Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Friday, November 26, 2004

Oregon: a change in who pays for land-use preservation

Oregon has very restrictive measures on growth and development. These measures make it virtually impossible for cities and towns to grow beyond certain comparatively small, well-defined areas. The effect of these restrictions is to limit the supply of urban land, driving its price upward; at the same time the policies depress the value of rural land. These effects, in turn, mean that the owners of rural land have implicitly (in an opportunity cost sense) been bearing the cost of no-growth policies, while the owners of urban land have been benefiting.

November's election has changed who will bear the costs of the no-growth policies (link from the NYTimes, registration required):
Under a ballot measure approved on Nov. 2, property owners who can prove that environmental or zoning rules have hurt their investments can force the government to compensate them for the losses - or get an exemption from the rules.

As the state enacted increasingly restrictive covenants on the uses to which one could put one's land, rural landowners were being forced to bear the implicit costs of these restrictions. As one put it:
Whatever the benefits of Oregon's land-use rules,... "the people paying the cost are property owners. ...If Enron does something like this, people call it theft," he said. "If Oregon does it, they call it land-use planning."

Now, under the new scheme, all the taxpayers in the state will bear the costs of land use restrictions. The restrictions themselves are not being overturned; the only change has been in who will bear the costs of the restrictions.

This change will undoubtedly mean that some land will be freed up for development: it is really easy to be in favour of pristine nature when you can force someone else to bear the costs; but voters and legislators tend to think again if the costs are spread across all the voters.

The folks at PERC undoubtedly understand this.
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