The Economic Consequences of Regulatory Taking Risk on Land Value and Development Activity

J. OF URBAN ECONOMICS

Posted: 5 Jul 1998

See all articles by Timothy J. Riddiough

Timothy J. Riddiough

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics

Abstract

In this paper the real options approach to land valuation is extended by: i) showing how land value may be adversely affected where localities threaten a regulatory taking with less than full compensation, ii) quantifying the resulting probability of development, which may increase in an attempt to thwart the taking of development rights; and, iii) measuring the value of lost income on an ex ante basis when an interim taking occurs. We find that the economic impact of such regulation can be substantial, which has implications for measuring just compensation claims as well as for general land use regulatory policy and related legal theory.

JEL Classification: R38

Suggested Citation

Riddiough, Timothy J., The Economic Consequences of Regulatory Taking Risk on Land Value and Development Activity. J. OF URBAN ECONOMICS, Available at SSRN: https://ssrn.com/abstract=7465

Timothy J. Riddiough (Contact Author)

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics ( email )

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