Sunday, June 22, 2008

Nibbling away at nature & amenity resources

I don't have strong views on the proposed use of the particular park in Kensington for Sir Ron Eddington's proposed tunnel to connect the eastern freeway with the western suburbs in Melbourne*. Public protests are being organised on this use of the park. However I am concerned at the propensity of governments at all levels to nibble away at public parks and nature reserves in meeting infrastructure and other developments within intensively settled urban areas.

These parks and reserves have significant social value both in terms of their use values (e.g. walking the dog, bicycling, enjoying the open air) and because of the implied amenity externalities that get crystallised into increased local property values. The extent of the use value generated can be measured by the consumer surplus triangle the presence of such areas generate - the triangle is large because the access costs of large numbers of people in urban areas to these resources is so low. (I always set out this idea to my environmental economics students as an application of Harold Hotelling's 'travel cost' method of valuing natural resources).

But every time a new road or development is proposed the prospect of resuming large numbers of private homes and business firms to provide land needed looks far too expensive compared to nibbling a bit of the local park or reserve and, of course, the externalities these resources give rise to get forgotten about. And the argument normally put is that the park is quite large and we are only taking a 'small' proportion of it. Repeated applications of this reasoning lead to death by one thousand cuts, to an impoverished amenity resource and a urban environment.

It is not always the public sector alone that is at fault here. Private developers stage protracted campaigns to get land in reserves rezoned to develop private housing and industry - private nibbling along most of the Yarra Parklands in Melbourne is close to an outrage despite the excellent efforts of Melbourne Water and other groups in restoring this land. Developers pester local governments for decades.

And at the time of each public or private sector 'nibble' the argument is sensible in terms of myopic development costs or of giving private agents the chance to 'enjoy nature'. It is just that the long-term outcome is not at all sensible.

In my view we ideally want far fewer private gardens and much more public land that can be assigned to provide amenity resources and nature conservation. There are economies of scale in providing both types of output. One advantage of private holdings however is that they are less susceptible to development pressures and nibbling. While they are much less efficient they are more resiliant in the face of relentless development pressures and the views of philistine public administrations.

* Of course I am strongly opposed to unending expansions of road and tunnel infrastructure when socially costly urban travel is unpriced. Supply decisions should be made in an environment where costly travel is priced.

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