Wetlands and open space: The impact of environmental regulations on land use patterns

Section 404 of the Clean Water Act (CWA) has worked toward minimizing the degradation of wetlands since its inception. In 1985 the definition of the US waters regulated under Section 404 was expanded due to a Supreme Court ruling in an effort to specifically reduce environmental damage caused by new residential development. This study analyzes the resulting development permit approval process from the new regulatory environment following Section 404's expansion to examine the regulation's efficacy and illustrate potential tradeoffs between water resource protection and land fragmentation. Land use changes are identified using difference-in-difference estimators in duration analysis and a sample selection model. Results indicated that the new regulatory framework significantly slowed development of environmentally sensitive parcels but also decreased the density of new development.