitan area. The discrete-space model assumes distinct neighborhoods in which developable land is homogeneous within a neighborhood but heterogeneous across neighborhoods. Open space provides environmental amenities within the neighborhood it is located and may provide amenities in other neighborhoods (amenity spillover). We solve for equilibrium under various assumptions about amenity spillover effects and transportation costs in both open-city (with in- and out-migration) and closed-city (fixed population) versions of the model. Increasing open space tends to increase equilibrium housing density and price within a neighborhood. In an open-city model, open space provision also increases housing density and price in other neighborhoods if there is an amenity spillover effect. In a closed-city model, housing density and prices in other neighborhoods can decrease if the pull of the local amenity value is stronger than the push from reduced availability of developable land.We use numerical simulation to solve for the optimal pattern of open space in two examples: a simple symmetric case and a simulation based on the Twin Cities Metropolitan Area, Minnesota, USA.

Last Modified: 3/31/2008


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