Recent court decisions have made economic development and tax policy front-page news. The recent U.S. Supreme Court decision in Kelo v. City of New London raised a public outcry when it allowed local governments dramatic latitude in acquiring private property for economic development purposes. This case had a fiscal aspect as well, for it illustrated how financial pressures can lead local governments to seek alternatives to direct investment for economic revitalization and redevelopment.

Economic development was also the focus of a major lower court decision on state tax policy. In Cuno v. DaimlerChrysler, the 6th Circuit Court of Appeals found that Ohio’s investment tax credit, intended to attract businesses from other states, violated the Commerce Clause of the U.S. Constitution (Hellerstein 2005). These and other, similar cases raise many questions about the connections between economic development and tax policy.

Is there a relationship between economic development and infrastructure spending?

Infrastructure, that vast network of capital-intensive services including roads, water provision, sewer services, and electrical supply, is critical to current and future economic activity. However, serious economic examination of the link between infrastructure spending and economic productivity only began in the late 1980s. Aschauer (1989, 194–197) argued that declining infrastructure spending resulted in less economic growth. More recently, Bougheas et al. (2000, 520) reported findings that “highlight the importance of infrastructure accumulation” for productivity gains.

Other researchers have pointed out that the most significant recent changes in infrastructure spending have occurred at the state and local levels, rather than the federal level. Gramlich (1994, 1178) argued that federal infrastructure spending has been fairly consistent over time, but state and local spending has decreased. Holtz-Eakin (1993) cautioned that while public expenditures on infrastructure may be important, they may not directly affect economic productivity. He argued that differing state and local needs may account for many infrastructure spending disparities, and that maintenance of existing infrastructure assets may be more important than new spending for capital acquisition. Boarnet (1997) considered efficient pricing for infrastructure use as important as its actual provision.

Nevertheless, the American Society for Civil Engineers (ASCE) is sufficiently concerned about the condition of infrastructure in the U.S. to assign it a grade of “D.” ASCE (2005) argues that the country needs to spend about $1.6 trillion over the next five years to improve the situation.

What is the relationship between infrastructure spending and local tax systems?

The mechanisms for funding infrastructure and its role in state and local spending are complex. Research in this area deals with such topics as fiscal illusion (i.e., when the complexity of the revenue system obscures the true cost of public goods and services) and specific capital financing strategies used to fund infrastructure. However, there has been little research on the impact of local tax structures on infrastructure spending.

Economists have long argued that the value of publicly provided goods and services, such as infrastructure and its maintenance, are reflected in the value of the property served by those goods. Accordingly, a tax that captures the value of these public goods and services may be an important revenue source for funding them. However, in the last 30 years, local governments have moved away from such a tax, the property tax, to other sources of revenue. In many communities, this shift has produced an increased reliance on state aid, local sales tax revenues, and user fees.

In analyzing infrastructure spending in Utah, it is clear that the local revenue structure affects per capita operating and maintenance spending and new capital acquisition expenditures. Preliminary analysis indicates that communities are more likely to increase per capita infrastructure spending when it is financed by property taxes, all other funding sources held constant. It also appears that as per capita sales tax revenue increases, per capita spending for infrastructure services declines.

How constrained are local revenue systems?

One reason that local government revenue structures affect spending on infrastructure is that the states impose various constraints on local revenue sources. Although the past ten years have seen no dramatic changes in the roles of the property tax, intergovernmental aid, or the sales tax in overall local government revenues, the ratio of total revenues to personal income has fallen about 7.5 percent. This real decline highlights the increasing pressure on local governments to identify new revenue sources.

Yet, local governments face serious constraints when they seek to change their revenue systems. States impose intergovernmental restrictions, such as limits on sales tax rates that localities can impose. Less tangible but equally important is political opposition to tax increases. The third factor is the set of tax and expenditure limitations that many states have enacted, ranging from Proposition 13 in California in 1978 to the more recent taxpayer bill of rights enacted in Colorado, which drastically limited increases in government spending.

