Land use externalities, open space preservation, and urban sprawl

Parcel data on residential land conversion are used to investigate how land use externalities influence the rate of development and modify policies designed to manage urban growth and preserve open space. Several "smart growth" policies are found to significantly influence land conversion, including a development clustering policy that concentrates development and generates preserved open space. In addition to directly affecting a parcel's hazard rate of conversion, this policy is found to affect neighboring parcels' conversion by generating a positive open space externality that hastens their development. The implication that the clustering policy could generate a more sprawled pattern of development is explored using spatial simulation. (C) 2004 Elsevier B.V. All rights reserved.