Planning, Law and Economics

The Rules We Make for Using Land

Barrie Needham

• Publisher: Routledge
• Year: 2006
• ISBN:
  9781134288922
• Edition: 1
• Topic: Architecture
• Subtopic: Urban Planning & Landscaping

What rights does the state have over privately owned land? Why should some landowners be favoured over others? How can the practice of land-use planning be improved?

This book addresses these essential questions and shows that the interests people have in property rights over land and buildings are not just emotional but often financial too. It follows that the law, which affects who has property rights, what those rights are and how they may be used, can have great financial consequences for people and great economic consequences for society in general.

For those reasons, looking at land-use planning as it affects and is affected by property rights illuminates some core aspects of land-use planning, including the law, economics, ethics and ideology. In this book, Needham examines those aspects from the clear perspective of property rights.

CHAPTER 1
LAND-USE PLANNING AND PROPERTY RIGHTS: A FRAUGHT RELATIONSHIP

The working of self-interest is generally beneficent, not because of some natural coincidence between the self-interest of each and the good of all, but because human institutions are arranged so as to compel self-interest to work in directions in which it will be beneficent.

(Cannan 1913, quoted in Pigou 1932:128–129)

LAND-USE PLANNING AFFECTS PROPERTY RIGHTS

A few years ago I saw on the television a planner/urban designer on the location where a large town expansion was to be built. She strode in big rubber boots across the fields, indicating with broad sweeps of the hand what would be built and where. The land was privately owned. But clearly such incidentals as existing rights in land must not be allowed to stand in the way of realizing her vision. I was reminded of the first planning project on which I worked, a plan for the expansion of Ipswich (1966). The development area was to be designated according to the procedures of the 1965 New Towns Act. We who knew where the new town was to be built (actually, it never was built) had on no account to give any indication of this until after certain legal procedures had been completed. That was necessary in order to be able to acquire the land at existing use value. Once again, realizing the planned development was not to be hindered by existing rights. When in 1947 the then minister of planning in Britain, Lewis Silkin, went to visit the site of the new town he wanted to have built at Stevenage, he alighted from the train to find that local opponents had replaced the station nameplates with ‘Silkingrad’. They equated Silkin’s land-use policy with the communism of the Soviet Union.

To those stories can be added countless others illustrating how land-use planning can harm private interests. We might smile condescendingly at the naivety behind the cry, ‘It’s my land and I can do what I like with it’; but we still feel aggrieved and improperly constrained if our application to extend our house is refused. Land-use planning is, quite properly, an emotional subject.

Those are particular episodes. At a very general level we have to take into account article 1 of the Protocol to the European Convention on Human Rights.

Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

Where does that leave land-use planning, which interferes in the ‘peaceful enjoyment’ of one’s land possessions? That article continues:

The proceeding provision shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.

Is that a ‘let-out clause’ giving carte blanche to land-use planning? If Europe follows America and puts more emphasis on individual property rights, the Protocol could have as much effect on land-use planning in Europe as the Fifth Amendment to the American Constitution has in the United States. We in Europe would be wise not to ignore the question.

The Fifth Amendment says: ‘Nor shall individual property be taken for public use, without just compensation.’ Its significance for land-use planning in the United States is that when a public body pursuing land-use planning restricts how someone may use her land or building, this is in some circumstances regarded as a ‘taking’ which must be compensated financially.

The proponents of as little possible restriction on individual property rights call themselves ‘libertarians’. They stress ‘freedom of the individual, the benefits of both market forces and entrepreneurship, the role of law, and the perils of bureaucratic control of the economy and society’ (Sorensen and Day 1981). According to this libertarian perspective, there should be as little land-use planning as possible, for people should be free to decide how to use their property rights.

Individuals have rights, and there are things no person or group may do to them (without violating their rights). So strong and far-reaching are those rights that they raise the question of what, if anything, the state and its officials may do. How much room do individual rights leave for the state?

(Nozick 1974:ix)

Private ownership of property protects the individual against arbitrary or arrogant actions of politicians, state officials and other holders of power.¹ As a protection against too simple a view of property rights, an appendix on ‘a theory of property’ has been added to this chapter.

We can accept in principle—even if we are libertarians—that the state be allowed to restrict some of our actions. This is part of the price we pay for the benefits of living in a society. We may not drive faster than 50 kilometres per hour on certain streets: we may not carry a gun: we may not defame others. We can accept that because those restrictions apply to everybody: everybody must ‘pay the price’. Land-use planning has, however, the particular characteristic that it discriminates between people. If a state agency does that, it is supposed to discriminate only between classes of people specified beforehand, such as those younger than eighteen or those who have lived in the country for less than so many years. Land-use planning, however, discriminates between people in a seemingly arbitrary way. For it discriminates between locations, and if you happen to live (or have rights in land) in ‘the wrong location’ that is your bad luck. On location A office development is allowed, on location B not. That locational discrimination is exacerbated by the fact that the financial consequences are often huge. Land-use planning allows, arbitrarily it would sometimes seem, some people to become millionaires while others must remain poor farmers. The way that land-use planning affects property rights can be particularly sour.

