BACKGROUND:Studies consistently find that supportive neighbourhood built environments increase physical activity by encouraging walking and cycling. However, evidence on the cost-effectiveness of investing in built environment interventions as a means of promoting physical activity is lacking. In this study, we assess the cost-effectiveness of increasing sidewalk availability as one means of encouraging walking. METHODS:Using data from the RESIDE study in Perth, Australia, we modelled the cost impact and change in health-adjusted life years (HALYs) of installing additional sidewalks in established neighbourhoods. Estimates of the relationship between sidewalk availability and walking were taken from a previous study. Multistate life table models were used to estimate HALYs associated with changes in walking frequency and duration. Sensitivity analyses were used to explore the impact of variations in population density, discount rates, sidewalk costs and the inclusion of unrelated healthcare costs in added life years. RESULTS:Installing and maintaining an additional 10 km of sidewalk in an average neighbourhood with 19 000 adult residents was estimated to cost A$4.2 million over 30 years and gain 24 HALYs over the lifetime of an average neighbourhood adult resident population. The incremental cost-effectiveness ratio was A$176 000/HALY. However, sensitivity results indicated that increasing population densities improves cost-effectiveness. CONCLUSIONS:In low-density cities such as in Australia, installing sidewalks in established neighbourhoods as a single intervention is unlikely to cost-effectively improve health. Sidewalks must be considered alongside other complementary elements of walkability, such as density, land use mix and street connectivity. Population density is particularly important because at higher densities, more residents are exposed and this improves the cost-effectiveness. Health gain is one of many benefits of enhancing neighbourhood walkability and future studies might consider a more comprehensive assessment of its social value (eg, social cohesion, safety and air quality).