Impacts of planning rules, regulations, uncertainty and delay on residential property development

This paper proposes a framework for how houses could be developed, with a focus on how regulatory policies and practices affect decision making. The authors surveyed property developers in Auckland on how planning rules and regulations affect the cost of \u27affordable\u27 housing. Almost 90% of the developers surveyed had been affected by delays or uncertainties related to regulation. The typical cost range of regulations is estimated to be between $32,500 and$60,000 per dwelling in a subdivision and between $65,000 and$110,000 per apartment. Academic Abstract Dwelling prices are determined in the long run by the total costs of a development, where costs include regulatory costs, including costs of delay and uncertainty. We outline a conceptual framework for the development process and then develop a real options model of housing development that indicates more formally how regulatory policies and regulatory practices affect development decisions. We apply these insights to the design of a survey of property developers active in the Auckland market, with an emphasis on the ‘affordable’ part of the market. In surveying developers, we aim to elicit their views regarding the impacts that planning rules and regulations have on total development costs. We do not attempt to value the corresponding benefits of the planning rules and regulations, so this study is not a cost: benefit analysis of council planning approaches; rather it documents the costs of the rules and regulations – as perceived by developers – to provide a basis for benefits to be compared. Almost 90% of surveyed developers have been affected by delays or uncertainties related to regulation. Regulations that have had major effects on the actual building costs of apartments include: building height limits, balcony requirements, conforming to Council’s desired mix of apartment typologies and minimum floor to ceiling heights. Major cost effects on developing residential sections and standalone dwellings include: infrastructure contributions not related to the specific development, section size requirements, extended consent processes and urban design considerations stemming from Council’s urban designers. Reserve and development contributions and Watercare levies affect the costs of both types of development. Excluding the cost of Watercare and reserve and development contributions, the typical cost range of the total impact of regulations is estimated to vary between $32,500 and$60,000 per dwelling in a subdivision. In terms of affordable apartments, assuming the total internal floor area remains the same and no deck is built, the impact on total cost typically is estimated to range between $65,000 and$110,000 per apartment

Well Isn't That Spatial?! Handbook of Regional and Urban Economics: A View From Economic Theory

Review of the 'Handbook of Regional and Urban Economics: Volume 4: Cities and Geography' edited by J.V. Henderson and J.-F. Thisse

Testing the 'new economic geography': a comparative analysis based on EU regional data

This paper evaluates 'new economic geography' theory by comparing it with a competing non-nested model derived from urban economics. Using bootstrap inference and the J-test, the paper shows that while NEG theory is supported by the data, it needs to be modified to achieve this, and it is not the only, or even the best or simplest, explanation of regional wage variations across the EU.'new economic geography', urban economics, bootstrap, J test

CREATIVE ECONOMY AND CREATIVE CITIES

The paper sets out why creativity has become so important to urban and regional economics. It focuses on the role of creativity, creative industries, creative economy, creative class and creative cities for the modern urban economics. It points out the idea that the power of the future economy lays within the development of the creative city. The aim of a creative city is to make us to think of our city as a living work of art, where citizens can involve and engage themselves in the creation of a transformed place. Every city can be more creative that it currently is and the task for the city wanting to be creative is to identify, nurture, harness, promote, attract, and sustain talent and to mobilize ideas, resources and organizations.creative economy, creative cities, urban economics, creative class, sustainable development.

Discussion: Applications and Innovations in Spatial Econometrics

These articles provide a discussion of studies presented in a session on spatial econometrics, focusing on the ability of spatial regression models to quantify the magnitude of spatial spillover impacts. Both articles presented argue that a proper modeling of spatial spillovers is required to truly understand the phenomena under study, in one case the impact of climate change on land values (or crop yields) and in the second the role of regional industry composition on regional business establishment growth.lagged variables, panel data, spatial spillovers, Community/Rural/Urban Development, Environmental Economics and Policy, Resource /Energy Economics and Policy, C33, C51,

Regional Economic Implications of Water Allocation and Reliability

The understanding of how allocation decisions can maximise the economic returns to the community from water for irrigation has received little attention, but is a significant issue for regional councils, those interested in water allocation policy development, and for irrigated farmers. There is a tradeoff between the amount of irrigated area and the reliability with which it can be undertaken. Overseas studies have generated a curve with optimum levels of allocation which maximise the economic return to the community from the resource. The study on which this paper is based used a single case study to model the individual and regional economic outcomes for four scenarios of water allocation, using daily time step simulation models of the hydrological, irrigation, farm and financial systems over the 1973 – 2000 period. The results show that there is an increasing return to the region as the allocation from the resource increases, at the expense of lower returns to existing users.Irrigation, reliability, regional economic impacts, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Community/Rural/Urban Development, Environmental Economics and Policy, Farm Management, Financial Economics, Institutional and Behavioral Economics, Land Economics/Use, Resource /Energy Economics and Policy,

The theoretical and methodological toolbox of urban economics: from and towards where?

