Francesco Marangon Tiziano Tempesta - FIG · Francesco Marangon -Tiziano Tempesta Economical...

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FIG/FAO International Seminar onState and Public Sector Land ManagementState and Public Sector Land Management

9-10/9/2008Villafranca (VR)

Francesco Marangon Francesco Marangon -- Tiziano TempestaTiziano Tempesta Economical aspects of a correct land managementEconomical aspects of a correct land management

Francesco MarangonFrancesco Marangon Tiziano TempestaTiziano TempestaDepartmentof EconomicsUniversity of Udine – IT

Department for Territory and Agro-forestry systems University of Padua – IT

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StructureStructure•• Economics and land managementEconomics and land management•• Land use and market failureLand use and market failure•• Government intervention and failureGovernment intervention and failure•• Veneto case study:Veneto case study:

– Land settlement, urban planning and development policies

– Real estate market– Consuming and wasting the land– Landscape impact

•• ConclusionsConclusions

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Economics and land managementEconomics and land management

• Land utilization and its changes depend on real estate market trends .

• From an economic point of view, land demand is a derived demand (land is one of the factors of production).� If for some reason the prices and their

trend expectation change , then the "derived” land demand will also change.

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• In the absence of external interventions, the territorial structure will thus be determined entirely on the basis of markets whose goods demand for land use.

• The economic theory created several models to explain the land use trends on the basis of market forces.


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Von

V

on T

hTh ü

ü nenne

n’’ s

s M

odel

Mod

el

r(a)Economic

rent

distance centre

r(b)r(c)

ba

c

Production a

Production b

Production c

AA

BB

CC

OO

NetworkNetworkModelModel


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Spontaneous organizationSpontaneous organizationof territorial spaceof territorial space

• Polarized urban rent (differentials in property values) with strong spatial hierarchy of economic activities.

• With agglomeration diseconomies(i.e. traffic congestion, logistic costs):� mix of activities;� network asset.

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Land use and Market failureLand use and Market failure• Economic theory underlines that market is

not able to determine an optimal social use of resources in the presence of “market failuresmarket failures ”.

• Referring to land, we have: – Non-renewable resources;

– Externalities;– Public goods;

– Irrationality of economic agents.

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Land as exhaustible resourceLand as exhaustible resource• Many resources are mixture of

renewable (regenerate themselves) and non-renewable (exhaustible) elements: soilsoil and its overover --exploitationexploitation (unsustainableunsustainable ) due to free market action.

•• IrreversibleIrreversible land use and inflexibleinflexiblesystems (urban sprawlsprawl ).

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Externalities are usually defined asunintentional sideunintentional side--effects of production effects of production

and consumption that affect a third and consumption that affect a third party either positively or negativelyparty either positively or negatively

ExternalitiesExternalities

LANDLAND

Traffic pollution Landscape degradationHydrogelogical asset Urban congestion

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Land(scapeLand(scape ) as public good) as public good

NONNON--RIVALRIVAL CongestibleCongestible RIVALRIVAL

NON NON EXCLUDABLEEXCLUDABLE

PURE PUBBLIC PURE PUBBLIC GOODSGOODS

LandscapeLandscape

Openaccess

resourcesRoadsRoads

Openaccess

resourcesFree parking

area

EXCLUDABLEEXCLUDABLEToll Goods

Natural HabitatsClub goodsHighways

PRIVATE PRIVATE GOODSGOODSHousesHouses

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Irrationality in real estate investors Irrationality in real estate investors

Source: CRESMESource: CRESME

120.000.000

100.000.000

80.000.000

60.000.000

Source: ISTATSource: ISTAT

Housing Housing cycle: cycle:

deeds of deeds of sales and sales and

market market prices prices

((€€ .000 .000 ’’95)95)

Building Building permitspermits

issuedissued in Italy in Italy toto realizerealize newnew

houseshouses fromfrom1990 1990 toto 20042004

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CompositionComposition ofof ItalianItalianfamily family wealthwealth asas % % ofof GNPGNP

Irrationality in real estate investors Irrationality in real estate investors

3,5%3,5%

2,3%2,3%

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• Market failure calls for governmentgovernmentinterventionintervention to correct inefficiency.

• For example European Spatial Development Perspective (ESDP) “Towards Balanced and Sustainable Development of the Territory of the European Union” (1999):� recommendation for public intervention

and sustainable urban increase.

How markets use priced and How markets use priced and unpricedunpriced (environmental) resources(environmental) resources

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Why governments failWhy governments failAlthough there are good reasons for governments intervention, unfortunately they are often no better at managing natural resources than the free market:

1. We tend to think that the duty and purpose of government is to act in our interests as a communityrather than as individuals, but this image can be false.

