Unintended Effects of Environmental Policies: The Case of Urban Growth Controls and Agricultural Intensification

Matthew J. Fienup and Andrew J. Plantinga

Abstract

When environmental policies do not control decision-making on all margins, they can have unintended effects on the environment. We examine effects of urban growth boundaries (UGBs) on agricultural intensification. A primary goal of a UGB is to preserve open space outside the boundary; however, by eliminating the future rent stream from development, UGBs encourage landowners to adopt more capital-intensive agricultural uses. We empirically estimate UGB effects on intensification rates in Ventura County, California. Difference-in-differences estimates reveal that UGBs increased intensification rates by 16–21 percentage points. In Ventura County, policies designed to preserve open space accelerated its loss and increased agricultural externalities

JEL
View Full Text