These constraints have forced local governments to become more innovative in their revenue-raising methods. An entire cottage industry of financial advisors, bond attorneys, and other public and private sector innovators has emerged to help local governments find ways of loosening or circumventing these limitations. Some strategies may have increased economic efficiency, although they give rise to equity concerns (for example, the movement toward the increased use of fees and charges); others are nearly invisible to the taxpayer. In nearly all cases, local governments have been seeking to use land as a revenue-generating device—a trend that shows no sign of abating.

What are alternative ways to finance capital infrastructure?

Two types of debt traditionally have financed infrastructure projects: general obligation (GO) bonds, backed by the full faith and credit of the issuing locality; and revenue bonds, backed by income from the capital project. Both types of debt have significant restrictions on their use, such as voter approval requirements and caps on maximum indebtedness. These debt limitations, the difficulty in raising property taxes, and the fear of political opposition have increased the use of alternative capital finance methods based on land use.

One longstanding method, tax increment financing (TIF), utilizes the increases in property value to help finance redevelopment projects. Originally designed as a financial instrument to eliminate blight and provide affordable housing, this instrument has become increasingly popular in many states for a variety of projects. Forty-seven states and the District of Columbia now allow this technique.

Capturing the property tax increment attributable to government-sponsored redevelopment in order to service this debt makes economic sense if the new development would not have occurred without the formation of the tax district. Moreover, this debt does not have to be approved by voters, but rather by a group designated by the city government. Not even these two factors explain the extraordinary recent growth in the number and size of TIF districts, however, raising suspicion that this tool may be used more often to attract and subsidize economic growth than to eliminate blight. For example, in 2003–2004, California had 33 TIF redevelopment projects, each of which covered more than 6,000 acres, a surprisingly large area to be declared “blighted” in any one jurisdiction (see Figure 1).

Another popular tool in several states is the community facilities district (CFD), which usually funds new development. Landowners within a region form a CFD to issue debt to finance the infrastructure needed to develop raw land. District members’ votes are typically a function of the amount of property each landowner holds. The local government must approve CFDs, although they are not a formal part of the government and their debt issuance is not subject to approval by the general public.

A lien for CFD assessments is placed on each lot in the district, and the CFD tax liability appears on the property tax bill of each district member as a separate line item. Variations of this technique may utilize sales taxes, impact fees, and user charges. Many rapidly growing local governments encourage the formation of these districts to help finance their community’s growth. Nevertheless, CFDs can be very complex, and may fail if anticipated growth does not occur (see Figure 2).

TIFs, CFDs, and other such techniques present an ethical dilemma to local government. Sometimes they are not fully understood by the political decision makers who authorize their use, let alone by members of the general public who will bear the burden of paying this debt in the future. Yet they remain a popular tool to finance crucial infrastructure that is basic to improving the economic well-being of the community.

Could a land tax help finance infrastructure for economic development?

The land component of property value is another potential source of revenue to encourage economic development. Since the supply of land is fixed in the short run, an increase in a land tax will not affect the tax base. However, it will encourage more intensive use of the land and may slow urban sprawl. Unfortunately, the lack of empirical data makes it difficult to determine if this theory is accurate. One example in the U.S. is the City of Pittsburgh, which in 1979–1980 restructured the tax on land to be five times that on improvements. Building activity showed a dramatic increase, although other factors may have contributed to the change as well (Oates and Schwab 1997). Pittsburgh later returned to a single-rate property tax system.

Increased use of a land tax poses significant problems. In particular, accurately assessing land can be challenging, although statistical and econometric techniques may help address this in the future. A second concern is that more intensive use of land value taxation will lead to denser development, exacerbating many of the problems associated with congestion. These effects must be weighed against the positive benefits of reducing long-distance commuting. A third problem concerns equity. Owners whose property has a high land/improvement ratio will face an increased tax liability. This shift might be mitigated by adjustments in the tax rate, special exemptions or targeted tax credits.

