for Lincolnopolis: 2011 Hyde Chair Design Studio by Bruce Johnson, Professor Department of Agricultural Economics University of Nebraska–Lincoln [email protected]October 13, 2011 Lincoln, NE Land and Spacial Economics of the Lincoln Metropolitan Area: Implications for the Future
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Land and Spacial Economics of the Lincoln Metropolitan ... Metro Future.pdf · Types of Market Failure Associated with Land Use. A. Costs of Irreversibility Ignored • Farmland conversion
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for
Lincolnopolis: 2011 Hyde Chair Design Studio
by Bruce Johnson, Professor Department of Agricultural Economics
“Long before 2030 the trend toward even larger cities and an increasing ratio of urban‐to‐rural dwellers is likely to have reversed.”
‐‐ Lester Brown
“The end of cheap energy is a fundamental economic turning point – which will change the scale and the nature of the city.” – David Orr, Earth in Mind
“This is no black‐or‐white, city –versus – suburb, winner‐takes‐all battle. Cities and suburbs alike are part of the new spacial fix.” ‐‐ Richard Florida, The Great Reset.
Two‐Fold Purpose
1st Set some economic framework to today’s metro‐area configuration
(Outcomes of First‐Order Conditions)2nd Discuss implications for the future
(Second‐Order Decisions)
For Lincoln’s Settlement
Initial Economic Motivation: Salt!
Lincoln: A Natural Basin (Salt Build up)
Later, Key Transportation Hub in Western Development
VS.
Lincoln and Key Bedroom Communities (Population & % Growth 2000‐2010)
Lincoln Metro258,40014%
Gretna 4,44189%
Bennet719 26%
Hickman 1,55343%
Real Estate Market Price Patterns Surrounding Lincoln
• Elongated VonThunenconfigurations following key road networks
• Real Estate gradations a function of distance form cone.
Acreage Zones Around Lincoln
HW 34
HW 2
HW77
I-80
HW 77
$40,000/ac
$15,000/ac$10,000/ac$7,000/ac
Metro
• Historical Development Patterns reflecting subsidized energy era.
• Today, end of cheap energy a fundamental economic turning point.
400
300
200
100
1990 2000 2010
4
3
2
1
Rural Acreage Values Surrounding Lincoln Over Time
Gas Prices
Gas
$/G
alR
ural Acreage Values ($1,000)
Lincoln/Lancaster County Zoning for Acreages
• 20‐acre rule (since 1978)• Minimum size for single family dwelling
• Cluster Development • Allowing “nested” 2 to 3 acre sites
Current Debate (10/4/11)
‐‐Move to 5‐acre rule
Market‐Driven Decisions(within the bounds of public policy) Determine Value and Use of Land
Concept of Highest and Best UseDef.: That use which will generate the greatest net return to the property over a
reasonable period of time (highest net present value).
Determined by derived demand in the market (economic derivation)
H & B use must meet following criteria: 1. Physically possible 2. Legally possible3. Financially feasible 4. Most productive
Typical land use profile surrounding urban center
Land Values Reflecting Use
Highest and Best Use$36,000
$30,000
$24,000
$18,000
$12,000
$6,000
Commercial
ResidentialSub-Div
Acreages
Int. Ag Ext. Ag
Land Use Profile in Rural – Urban Transition Zone
When Market Allocation Leads to Market Failure
Types of Market Failure Associated with Land Use
A. Costs of Irreversibility Ignored
• Farmland conversion is usually irreversible (economically)
• Thousands of marginal decisions, responding to market signals, can lead to a perverse societal effect
“Tragedy of the Commons”
(or)
“Tyranny of Small Decisions”
When Market Allocation Leads to Market Failure Cont.
B. “Public Goods” not supplied by the market
‐‐ Def: Any good that has: 1. Nonrivalry: One person’s consumption of that good does
not diminish amount available to other consumers, and
2. Nonexcludability: If available to one person then it is available to others (whether they pay or not)
When Market Allocation Leads to Market Failure Cont.
‐‐ Some public goods• Sustainable base of Farmland,• “Foodsheds” around urban areas• Biodiversity of the countryside • Wildlife habitat• Ground water recharge • Flood control benefits • Unique “view sheds” • Atmospheric benefits of green space, trees, etc.• Food producer – Food consumer connection• Resilience via diversity
When Market Allocation Leads to Market Failure Cont.
‐‐‐ Public goods generally won’t be supplied by private (market) sector since no opportunity for profit. So, tends to be provided through unit of government or non‐profit organization. Question: Who should pay? And how much?
When Market Allocation Leads to Market Failure Cont.
C. Warped Distribution of Market ResultsEconomic winners and losers of decisions.
Questions of equity or fairness
Some examples: Who pays for annexing new development?
