Exploiting spatial and temporal variations in residential subdivision development to identify urban growth spillovers

Minimum lot size zoning requirements are a frequent policy tool used to restrict the density and location of residential development. Zoning regulations are typically instituted and adopted locally, often with limited input from surrounding jurisdictions. Autonomous local land use regulations that constrain some, but not all development within a region create discrete differences in the returns to development across otherwise similar locations and are hypothesized to lead to a lower density, more scattered land development pattern. We examine the rural down-zoning policy in Baltimore County, Maryland in 1976 and its potential effect on creating urban growth spillovers in the adjacent counties. Using propensity score matching methods combined with a difference-in-difference econometric strategy, we find that this down-zoning policy resulted in significant spillover impacts to surrounding counties in areas observationally similar to those down-zoned in Baltimore County. To our knowledge, this is first analysis of regional spillover impacts resulting from zoning across county boundaries that relies on spatially disaggregated parcel-level data.