How much is a public park worth? An ex ante methodology for impact and cost-benefit analysis on the example of Millenáris Széllkapu in Budapest

Abstract

Establishing a public park raises a number of methodological issues. The model worked out by HÉTFA Research Institute is suitable for cost-benefit analysis and ex ante viability test of a public park integrated into urban landscape. The paper presents the model by the example of a planned public park at one of the busiest centers of Budapest, the junction of Margit Boulevard and Millennium Park. Such a comprehensive economic evaluation for public parks has not been made in Hungary. First the mechanism of effects was set up, and by using the hedonic price method the project’s costs and benefits were presented with national and international statistical indicators and benchmarks. The investment, that has been started in 2016 with in the initial planning and demolition pays for itself by 2019. The results are tested with sensitivity analysis, which has inter alia shown that if we count by the general approach of the project management - costs are expected to increase by 10% and benefits are to reduce by 10% - investment returns for the city and their inhabitants for 2030. Furthermore, without the effect of property appreciation - the investment turns positive by 2061 thanks only to indirect social, economic, environmental benefits. According to our analysis, the park's development, which relaxes a built-in highly populated urban fabric, has become an economically profitable investment as a result of significant beneficial external effects.