Who gains (loses) from a zoning change to more intensive use?
Who gains (loses) from zoning change to less intensive use?
When Market Allocation Leads to Market Failure Cont.
D. ExternalitiesAlso called: Spillover costs, spillover
benefits, unintended consequences, side effects, third‐party effects.
Def: Disassociation of benefits and costs
Ex: External Cost
Q
MC Social (total)
MC Private
D = Mar. Ben
$
When Market Allocation Leads to Market Failure Cont.
Market failure since: – Not all costs considered
– Market process produces too much of a good and sells it at artificially low prices.
When Market Allocation Leads to Market Failure Cont.
Land use examples of external costs:• Excessive farmland losses from development.
• Development leading to congestion and lower property values for surrounding land owners.
• Public cost of infrastructure associated with unchecked development and sprawl.
• Environmental damage off site.
• Loss of resilience.
When Market Allocation Leads to Market Failure Cont.
Implication(s) of externalities
Must internalize externalities to allow market to operate effectively.
A. Force accountability for spillover costs.
B. Allow appropriate benefits to flow to providers of societal benefits.
Implications for the Future (second‐order decisions)
for Positive Transformation
“ Great Resets are broad and fundamental transformations of the economic and social order and involve much more than strictly economic or financial events. A true Reset transforms not simply the way we innovate and produce but also ushers in a whole new economic landscape. As it takes shape around new infrastructure and systems of transportation, it gives rise to new housing patterns, realigning where and how we live and work. Eventually, it ushers in a whole new way of life – defined by new wants and needs and new models of consumption that spur the economy, enabling industry to expand and productivity to improve, while creating new and better jobs for workers.
Economic systems do not exist in the abstract; they are embedded within the geographic fabric of the society – the way land is used, the locations of homes and businesses, the infrastructure that ties people, places, and commerce together. “
‐‐‐ Richard Florida, The Great Reset, 2010
Sustainable Systems
Systems: “Everything we do as
individuals, as an industry, or as a society is done in the context of an information–
feedback system”
Jay W. Forrester (MIT)
Sustainability:
“ – The possibility, that human and other life will Flourish on the
planet forever.”
John R. Ehrenfeld (MIT) Sustainability By Design
Given• Definite limits of the earth:
• “Source “ Function
• “Sink” Function
• Destructive Human Ecological Footprint
• Dysfunctional Economic/Financial Institutions
• Disparities Across Humanity
• Discontentment with Traditional Societal Values
Then:Nothing less than a complete transformation of Human Organizations and Cultures in Geographic Space Needed
Given the current settlement pattern of Lincoln and the forces of significant change on the horizon, how might we design and implement a growth plan that will accommodate a doubling of population in a sustainable manner?
More specifically:
• How would transportation networks and modes need to be altered, and what specific decisions and policies would support that change?
• How would future housing replacement and future development look?
• Discuss the role of technology in the transformation process of Lincoln in the years ahead.
• The American consumer of tomorrow may be quite different from today’s consumer—out of need and/or necessity. Does that dictate a particular design and planning dimension that may go against conventional development patterns?
• Food security is fast becoming a critical concern the world over. How could the Lincoln metropolis build a resiliency factor into its future land use at a scale that would enhance food security?
• Are “gated communities” a dysfunctional artifact of the past? Can the culture embrace a more inclusive community via thoughtful design and planning; or must the planning and execution follow a distinct cultural shift?
A. Shrinking Geographic Space of Daily Life.
Due TO: • Rising costs of travel
• Increased efficiency of interaction w/out travel
Live
Play
Webber Triangle Applied to Daily Life
B. From: Want’s—Based Consumptive Excess
To: Need’s—Based Consumer Leanness
Life Style and Cultural Shifts
Residence:
Vehicles:
Large Owned
SmallerOwned
Smaller Leased
Coop. Leased
Multiple Vehicles Owned
Single VehicleOwned
SingleVehicle Leased
“Zip Car”
C. Food and Diet
From: To: Constant Seasonal Access
Access to of Locally—Based
International Foods
Foods
D. From: Mega Industrial Economies of Size (Leading to Standardization, vulnerability, and sterility)
TO: Community‐Sized Economies of Sustainability (Right Scaling Leading to diversity, resilience, and synergism)
E. From: Heavy Vertical Networks of Social Capital
TO:
More Horizontal Networks of Social Capital
(Rich Bonds of connectedness, responsibility, and mutual need)
F. From: Culture of Independent and Dependent members (“Me‐Them”)
To:Culture of Interdependent Members (“US”)
• Community with a renewed “Sense of Place” • Transformation towards a livable flourishing community beginning at home.
• “It means reweaving the local ecology into a fabric of the economy and life patterns—” David Orr