Land Use

see also: highest and best use
underused land

Mason Gaffney: Economics in Support of Environmentalism

Growing barley is a worthy goal (especially if you enjoy a little beer). So is growing corn. It would be great to raise as much of each as anyone wants, but the Earth has its limits. A choice and a decision are required. People invented (or stumbled into) the discipline of economics to help with such hard choices, and to console ourselves that we are doing the right thing. The hardest choices are those regarding land use, because there is just so much. We can build more houses, cars, and boats, write more music and drama, spawn and educate more people, but we cannot make another Hudson Valley.

Barley grows on cheap land, and the demand is limited, so the best barley land is used for growing corn. Economics reconciles the competing demands and rationalizes the outcome. It defines the "highest and best use" of land as that yielding the highest net gain, the excess of revenues over costs. Economists include non-cash "service flows" among "revenues," although they bear watching: sometimes they forget. Thus, economics shows how the market sorts and arranges land uses, giving us a corn belt, a wheat belt, and a cotton belt. Economists pride themselves on this achievement. (Some preen themselves too much, as we will see, and pride goeth before a fall.)

By the same logic, irrigated crops take land from dry-farmed crops; orchards take land from irrigated row crops; housing takes land from orchards and groves; commerce takes land from housing.

Sometimes the rich take land from the poor, provoking sympathy, strong rhetoric, and occasionally effective rear-guard resistance to such changes. Actually, a well-oiled market is often quite democratic. People of moderate income, by crowding, can outcompete those of high income for the same land, as when a Sears or Wal-mart takes the best commercial sites from a Nordstroms or Broadway; or when an old estate is subdivided into five lots per acre. This, too, provokes negative rhetoric, but developers know how to make hay out of this, and mincemeat of their opposition. At this point developers become populists and accuse preservationists and environmentalists of snobbery and elitism. We need an answer for that one if environmentalists are going to command enough popular support to win, and hold the gains. Of this, more later. ... read the whole article

Nic Tideman: The Structure of an Inquiry into the Attractiveness of A Social Order Inspired by the Ideas of Henry George

What forms of land use control are consistent with the philosophy of Henry George?

Proposed answer: When land use controls take the form of permission that is given to some persons and not others, the philosophy of Henry George would require anyone with such permission to pay for it according to its market value. Land use control might also take the form of making no distinctions in what different persons may do, but requiring all persons to pay for the adverse impacts of their actions. ... read the whole article

Nic Tideman: The Case for Site Value Rating

Site value rating embodies the principle that people are allowed to keep what they produce and must pay annually for the value of the naturally occurring and socially created resources they use. This principle can be extended to take account of individual actions that have noticeable effects on the rental value of land surrounding that which individuals use themselves. When land is used in such a way as to raise the rental value of surrounding land, as by providing parking near a commercial center or by providing improvements that are beautiful to see, the person who creates that value should receive it. Correspondingly, when people use land in such a way as to lower the value of surrounding land, by generating noise, noxious smells, air pollution, or unsightly views, they should be charged according to the reduction in the rental value of the surrounding land that results from their activity. The opportunity to be paid for adding to the value of surrounding land will generally make land more valuable. And the requirement to pay for harmful consequences of land use will tend to inhibit such uses of land.

The whole practice of planning should be replaced by a system of charges for harmful consequences of land use and payments for beneficial ones. Planning is motivated by a concern for the harmful consequences that can result from land development. But the resulting restriction in land development makes planning permission all the more valuable to the few who receive it, with the result that vast fortunes are made by contriving to appear to have, in one's person or in one's projects, whatever attributes are regarded as attractive by those who grant planning permission. With so much money at stake, it is virtually impossible to avoid bias. A recognition of the impropriety of the large gains from receiving planning permission leads planning bodies to be ever more strict about granting it, and the result is ever higher prices of homes, to the detriment of first-time buyers.

When there are harmful consequences of land development, these are generally manifest in lower rental values of land near the land that is developed. The effort that is now devoted to determining whether to grant planning permission should be spent instead on identifying the magnitudes of the harmful consequences of development. Then everyone who wishes to develop land, and everyone who has title to land that is already developed, should be charged those costs. Those who have land that is adversely affected by development would be compensated automatically through the reduction in the rates on their land. ... read the whole article