Land use for transport projects: Estimating land value

Abstract

Transportation projects are typically characterized by increased land use, which is a scarce resource of economic value. However, there is a tendency to ignore land value during feasibility studies of transportation projects. This may lead to a reduction in the economic efficiency of a project and to increased land use. This paper presents an economic model, based on the relationship between the elasticity of land price with respect to density, and estimating the future value of land designated for various uses, including transportation projects. The model was applied to transactional data from Israel, and was used for examining the value of land designated for two transport projects within Israel. The conclusions of the study indicate that taking the land value during a feasibility analysis of transportation projects into account, may lead to the consideration of other alternative plans, which may prevent the excessive use of land.