Thursday, March 10, 2005

Parity of values

In my last post, I suggested there might be some merit to a constitutional amendment which required land owners to compensate communities for the loss of ecosystem services values due to land development. I've put a little bit more thought into the idea, trying to see if I can develop a meaningful justification (beyond retribution) for such a plan.

Off hand the only good justification I can think of is an economic efficiency argument. To wit, land owners, land developers, and society at large tend to undervalue natural resources. The land market, as currently configured, sees land as a resource whose only value lies in its development potential. Thus, all development decisions are basedd solely on the money they can generate. There is no mechanism to account for the external costs that development will create. This holds true whether we're talking about purely anthropogenic costs (increases in traffic congestion and air pollution, etc.) or intrinsic environmental costs (loss of ecosystem services, local extinction, etc.) In economic parlance, then, development decision are always misvalued and always economically inefficient. By forcing landowners to pay at least one portion of the external costs created by their development decisions, states would move towards a more rational and efficient development scheme.

Of course, this sort of plan would likely be declared anti-growth, anti-development, etc. I would argue that that is false. Economic inefficiency works both ways. There are, no doubt, places of dubious ecological value being preserved right now that might be ripe for development. If you want to be so crass as to put development decisions into some sort of formula, consider the following:

A = D - E where:

A = Actual value of a land parcel
D = Development value of a land parcel
E = Ecosystem service values of a land parcel

Ideally, you would develop land where A, the actual value of a land parcel, is positive. In those situations, the development value exceeds any ecosystem services values the land might provide, and you ensuring greater (if not entirely) efficient development is occuring.

Anyway, this is all pie in the sky. Beyond the political difficulty of convincing entire populations that landowners might owe some duty to the public at large, there is also the issue of measuring ecosystem service values. Doing so on a statewide scale (or nationwide scale) would require VAST resources that are unlikely to materialize in a political climate like ours.

Any of you smarty-pants types out there want to critique this?