Value Capture – Selected Resources

Studies quantifying the land value benefits of infrastructure provision:

There is a wealth of studies that attempt to measure the uplift in land values due to public investment in infrastructure. These studies usually employ statistical methods, such as hedonic price regressions, to analyse repeat sales price data. The majority of empirical studies investigate the relationship between transport infrastructure and land prices. However, there are studies looking at roads, schools, street trees, parks and gardens etc. In general, the rate of uplift varies depending on the context of the infrastructure investment. The empirical evidence also suggests that ‘willingness-to-pay’ for new infrastructure projects is capitalised into land prices very quickly after a project is announced. Empirical analysis helps us formulate better value capture policy.

The Economic Value of The Free Library In Philadelphia, Fels Institute of Government, 2010, p8 … [We] found that within 1/4 mile of one of Philadelphia’s 54 (library) branches, the value of a home rose by $9,630. Overall, Philadelphia’s public libraries added $698million to home values—which in turn generated an additional $18.5 million in property taxes to the City and School District each year. That benefit alone recouped more than half of the city’s investment.

Measuring the Economic Value of a City Park System, Harnik and Welle, 2009, p8

… Research into quantifying park quality continues; in the interim we have chosen to assign the conservative value of 5 percent as the amount that parkland adds to the assessed value of all dwellings within 500 feet of parks. (The preponderance of studies has revealed that excellent parks tend to add 15 percent to the value of a proximate dwelling).


Multilateral Agreements & International Context:

United Nations Conference on Human Settlements (1976) Habitat I: The Vancouver Declaration Habitat I–the first United Nations Conference on Human Settlements–was convened in Vancouver, 1976, as governments began to recognise the magnitude and consequences of rapid urbanisation.

Recommendation D.3 Recapturing plus value:

Excessive profits resulting from the increase in land value due to development and change in use are one of the principal causes of the concentration of wealth in private hands. Taxation should not be seen only as a source of revenue for the community but also as a powerful tool to encourage development of desirable locations, to exercise a controlling effect on the land market and to redistribute to the public at large the benefits of the unearned increase in land values.

The unearned increment resulting from the rise in land values resulting from change in use of land, from public investment or decision or due to the general growth of the community must be subject to appropriate recapture by public bodies (the community), unless the situation calls for other additional measures such as new patterns of ownership, the general acquisition of land by public bodies.

Specific ways and means include:

    • Levying of appropriate taxes, e.g. capital gains taxes, land taxes and betterment charges, and particularly taxes on unused or under-utilized land;
    • Periodic and frequent assessment of land values in and around cities, and determination of the rise in such values relative to the general level of prices:
    • Instituting development charges or permit fees and specifying the time-limit within which construction must start;
    • Adopting pricing and compensation policies relating to value of land prevailing at a specified time rather than its commercial value at the time of acquisition by public authorities;
    • Leasing of publicly owned land in such a way that future increment which is not due to the efforts by the new user is kept by the community;
    • Assessment of land suitable for agricultural use which is in proximity of cities mainly at agricultural values.

United Nations Conference on Housing and Sustainable Urban Development (2016) Habitat III: The Quito Declaration & New Urban Agenda The land value capture approach was re-endorsed at the most recent United Nations Conference on Housing and Sustainable Urban Development held in Quito, 2016:

(iv) Supporting effective, innovative and sustainable financing frameworks and instruments enabling strengthened municipal finance and local fiscal systems in order to create, sustain and share the value generated by sustainable urban development in an inclusive manner.


  1. We will promote best practices to capture and share the increase in land and property value generated as a result of urban development processes, infrastructure projects and public investments. Measures such as gains-related fiscal policies could be put in place, as appropriate, to prevent its solely private capture, as well as land and real estate speculation. We will reinforce the link between fiscal systems and urban planning, as well as urban management tools, including land market regulations. We will work to ensure that efforts to generate land-based finance do not result in unsustainable land use and consumption.

Asian Development Bank (2019) Sustaining Transit Investment in Asia’s Cities: A Beneficiary-Funding and Land Value Capture Perspective This report proposes five key mechanisms of land value capture and how they might be used to fund sustained urban transit investment in developing countries in Asia. It provides a primer on the importance of land value capture in urban planning and growth and identifies challenges to its use in Southeast Asian megacities like Bangkok, Jakarta, and Manila. The report combines technical analysis of land value increases arising from public mass transit investments with policy recommendations on the use of land value capture mechanisms in a developing country context.

United Nations Human Settlements Programme (2011), Innovative Land and Property Taxation This lengthy 2011 report by the United Nations Human Settlements Programme, examines property taxation around the world. It sees value capture financing as a robust mechanism that minimises funding volatility, and shares the risk of large infrastructure projects. It argues that taxation measures like value capture promote the most efficient functioning of urban environments and land markets, and notes that the potential for value capture is present in the information held and limited revenue on land collected by many local governments. However due to a lack of political will, local governments and communities forgo revenue by not levying as extensively and capturing the value that they could.

