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Letting The Market Preserve Land: The Case For A Market‐Driven Transfer Of Development Rights Program

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  • PAUL THORSNES
  • GERALD P. W. SIMONS

Abstract

The inequities inherent in conventional zoning‐based policies leave urban‐fringe jurisdictions unable to meet the growing demand for permanently preserved open space. Allocating marketable development rights (MDR) among all landowners treats this problem directly. It also leaves open the option of allowing the market to allocate land to undeveloped uses. This paper uses a simple market model to develop a framework that describes the mechanics of such a program and allows comparison with other commonly considered policies. The paper then addresses several concerns policy makers have raised about a market in development rights. Finally, the paper looks at alternative regulatory responses to perceived market failures. The analysis suggests that an MDR program offers significant advantages over existing preservation efforts. (JEL Q2, Rl, R5)

Suggested Citation

  • Paul Thorsnes & Gerald P. W. Simons, 1999. "Letting The Market Preserve Land: The Case For A Market‐Driven Transfer Of Development Rights Program," Contemporary Economic Policy, Western Economic Association International, vol. 17(2), pages 256-266, April.
    • Handle: RePEc:bla:coecpo:v:17:y:1999:i:2:p:256-266
    DOI: 10.1111/j.1465-7287.1999.tb00680.x
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    References listed on IDEAS

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    1. Mabbs-Zeno, Carl C., 1981. "Design of Programs Using Transferable Development Rights to Preserve Farmland in the Northeast," Journal of the Northeastern Agricultural Economics Council, Northeastern Agricultural and Resource Economics Association, vol. 10(2), pages 1-6, October.
    2. B. Delworth Gardner, 1977. "The Economics of Agricultural Land Preservation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 59(5), pages 1027-1036.
    3. David E. Mills, 1989. "Is Zoning a Negative-Sum Game?," Land Economics, University of Wisconsin Press, vol. 65(1), pages 1-12.
    4. Barry C. Field & Jon M. Conrad, 1975. "Economic Issues in Programs of Transferable Development Rights," Land Economics, University of Wisconsin Press, vol. 51(4), pages 331-340.
    5. McMillen, Daniel P. & Jarmin, Ronald & Thorsnes, Paul, 1992. "Selection bias and land development in the monocentric city model," Journal of Urban Economics, Elsevier, vol. 31(3), pages 273-284, May.
    6. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    7. Carpenter, Bruce E. & Heffley, Dennis R., 1982. "Spatial-equilibrium analysis of transferable development rights," Journal of Urban Economics, Elsevier, vol. 12(2), pages 238-261, September.
    8. Mabbs-Zeno, Carl C., 1981. "Design of Programs Using Transferable Development Rights to Preserve Farmland in the Northeast," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 2), pages 1-6, October.
    9. Mills, David E., 1980. "Transferable development rights markets," Journal of Urban Economics, Elsevier, vol. 7(1), pages 63-74, January.
    10. Brueckner, Jan K & Fansler, David A, 1983. "The Economics of Urban Sprawl: Theory and Evidence on the Spatial Sizes of Cities," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 479-482, August.
    11. Gary Wolfram, 1981. "The Sale of Development Rights and Zoning in the Preservation of Open Space: Lindahl Equilibrium and a Case Study," Land Economics, University of Wisconsin Press, vol. 57(3), pages 398-413.
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    Citations

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    Cited by:

    1. Francesco Chiodelli, 2013. "Il trasferimento dei diritti edificatori: spunti di riflessione da un seminario," SCIENZE REGIONALI, FrancoAngeli Editore, vol. 2013(2), pages 129-136.
    2. Ferreira, António, 2020. "Reconsidering the merit of market-oriented planning innovations: Critical insights on Transferable Development Rights from Coimbra, Portugal," Land Use Policy, Elsevier, vol. 99(C).
    3. J. Peter Clinch & Eoin O'Neill, 2010. "Assessing the Relative Merits of Development Charges and Transferable Development Rights in an Uncertain World," Urban Studies, Urban Studies Journal Limited, vol. 47(4), pages 891-911, April.
    4. Walls, Margaret & McConnell, Virginia, 2004. "Incentive-Based Land Use Policies and Water Quality in the Chesapeake Bay," RFF Working Paper Series dp-04-20, Resources for the Future.
    5. Till Proeger & Lukas Meub & Kilian Bizer, 2018. "Laboratory Experiments of Tradable Development Rights: A Synthesis of Different Treatments," Sustainability, MDPI, vol. 10(6), pages 1-19, June.
    6. Walls, Margaret & McConnell, Virginia & Kopits, Elizabeth, 2003. "How Well Can Markets for Development Rights Work? Evaluating a Farmland Preservation Program," RFF Working Paper Series dp-03-08, Resources for the Future.
    7. Walls, Margaret, 2012. "Markets for Development Rights: Lessons Learned from Three Decades of a TDR Program," RFF Working Paper Series dp-12-49, Resources for the Future.
    8. Jason Winfree & Jill McCluskey & Ron Mittelhammer, 2006. "Buyer-Type Effects in Conservation and Preservation Property Values," The Journal of Real Estate Finance and Economics, Springer, vol. 33(2), pages 167-179, September.
    9. Wang, Bo & Li, Fan & Feng, Shuyi & Shen, Tong, 2020. "Transfer of development rights, farmland preservation, and economic growth: a case study of Chongqing’s land quotas trading program," Land Use Policy, Elsevier, vol. 95(C).
    10. Yidi Wang & Ying Fan & Zan Yang, 2022. "Challenges, Experience, and Prospects of Urban Renewal in High-Density Cities: A Review for Hong Kong," Land, MDPI, vol. 11(12), pages 1-20, December.
    11. Joshua M. Duke & Lori Lynch, 2006. "Farmland Retention Techniques: Property Rights Implications and Comparative Evaluation," Land Economics, University of Wisconsin Press, vol. 82(2), pages 189-213.
    12. Paul Thorsnes, 2002. "The Value of a Suburban Forest Preserve: Estimates from Sales of Vacant Residential Building Lots," Land Economics, University of Wisconsin Press, vol. 78(3), pages 426-441.
    13. Elizabeth Kopits & Virginia McConnell & Margaret Walls, 2008. "Making Markets for Development Rights Work: What Determines Demand?," Land Economics, University of Wisconsin Press, vol. 84(1), pages 1-16.
    14. Proeger, Till & Meub, Lukas & Bizer, Kilian, 2017. "The role of communication on an experimental market for tradable development rights," Land Use Policy, Elsevier, vol. 68(C), pages 614-624.
    15. Stefano Moroni, 2014. "Considerazioni critiche su diritti ed indici di edificazione," SCIENZE REGIONALI, FrancoAngeli Editore, vol. 2014(2), pages 59-72.
    16. Evangeline R Linkous, 2017. "Transfer of development rights and urban land markets," Environment and Planning A, , vol. 49(5), pages 1122-1145, May.
    17. Gregory M. Parkhurst & Jason F. Shogren & Thomas Crocker, 2016. "Tradable Set-Aside Requirements (TSARs): Conserving Spatially Dependent Environmental Amenities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(4), pages 719-744, April.

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    More about this item

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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