After more than five decades since the recognition of the importance of a branch in Economics called Regional and Urban Economics, there is for sure sufficient scientific material for an ex-post evaluation of what has been achieved so far, where is the scientific frontier in this field, and what are the main open conceptual questions. The present contribution aims at providing such a "picture", by underlining, in a critical way, the results achieved and the challenges that still remain to be faced. It is not at all a first attempt in this direction: especially in the last decade, some doubts on the scientific achievements in the fields of Regional and Urban Economics, and more widely of Regional Science, were stressed, especially in the American academic world. These sciences were interpreted as going through a deep "scientific crisis", interpreted as a sort of downward slope in their "life cycle". Some scientific in-depth analyses have already been provided by regional scientists, rightly claiming that still much can be said and be produced in terms of both theoretical and empirical (modelling) elements. Our paper will start from those considerations, and provide a step further in the interpretation of the problems encountered by Regional and Urban Economics in the actual scientific world, and will strongly suggest that there are important signs of a reaffirmation of the discipline, given the recently strong renewed interest around the conept of territory, developed: - within other branches of the Economic theory. A clear example of this is the emergence of the "New Economic Geography" theory, widely anchored to some well known regional economic concepts. The same can be said for the recent concept of knowledge spillover of the Industrial Economists, in which the innovative diffusion process is largely dependent on geographical distance among innovative actors; - with traditionally related scientific fields, such as Urban Planning and Geography, for the development of a unified framework of analysis for territorial economic processes; - with sociologists, on the concept of "social capital", related to the interaction between social and economic elements for the explanation of the processes of knowledge creation at the local level. In all these cases, there is still place for a more in-depth cooperation among scientists, with the aim to achieve a more in-depth knowledge of theoretical concepts; moreover, in all these cases, there is still place for regional economists to strengthen their role within the international interdisciplinary arena. The paper will highlight these cases, and strengthen the reasons for this statement.

Essentials for sustainable urban transport in Brazil's large metropolitan areas

Before financing major urban transport projects, decisionmakers should attempt to put in place the basic elements for long-term sustainability of the sector. Specifically, the author contends that each large metropolitan area in Brazil should incorporate into its urban transport strategy, and pursue vigorously, the following four-point agenda: 1) create a regional transport coordination commission in charge of coordinating policies among federal, state, and municipal governments, giving highest priority to major urban transport investments in the metropolitan region and promoting modal integration - all to the end of improving the sector's economic efficiency and long-term sustainability; 2) adopt an integrated land use, urban transport, and air quality strategy that provides a framework in which the community and decisionmakers can evaluate future urban transport investments and policies; 3) enact into law formal financing mechanisms that would ensure that long-run variable costs of urban transport systems are covered by operating and non-operating revenues from the systems and by appropriate user charges; and 4) promote private sector participation in the operation, maintenance, and construction of urban transport systems - through concessions or management contracts - as a way to lessen the financial burden on the government.Roads&Highways,Public Sector Economics&Finance,Banks&Banking Reform,Municipal Financial Management,Environmental Economics&Policies,Urban Transport,Banks&Banking Reform,Roads&Highways,Municipal Financial Management,Environmental Economics&Policies

A note on the linear, logit and probit functional form of the labour force participation rate equation

The commonly used specification in regional economic research on labour force participation is the linear probability function. An important alternative recommended in the Handbook of Regional and Urban Economics in the contribution of Isserman et al. (1986) on `Regional Labor Market Analysis' is the logit probability function. Their argument for the logit probability function is as follows. Given that economic theory on labour force participation does not suggest to pick one functional form over another and that the parameters of the logit probability function are estimable by OLS under the usual assumptions about the error term, the benefit of the logit probability function is that any estimated value for L lies within the logical bounds [0,1]. This feature is particularly desirable in a forecasting context when out of sample data might otherwise potentially yield absurd labour force participation rates. In this note two counter-arguments are gathered against using the logit probability function which are lacking in the Handbook of Regional and Urban Economics. Furthermore, it is shown that the logit probability function in this discourse can be replaced by the probit probability function equally well. Keywords: logit, probit, labour force participation rate.

REGIONAL IMPACT OF URBAN WATER USE ON IRRIGATED AGRICULTURE

Linear programming and regional input-output models were applied to estimate the impacts of increased pumping costs for irrigated agriculture due to groundwater depletion principally caused by the expanding urban area of San Antonio, Texas. A biophysical simulator was use to estimate linear programming coefficients of crop yield by irrigation level and timing. The results indicated significant local (county) economic impacts from groundwater mining but insignificant regional impacts. A major improvement on irrigation efficiency would be required to offset the increased pumping costs and reduce water availability associated with increased lifts due to urban expansion.Resource /Energy Economics and Policy,