2. Governments may not be very good at getting the right information which enables them to trace through the full consequences of a particular action.

3. Government may frame a good environmental law in principle. However, it has to be translated into practice by experts who are part of a government bureaucracy.

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Land SettlementLand Settlementof the Veneto Regionof the Veneto Region

At the beginnings of the Seventies (before the economic boom) the Veneto Region had: - a polycentric residential and productive settlement

(presence of almost 5 cities of small-medium size instead of a big city) and more dispersed than the other Italian regions (urban sprawl)

- a big economic disparity between the central part of the Region and two marginal areas (mountain and south rural)

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MarginalMarginalAreasAreas

MountainMountain

South PlanSouth Plan

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Urban planning and Urban planning and development policiesdevelopment policies

Since its establishment the Veneto Region tried:

� to reduce the economic development gap� to reduce the negative effects of the dispersed

settlement

� to enhance the positive effects of the polycentrism (less urban and traffic congestion, less criminality, more social cohesion, etc.)

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Urban planning legislationUrban planning legislationThe Veneto Region passed a urban planning law at the end of the SeventiesThere are tree type of plans– Regional Master Plan (PTRC)– Province Master Plan (PTP)– Municipal urban plan (PRG)

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Urban planning legislationUrban planning legislation• Almost all the Municipalities enacted a urban

plan before the end of the Eighties.

• The Region adopted the Master Plan (PTRC)in 1992.

• The Provinces, despite a great deal of studies and proposals, till today have not adopted the Master Plan.

• The Municipalities were been the principal (but not the only one) actor of the urban growth.

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The Real Estate PricesThe Real Estate Pricesin the Veneto Regionin the Veneto Region

The analysis of the real estate prices permit to highlight:– The degree of economic development of

the different part of the territory – The role played by the market and by

the public intervention in the evolution of the land settlement

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VR

VI

TV

PD

VE

Real Estate Real Estate PricesPrices((€€ 2005/mq)2005/mq)

Effect ofEffect oftowns and towns and Central AreaCentral Areaof the Regionof the Region

LessLess thanthan 900 900 €€/mq/mq

FromFrom 901 901 toto 1000 1000 €€/mq/mq



More More thanthan 1500 1500 €€/mq/mq

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Effect ofEffect ofTourismTourism






Caorle

EracleaJesolo

ChioggiaLAKE

of Garda

MOUNTAINCortina High Cadore Comelico

SEASIDESEASIDE

MOUNTAINAltopiano di

Asiago

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Effect ofEffect ofthe highways the highways and of the and of the main roadsmain roads






Highways

Main Roads

Verona-Trieste

Padova-Bologna

Venezia-Belluno

Transpolesana

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Real Estate prices in the Veneto Real Estate prices in the Veneto Region per socioeconomic areas Region per socioeconomic areas

Area Municipalities (Number)

Price Euros 2005/mq

Deviation from the regional mean (%)

Mountain not tourist 45 849,2 -21,7 tourist 67 1.074,6 -1,0 Hill not tourist 91 1.019,5 -6,0 tourist (lake) 8 1.905,0 75,6 Plan marginal 76 853,8 -21,3 transitional 76 1.004,1 -7,5 central Veneto 112 1.070,3 -1,4 metropolitan 50 1.320,1 21,7 towns 5 level 22 1.420,7 30,9 towns 4 level 9 1.438,3 32,6 towns 3 level 9 1.465,6 35,1 towns 2 level 4 1.946,3 79,4 towns 1 level 4 2.203,8 103,1 tourist (seaside) 5 1.600,0 47,5 total 578 1.085,3

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Consuming and wasting the landConsuming and wasting the land

• Following the Corine Land Cover data, in 2000 the urban areas covered about the 7,7% of the surface of the Region

• A recent study of the Magistrato delleAcque pointed out that inside the Basin of the Venice Lagoon the Corine Land Cover data underestimates the real urban area (about 60% less)

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Starting from the Starting from the MagistratoMagistrato delledelle AcqueAcque data,data,through a statistical function, we estimatedthrough a statistical function, we estimated

thethe real urban area in the Veneto Region plan in 2001real urban area in the Veneto Region plan in 2001

The land consumption per inhabitant has been aboutThe land consumption per inhabitant has been abouttwo times lowertwo times lower in the in the townstowns than in the other parts of the planthan in the other parts of the plan

Estimated urban surface Areas Surface (kmq)

Inhabitants in 2001

total (kmq)

% per capita (mq)

Marginal and transitional areas. 5153,1 925.750 566,6 11,0 612 Central part of the Region 2962,1 1.000.537 546,3 18,4 546 Metropolitan areas 858,1 537.267 228,9 26,7 426 Towns 742,2 978.631 214,3 28,9 219 Total 9.715,4 3.442.185 1.556,0 16,0 452

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The recent building boomThe recent building boom

0

5.000.000

10.000.000

15.000.000

20.000.000

25.000.000

30.000.000

35.000.000

40.000.000

45.000.000

1970 1975 1980 1985 1990 1995 2000

mc

HousesHouses

Non Non

residential residential

buildings buildings

Factories, Factories,

Mall, Farm Mall, Farm

buildings etc.buildings etc.

