Land value capture finance for transport accessibility: a review

Abstract

Cities worldwide have been experiencing escalating problems in obtaining financial resources for transport investment. Investments in transport thus need to seek new paradigms to solve these problems. Accessibility is a pivotal element in this context because it may induce increases in land value whereby some or all of these increments in land value resultant from the increase in accessibility can be captured to recover the capital costs of a transport investment. From this perspective the present paper reviews the main land value capture finance (LVC) mechanisms (betterment tax, accessibility increment contribution, and joint development) in relation to increased transport accessibility. The three financing instruments retain common features such as the ability to achieve wider public goals and private objectives, and they are flexible and can be implemented through different forms of financial instruments. We conclude that, for the successful implementation of a land value capture finance programme to take place, we must always consider the context (the urban area and the transport mode) in addition to the economic relationship between the life cycle of the transport system, its profitability and the property market.