The Economics of Urban-Rural Space

The emergence of urban-rural space, as evidenced by the expansion of low-density exurban areas and growth of amenity-based rural areas, is characterized by the merging of a rural landscape form with urban economic function. Changing economic conditions, including waning transportation and communication costs, technological change and economic restructuring, rising real incomes, and changing tastes for natural amenities, have led to this new form of urban-rural interdependence. We review the recent research on the causes and consequences of this growth at regional and metropolitan scales, discuss advances in empirical and theoretical economic models of urban land-use patterns at spatially disaggregate scales, and highlight research on environmental impacts and the efficacy of growth controls and land conservation programs that seek to manage this growth. The paper concludes with future research questions and needs. These include spatially disaggregate and accurate data, improved causal inference and structural modeling, and dynamic models that incorporate multiple sources of spatial and agent heterogeneity and interactions.