LAND-USE PLANNING AFFECTS ECONOMIC EFFICIENCY

The effects of land-use planning on people’s lives go further than clashing with the strong feelings which many people have about land and places and about their own rights in land. For the interests which people have in land and buildings are not just emotional but often financial too. Land-use planning can make a person poorer or richer, by affecting the value of the rights on her land. It can do this both directly by restricting what may be done with that person’s land, and indirectly by influencing what others may do with their land, whereby their land has an effect on the value of the first person’s land. Those financial consequences for individuals can add up to very great economic consequences for the society.

The study of how people use property rights can enable us to analyse the economic consequences of land-use planning. According to the ‘libertarian’ perspective, the aim of land-use planning should be to ‘improve the efficiency and effectiveness of public regulation over economy and society’ (Sorensen 2003). The best way of doing this is to let people themselves decide how to use their own land and property. For if individuals act in their self-interest and if they interact under certain conditions, the result will be a better use of scarce resources than if those individuals are restricted in their actions by land-use planning. The argument continues: that will, however, not realize the desired economic goal unless the market in property rights is appropriate. It is not that the public administration should do nothing, rather that it should limit itself to creating the conditions under which individuals, in unencumbered interaction, will produce economic results which are the best for society. So state actions should as much as possible be restricted to making the market in property rights appropriate.

We can see the strong points in this argument without going as far as the libertarians. For the argument puts the discussion of the relative merits of ‘public planning versus the market’ in a new light. Land-use planning affects the way that people use property rights and therefore affects the efficiency with which economic resources are used. This way of looking at things enables a sharper analysis of the economic effects of land-use planning.

CAN LAND-USE PLANNING STILL BE JUSTIFIED?

Those are very serious criticisms against land-use planning: it restricts the ways in which people may use their property rights, and it can result in those rights being used less efficiently. And yet: many countries have practised land-use planning for many years and—it would seem—want to continue doing so. Why? Why have not we, the members of the public who by our votes select the law makers and policy makers, chosen politicians who want to abolish land-use planning?

The answer is, presumably, because we consider that it can be a useful activity. We can be cynical about this: we want to retain land-use planning because it protects our property interests. This might be true in a selfish, pecuniary sense, as in the argument that the American system of zoning or of no-growth communities is used to protect the value of single family housing in the suburbs and to exclude poor families (Seidel 1978; Fischel 2001). The economic benefits can be less immediate but nevertheless valuable, as when land-use planning creates a framework for private investment.² However, we would do well not to be too cynical. Our interests in the way in which land and buildings are used can also be less self-seeking, sometimes even altruistic. We want land in location X to be used in such a way that we can enjoy the view of it. We want our town centres to be attractive and lively places. We want to be able to find work without having to travel too far to find it, without at the same time being so near to it that the noise and traffic disturb us. We want other members of the public to be housed decently. We want the interests of our children and our children’s children to be safeguarded.

This topic is often discussed in terms of: land-use planning restricts private interests in favour of the public interest; there are procedures in place to protect those whose individual interests might be damaged; but if necessary the public interest must take precedence. Land-use planners sometimes act in accordance with this argument: they see individual rights as an obstacle to the realization of land-use planning schemes and they feel justified in being cavalier with people’s rights: because the planning is in the public interest, isn’t it? If a landowner refuses to cooperate in a publicly initiated scheme, some planners feel that their professional judgement and social commitment are being questioned, and the landowner is seen as an opponent to the public good, as represented by the planner. Planners acting in this way have been described by Davies (1972) as ‘evangelistic bureaucrats’.

I find, however, the discussion ‘private interests versus the public interest’ to be an inadequate way of exploring this topic. For ‘the public’ is composed of you and me and all other persons. Our interests are individual. ‘The public interest’ is too quickly associated with the interest of the municipality, or the national government. The point at issue is then, that land-use planning affects individual interests in land, favouring some and harming others. Some of the people whose interests are involved have not yet been born. How can such conflicts between individual interests be resolved? Matters become even more complicated when we take into account that there can be a conflict between what one person wants for herself and what she wants for the collectivity. We might want to live in the middle of a beautiful landscape: but we do not want others to live there, because that would spoil the view for us.³ We make a distinction between our interest as a private individual and ...

Table of contents

• THE RTPI Library Series
• CONTENTS
• PREFACE
• ACKNOWLEDGEMENTS
• CHAPTER 1 LAND-USE PLANNING AND PROPERTY RIGHTS: A FRAUGHT RELATIONSHIP
• CHAPTER 2 TWO WAYS IN WHICH LAWS CAN INFLUENCE HOW LAND IS USED1
• CHAPTER 3 THE LEGAL LANGUAGE: RIGHTS IN LAND1
• CHAPTER 4 THE ECONOMIC LANGUAGE: MAKING A GOOD USE OF SCARCE RESOURCES
• CHAPTER 5 AN EVALUATION OF PROPERTY LAW: RULES UNDER PUBLIC LAW
• CHAPTER 6 AN EVALUATION OF PROPERTY LAW: RULES UNDER PRIVATE LAW
• CHAPTER 7 APPLICATION: ACHIEVING NEIGHBOURHOOD QUALITY
• CHAPTER 8 APPLICATION: REGIONAL LAND-USE PLANNING
• CHAPTER 9 CONCLUSIONS: THE RULES WE MAKE FOR USING LAND
• NOTES
• BIBLIOGRAPHY
• INDEX