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19/01/2015

Little evidence for economic benefits of public realm upgrades

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Does regeneration of public realm really produce the economic benefits claimed by politicians and policymakers, asks Henry Overman

Henry OvermanPublic realm improvements and estates renewal programmes can be an effective means of improving the quality and attractiveness of public spaces and buildings, and creating more pleasant and liveable places.
 
Making places more pleasant and liveable, so the conventional wisdom goes, will also boost retail, attract new businesses and residents, and generally increase an area’s prosperity.
 
But do improvements to public spaces and buildings really boost economic growth? Not necessarily.
 
Politicians, policy-makers and practitioners alike will often be heard justifying public realm interventions – such as improving a rail station forecourt, revamping a public square, or landscaping a local park – in terms of positive impacts on the local economy, with benefits for residents and businesses alike. Estate renewal schemes are also sometimes viewed as mechanisms for economic development.

"Public realm improvements in commercial areas might boost business activity" 

But our recent reviews of the available evidence suggest a more nuanced picture than this; specifically, that while these interventions sometimes have positive impacts on local house prices, this does not necessarily translate into economic uplift for residents. In fact, higher housing costs may displace existing residents, particularly in the rented sector.
 
Attracting new residents may create more mixed communities, and it is often argued that such mixed-income communities serve the interests of the relatively worse-off through fostering social and other networks. But despite claims to the contrary, the evidence on the importance of these effects is highly disputed. In the same vein, public realm improvements in commercial areas might boost overall business activity, but the evidence is less clear that this delivers local economic benefits, particularly increased employment. Again, existing businesses might be displaced owing to rising rents.
 
These complexities muddy the waters when it comes to predicting the local economic impacts of both public realm and estates renewal projects, meaning those responsible for instigating them – and the planners who design, appraise and evaluate them – should be clear about their objectives for the projects from the outset.
 
There are many good reasons for investing in public realm and housing estates, but stimulating growth in the local economy is not one that is supported by the available evidence.
 
For more information on the What Works Centre for Local Economic Growth, or to read our full briefing on public realm improvements, visit: whatworksgrowth.org.
 
Henry Overman is professor of economic georgraphy at LSE and director of the What Works Centre for Local Economic Growth

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