Restricting the construction of second homes in tourist destinations : an effective intervention towards sustainability?

This study uses a quasi-experiment to evaluate the impact of the second home restriction (Lex Weber) on construction investments in Switzerland. It estimates the effect in different strongly affected areas. Four different specifications are defined, and the changes in investment behaviour are analysed. A first basic model considers the variation in investments through a discrete difference-in-difference analysis, and an extension of the model instead includes a continuous treatment variable to account for the different strong impacts of the law in various municipalities. In the second step, these two basic models are developed into an event study design that allows us to evaluate the effects of the initiative by considering the yearly cumulative impacts separately. The results show that with a delay of three years (due to the expiration of permits), the law had the desired impact on new construction investments. Additionally, the importance of the changes in the local economy and tourism industry are discussed.