Land conservation policy and rental markets: evaluating unintended housing price effects

Environmental policies can generate distributional impacts through the housing market, impacting homeowners and renters in unequal ways. While environmental improvements often benefit disadvantaged groups, one concern is that these improvements can increase the desirability of neighborhoods, which in turn can increase housing costs for renters and leaves the overall welfare effect ambiguous. In contrast, homeowners benefit from the additional amenities and the equity gain. This paper seeks to evaluate how rental prices respond to gains in nearby land conservation relative to owner-occupied home values using a panel of census and conservation data for the whole USA. We employ a first-difference regression model and use propensity score matching as a pre-processing method to improve the comparability of areas with and without new conservation. Our results suggest that local gains in conservation do not capitalize into rental prices but do capitalize into home values. Overall, our findings indicate that concerns for renters’ welfare and unintended consequences of land conservation are unsupported.