AnEmpiricalAnalysisontheEconomicEffectofLandBank

Abstract

1. CONTENTS (1) RESEARCH OBJECTIVES In this study, the necessity and the cost saving effect of preemptive land stockpiling were evaluated for road construction and land development projects.. (2) RESEARCH METHOD This study conducted a qualitative survey on the operation of land banks in Korea and an empirical analysis on the difference between the unit cost of land compensation and the change in land price of surrounding areas during project period. For 5 land development projects and 10 road construction projects, the actual land compensation cost expenditures were compared with the estimated costs assuming lump-sum compensation at the initial point of time. (3) RESEARCH FINDINGS Since the correlation between the published price of land and the unit cost of land compensation, which are changing anually, was unclear in land development projects, the expendture patterns of purchasing land hardly justify the cost-saving effect of preemptive lump-sum compensation. However, in road construction projects, the annual variations in unit cost of land compensation showed similar patterns to the increase in published land price. 2. RESULTS The land stockpiling by land bank is a policy tool to promote public projects such as road construction and industrial complex development quickly by securing land in advance and saving costs. The result showed that, in 10 road construction projects, about 6.8% of land compensation costs can be reduced by assuming lump-sum land purchase in early stages by the Land Bank, while we cannot expect these cost-saving effects in land development projects. It seems that the lump-sum compensation method for stockpiling land is relatively effective in road construction projects, rather than in land development projects, considering the land price increase invoked by development projects. In land development projects, with a proper division of sub-areas to be purchased stepwise, even sequential compensation can be appropriate.