Building permits per year (m 3)

Previous Previous

boomboom

No No

regional regional

regulationregulation

Absence Absence

of urban of urban

planningplanning

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The building boom has been a general phenomenon in Italy… but in the Veneto Region it has been very higher!

VenetoVeneto North Italy

Houses4.204 4.204

(second in Italy)(second in Italy)2.602

Non residential buildings

7.7917.791(first in Italy)(first in Italy)

4.612

Building permits (cubic meters per square kilometer)

The recent building boomThe recent building boom

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The The

Central Central

Part ofPart of

the Region the Region

(Roman(Roman

GraticolatoGraticolato

historical historical

areaarea))

Land settlementLand settlement

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Padova Historical Walls

PadovaPadova


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RovigoRovigo


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The landscape impactThe landscape impact• The scattered modern buildings can

dramatically reduce the landscape landscape aestheticaesthetic quality and the attractiveness of the territory for the outdoor recreation (both tourists and daily users).

• The landscape quality is the main factor considered by the Veneto inhabitants when choosing a place where make a day-trip.

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Landscape aesthetic appreciation (scale from 1 to 10) and percenLandscape aesthetic appreciation (scale from 1 to 10) and percen tagetageof a vista occupied by of a vista occupied by modernmodern houseshouses , , factoriesfactories and and pylonspylons

0

1

2

3

4

5

6

7

0 1 2 3 4 5 6 7 8 9 10

% immagine

IEV

tralicci

fabbriche

case

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Landscape aesthetic appreciation (scale from 1 to 10) and Landscape aesthetic appreciation (scale from 1 to 10) and percentage of a vista occupied by percentage of a vista occupied by modern housesmodern houses , , factoriesfactories ,,

modern vineyardmodern vineyard and historical villasand historical villas

0

1

2

3

4

5

6

7

8

9

10

0 1 2 3 4 5 6 7 8 9 10

% of the view

VA

I

factories

modern vineyards

modern houses

ancient villas

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Landscape aesthetic appreciation (scale from 1 to 10) and percenLandscape aesthetic appreciation (scale from 1 to 10) and percen tagetageof a vista occupied by factories, of a vista occupied by factories, modern vineyardmodern vineyard and and woods and woods and scattered treesscattered trees

Relazione tra qualità dell'immagine e percentuale d ella veduta

occupata da fabbriche, vigneti moderni e boschi e a lberi

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

0 1 2 3 4 5 6 7 8 9 10

% della veduta

punt

eggi

o m

edio

fabbriche

vigneti moderni

alberi e boschi

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Recreational areas demandRecreational areas demand• The landscape degradation is one of the

main cause of the recreational demand• Day-trip in the Colli Euganei Regional

Park: 2.5 millions per year• Day-trip in the Mountain areas of the

Region: 7.7 millions per year

The visits are concentrated mainly during the weekend in spring and summer

Increasing Traffic and Pollution problems

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ConclusionsConclusions• After about 40 years of economic growth

the territory (especially on the plain) of the Veneto Region can be considered deeply compromised .

• The urban areas are strongly sprawled.• The urban planning failed in the attempt

to control the sprawl and to reduce the economic gap between developed and marginal areas.

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ConclusionsConclusions• The growth of urban areas was largely driven

by the choice of agents market that pursued the increase of the urban rent .

• Huge soil consumption, landscape degradation, traffic pollution are on the whole the unsustainable results of such dynamics.

• The public administration has been strongly prone to the interests of investors also in recent years.

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ConclusionsConclusions• The improvement of the territory will require

a great deal of time (inertia of the urban systems) and could be very costly from the social point of view

• A deep change of the urban planning legislation will be necessary

• Today the building trade is essentially a financial activity : how the municipalities will be able to control and to plan in a sustainable ways the territory facing such strong interests?

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Francesco MarangonFrancesco [email protected]@uniud.it

Tiziano TempestaTiziano [email protected]@unipd.it

Francesco Marangon Tiziano Tempesta - FIG · Francesco Marangon -Tiziano Tempesta Economical...

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