Journal Article

Policy Monitor

Virginia McConnell and Margaret Walls

in Review of Environmental Economics and Policy

Published on behalf of Association of Environmental and Resource Economists

Volume 3, issue 2, pages 288-303
Published in print January 2009 | ISSN: 1750-6816
Published online June 2009 | e-ISSN: 1750-6824 | DOI:
Policy Monitor

Show Summary Details


To address the externalities that arise from local land uses, some communities in the United States have turned to Transferable Development Rights (TDRs) as a promising policy tool. TDRs separate the right to develop from the land itself, and create a market that allows those rights to be transferred from one location to another. If the markets work well, targeted areas are protected from development, thereby maintaining them as open space, buffers for water pollution control, wildlife habitat, or scenic vistas, or for other uses; the transferred rights are used to develop other areas more densely than would otherwise be the case. While TDRs have been established in many communities in the last 30 years, only a handful have been successful in achieving local land use goals. The design of TDR markets is complex because they must be integrated with local zoning regulations and they depend critically on local economic conditions in the housing and land markets. This article summarizes the key elements in the design of TDR programs and reviews a number of existing markets to identify which have performed well and which have not. The evolution of the successful markets is described, and lessons learned for future TDR programs are presented.

Keywords: Q24; Q57; Q58

Journal Article.  7717 words.  Illustrated.

Subjects: Environmental Economics

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