A Taste for Trips out of Town

Urban sprawl is inefficient if landowners ignore the social value of open space in their decision to develop it

The absence of a market for open space amenities impedes reliable estimation of the landowners’ value, so policies that control urban growth may be ill-informed. Vermeulen and Rouwendal’s approach to this valuation problem relies on the well-established notion that travel costs of recreational activity serve as an implicit price. In the paper the conventional monocentric city model is extended with a demand for ‘trips out of town’: recreation in large contiguous undeveloped areas like forests, wetlands or the countryside, for which open space within the urban boundary is an imperfect substitute. Urban expansion reduces accessibility of such ‘true open space’ for prior inhabitants. A simple expression for the tax on conversion of agricultural land to urban use that internalises this effect is derived. The researchers apply it to the city of Amsterdam. The travel cost approach has rarely been applied to the valuation of open space in or near urban areas. In particular, most applied welfare analyses of open space provision in a general equilibrium framework have been based on capitalization of benefits into local property values. This entails a focus on comparably localized effects. Notably, open space amenities in earlier research are confined to a surrounding squared kilometre. Others have considered the benefit of proximity to public open space, yet the average distance is only about one kilometre in this empirical application. In large cities, visits to true open space will generally require a much longer trip. This is described and discussed in the paper by Rouwendal and Vermeulen.