The Impact of Compact City Policies on LandPrices: The Case of Toyama City

This study examines the effects of compact city policies on land prices.Using Toyama City, Japan, as a case study, we apply a difference-indifferencesapproach to district-level panel data of official land prices from2001 to 2025. The results reveal that residence-encouraged zones experiencedsignificant land price appreciation after the implementation ofcompact city policies. Rising land prices expanded the property and cityplanning tax bases, contributing to the city’s fiscal stabilization. Thefindings suggest that compact city policies can reorganize urban spatialstructures as well as enhance fiscal sustainability—an outcome conceptualizedas “urban management.” This study provides new empirical evidencethat compact city strategies in shrinking cities can generate bothspatial and fiscal benefits, thereby offering practical implications for sustainableurban planning and local governance. However, there are someresearch limitations: the study does not consider the balance of expenditureand revenue, the time range of the policy, or the micro-level behaviorof households or developers. JEL code: R14, R38, R51, C23, H71