(The) effects of land use regulations on efficiency and equity : the case of floor area ratio regulations and greenbelts in the seoul metropolitan region = 토지이용규제의 효율성과 형평성 : 서울 수도권 용적률 규제 및 그린벨트를 중심으로|RISS 상세보기

다국어 초록 (Multilingual Abstract)

This thesis examines political economic conflicts of interest and inequality caused by land use regulations, especially floor area ratio regulation and greenbelt as density controls used in metropolitan areas.
In Chapter 2 the impact of the greenbelts designated in Seoul Metropolitan Region (SMR hereafter) on the overall urban economy and the differential effects on each type of households in the city is analyzed through the theoretical analysis and the policy experiment. According to this study, the greenbelts in SMR decrease the average real income of the metropolitan area by about 8.6%. Although the environmental benefits were reflected in the model, the distortion in land markets was larger than other benefits. Therefore, greenbelt is basically an inefficient policy from a welfare economics point of view.
Since land use regulation is a planning tool to limit the use and size of the lands and buildings built on it, this study analyzed the equity among the income classes by classifying household types based on the land ownership. As a result, the renter households and Gyeonggi and Incheon landholding households experienced a larger welfare loss than the Seoul landowners. When greenbelts are installed, overall urban land prices increase because of the decrease in land supply. In the case of the renter households, their welfare level decreases since the amount of residential land to be consumed is reduced and the households migrate into zones closer to the center of the city where environmental amenity is the most inferior to other zones. In this thesis, the welfare is converted to the real income by replacing the utility unit with the monetary unit. Hence the welfare loss of the renter household type is equivalent to 11.2% of the real income. In addition, the Gyeonggi and Incheon landholding households, who directly missed the opportunity of land development due to the installation of greenbelts, suffered welfare loss equivalent to 14.2% of the real income. On the other hand, despite the decrease in the supply of residential land, the real income of Seoul landholding households increased by 0.7% due to the increase in land rental income. In other words, it shows that the effect of the greenbelt can be very different depending on the land ownership and the residential location in the city.
The results of the analysis in Chapter 2 show that the greenbelt in SMR is not only inefficient but also economically and environmentally unequal policy. Since it is known that the environmental value of greenbelt is underestimated in the current generation, the value of benefits of the greenbelt might rise. Moreover, greenbelts can prevent excessive urban sprawl in metropolitan areas and are known to have a function of national security in the Korean context. Therefore, discussions about the cancellation of the greenbelt in the current situation should be done carefully even though it is welfare economically inefficient and unequal. However, it should be recognized publicly that the side effects of the greenbelt are mainly paid by the renter households, which are socially and economically weak groups, and alternative means are needed to mitigate the economic and environmental losses of the households.
In Section 3, we extend and revise the model with reference to previous studies in order to overcome the limitations of the basic model in which the proportion of the land sector is somewhat excessive. By introducing the housing and office sectors into the model, the consumption and production activities of households and companies became more realistically. As a result, the effect of the greenbelt analyzed in Chapter 2 was reviewed and additionally analysis of floor area ratio regulations became possible. One of the biggest functions of FAR regulations is to reduce urban congestion by lowering urban density. This study refers to the results of existing literature and reflects this benefit to the model. In this analysis, a simulation was conducted by assuming that the upper limit of the FAR of the residential and commercial land in the city was lowered by 30%.
As a result, the 30% downward adjustment of the upper limit of the FAR showed that the real income of city representative households decreased by 3.3%. The tightening of the FAR regulations means the reduction of the housing and business and commercial facilities in the city, which leads to a decrease in housing consumption of the household sector and a contraction of the economic activity of corporates. In inelastic housing and land market like SMR, the rate of change of demand and supply is smaller than the rate of change of real estate prices. In other words, a 30% reduction in housing and office supply would result in a much larger price increase. The main result of this study is that the cost of regulation of housing welfare deterioration and land use distortion is greater than the benefit of improving outdoor quality in residential areas. This suggests that the FAR regulation may be an ineffective regulation.
In order to analyze the economic equity problem, we divided the households into three types as in Chapter 2 and observed the effect of the FAR regulation. The downward adjustment of the FAR regulation reduced the real income of the renters by 15.6%, while the real income of Seoul landholding households increased by 9.6% and that of Gyeonggi and Incheon landholding households increased by 10.1%. The decrease in housing supply and the increase in housing cost caused by the FAR regulations exacerbated the housing affordability for all types of households. However, since the non-labor income of the landholding households increased significantly, the overall welfare level of landowners improved. This result seems to be even more serious than the result of the inefficiency analyzed above because the real income gap between renter and landholder increases up to 20% only by the land use regulation, which overwhelms the 3.3% of inefficiency problem.
The effect of the greenbelt, which was analyzed again through the extended model, showed that the real income of representative households decreased by 1.1%. This result shows the welfare effect of the greenbelt is very small compared to the result of Chapter 2 (8.6%). In other words, this result can be interpreted as the fact that the analysis environment in which the land replaces buildings such as housing, office can overestimate the effect of the land use regulation. The real income of renter households decreased by 3.4%, but the real income of Seoul landholding households increased by 0.7%, while that of Gyeonggi landholders increased by 2.2%. In terms of equity, the welfare effect of greenbelt was relatively small as well. However, it is noteworthy that the welfare of Gyeonggi and Incheon landholding households has increased by the greenbelt. This is because the increase of land rental income in Gyeonggi and Incheon was larger than the loss of the development profit due to the designation of the greenbelt. In addition, it is because the area in Gyeonggi and Incheon developed densely when the greenbelt is designated, which means that the distortion in land use and economic activity due to the greenbelt can be mitigated because urban developers are able to react to the restriction in the land by a strategy of compact development.
This study analyzes the welfare effects of greenbelt and FAR regulation in both theoretical and numerical perspective in a general equilibrium environment and argues that both regulations can be inefficient and unfair. The land use regulation as a representative physical planning tool of urban space, especially the greenbelt and the FAR regulation in the literature, restrains horizontal and vertical expansion of cities respectively and limits urban density. Both regulations are considered to be essential elements of urban planning because of their nature of simplicity and easiness of policy implementation. However, the results of this study suggest that the welfare effect of land use regulation is not a minor problem at all, especially in the aspect of equity. The fact that the planning means of the planners who pursue public interest can make the social and economic weak groups like the renters suffer severely, should be seen as a serious problem in the field of urban planning. Various and flexible countermeasures should be discussed to solve these problems, and further studies are required.

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