UN Human Settlements Program and the Global Land Tool Network (2011) Land and Property Tax – A Policy Guide This 2011 joint report, by the UN Human Settlements Program and the Global Land Tool Network, runs through case studies of local revenue generation through improvements to land. It argues that incremental land values are a crucial source of local revenue, and outlines various options for a land-based tax system for different urban and political contexts.


Australian Context:

Grattan Institute (2017) What Price Value Capture? Written by Marion Terrill. Concludes that due to the difficulty of implementing value capture in practice, “state governments should generally avoid value capture taxes because better, fairer and simpler taxes are available to them. They would serve their constituents better by imposing broad-base low-rate taxes, such as land taxes, instead of reaching for narrow-base high-rate value capture taxes”.

Parliament Of The Commonwealth Of Australia. Standing Committee on Infrastructure, Transport and Cities (Nov 2017) Harnessing Value, Delivering Infrastructure. Inquiry into the role of transport connectivity on stimulating development and economic activity  

In both scenarios of [regional] decentralisation or urban renewal, the combination of infrastructure and land use optimises land values—this is the essential ingredient to maximise funding through value capture.

Value capture represents the most equitable method to fund infrastructure, with the added benefit of relieving demands on consolidated revenues.

Long term master planning and sustainable funding through value capture can only be achieved through the alignment of the three tiers of government, land owners and developers.

It is imperative that the three levels of government recognise that the opportunity to sustainably fund infrastructure depends on their ability to cooperate. They must be willing to forego individual revenues to ultimately maximise total revenues.

Infrastructure Victoria Policy Paper (2016) Value Capture – Options, Challenges And Opportunities For Victoria Defines value capture and provides modelling for key value capture mechanisms under hypothetical scenarios. Written to build community awareness of value capture concept, and provide advice to the Victorian government.

Infrastructure Australia (2016) Capturing Value: Advice on making value capture work in Australia Infrastructure Australia recommends that governments routinely consider value capture opportunities in all public infrastructure investments. This paper considers five main types of value capture: 1. Betterment levies 2. Developer charges 3. Leveraging government land 4. Taxes on property transactions 5. Taxes on land value

Dr Chris Hale for Melbourne City Council (2014) City Rail Funding: International Background and policy options for funding transit

Value capture theory is now well-developed, and it rests ultimately on the recognition that major urban rail exercises, especially those serving the CBD and inner city, generate profound economic benefits. Traditionally though, Australian jurisdictions have done little to convert these broad-based benefits that accrue to the economy as a whole into a specific cash flow stream to assist with project delivery.

NSW Legislative Assembly, Public Accounts Committee (2013) Planning New South Wales Infrastructure for the Twenty-Second century considers various innovative methods of funding future transport priorities. The proceedings look back at the history of value capture in New South Wales, in the building of the harbour bridge and through to the 1970s and 1980s when they were effectively levied for rezonings.

Price Waterhouse Coopers for the Property Council of Australia (2012), Tax Increment Financing to Fund Infrastructure in Australia does not advocate value capture in the form of a betterment levy but, recognising our lagging infrastructure standards, recommends a more general property tax, the revenue from which could be locally dedicated to finance needed infrastructure projects. It notes that financing from land values both encourages the most necessary and ‘valued’ infrastructure to be built as well as ensuring a reliable and long-term revenue stream.

This 2012 Grattan Institute report Can We afford to get our cities back on the rails? Looks at the history and future options of rail financing in Australia. It examines the effectiveness of betterment levies in the building of the Sydney Harbour Bridge, the Melbourne City Loop and currently in London’s CrossRail project, particularly in avoiding government debt in financing infrastructure and avoiding funding deficiencies partway through a project.

Committee for Melbourne (2012 ) Moving Melbourne Public Transport over the next decades recommends “examining value capture techniques, that could be utilised to increase the pool of funds available to invest in critical transport infrastructure projects”.


Academic Articles & Conference Papers:

Abelson, Peter. “An Analysis of Value Capture Instruments.” Economic Papers: A journal of applied economics and policy 37.4 (2018): 399-411.

Smith, Jeffery J., and Thomas A. Gihring. “Financing transit systems through value capture: An annotated bibliography.” American Journal of Economics and Sociology 65.3 (2006): 751-786. An annotated bibliography of 127 academic articles relating to value capture

Rybeck, Rick. “Using value capture to finance infrastructure and encourage compact development.” Public Works Management & Policy 8.4 (2004): 249-260.

McIntosh, James Robert, et al. “Framework for land value capture from investments in transit in car-dependent cities.” Journal of Transport and Land Use 10.1 (2015).


Prosper’s submissions to government inquiries:
Other resources: