Abstract

Privately-led real estate urbanization in Chile is characterized by the highest land use. While private developers internalize the positive effects generated by public amenities, the increased land value, which is generated by public efforts, is not recovered by, nor redistributed to, the community, as in Chile there are no planning instruments specifically aimed to make those two goals possible. However, some recent legal and planning ad-justments seek the internalization of the externalities produced by urban densification by private agents, and also currently the state can partially capture land valuation generated by rural-to-urban rezoning. However, still land value generated by public infrastructure is hitherto not captured by the state. This article explores theoretical aspects of land value formation, seeking to provide empirical evidence about the effect produced on this valuation by the Metro network in Santiago, Chile. Furthermore, the paper analyses the new legal framework in the country, addressing its actual capacity to capture and redistribute land value, and anticipating regressive effects derived from its application.