A land tax has the important advantages of transparency and accountability. In particular, if land value increases because of government activities, there is strong justification for recovering at least some of those costs through a tax on the land component. We would even propose a name for this additional tax—a positive externality tax (PET). We recognize that, like any proposed increase in the property tax, such a shift would be politically controversial.

Conclusions

Our current research analyzes relationships among economic development, infrastructure, and the tax system. The fiscal problems of local jurisdictions are made more complex by the use of intricate methods of infrastructure financing, such as TIFs and CFDs, to fund economic development. The use of financing mechanisms based on a land tax may be one part of a potential response to this challenge.

Jeffrey Chapman is professor and director of the School of Public Affairs at Arizona State University in Tempe. He specializes in state and local finance and administration of financial resources, and has recently published in the area of local land use responses to fiscal stress.

Rex L. Facer II is assistant professor of public management at the Romney Institute of Public Management of the Marriott School of Management at Brigham Young University in Provo, Utah. He specializes in city management, public finance, public management strategy, and public policy analysis.

Faculty profile of Ming Zhang

Over the last several years, growing public attention has centered on the fallout from the subprime lending debacle—an unprecedented event that has resulted in massive foreclosures and widespread housing vacancy in what had been the perennially growing Sunbelt (Goodman 2007; Leland 2007). Across the southern United States, from Atlanta, to Fort Meyers, to Phoenix, massive new housing developments are largely unoccupied while older housing is abandoned due to foreclosure. Cities in the Sunbelt now exhibit housing vacancy rates akin to those observed in former industrial Rustbelt cities.

This situation leads to two critical questions: Can Sunbelt cities manage the land use changes that this unstable (and unpredictable) economic market has created, while still maintaining at least the status quo for remaining residents? Are these changes providing new planning opportunities for urban sustainability?

In our work with the Lincoln Institute, we conducted an empirical study to begin to answer those questions (Hollander et al. 2010). The United States Postal Service (USPS) regularly releases datasets that provide information on occupied housing units for each zip code. We were able to obtain household residential delivery data for all zip codes in the lower 48 states for three time periods: the beginning of the real estate boom (February 2000); the peak of the real estate market (February 2006); and a time of high foreclosures and significant decline in real estate markets (February 2009).

The key indicator employed in our study was derived from the USPS dataset: occupied housing units. The USPS data lists how many housing units received mail during a given month in each zip code. When no one is receiving mail at a location, it is considered vacant. After 90 days of vacancy, the USPS no longer lists the unit as active and, for our purposes, removes it from the occupied housing unit list.

Following a methodology developed by Hollander (2010), we noted changes in occupied housing unit density from one period to the next. It was possible to analyze this because zip code boundaries remained constant in our study sample. We focused on broad shifts in occupancy in a given zip code as being indicative of widespread vacancy and abandonment.

Two time intervals were selected for analysis: February 2000 to February 2006, and February 2006 to February 2009. The first period corresponds with the housing boom years, and the second period with the slowing of the boom into the foreclosure crisis. Change for each time interval and each zip code was calculated by subtracting the total count of households at the end of each interval from the count at the beginning.

Data Tabulation, Mapping, and Analysis

In addition to comparing national indicators of household change between the two periods, each dataset was separated into urban, suburban, and rural areas. Urbanized Areas, as defined by the United States Census, provided boundaries for our urban areas. Areas between the Urbanized Area and the Metropolitan Statistical Area boundary lines were considered suburban, and areas outside of Metropolitan Statistical Areas were considered rural.

For each of these regions and for both time intervals, we analyzed the following factors for both declining and gaining zip codes:

• number of zip codes with a net decline or gain in housing occupancy;
• total square mileage within those zip codes;
• total net housing loss (or gain) for all declining (and gaining) zip codes; and
• percentage of the total housing units lost (or gained) in declining (or gaining) zip codes.

The data were also mapped in three categories to display which zip codes were losing and gaining housing units for each time interval. Zip codes that had a net loss of 30 or more housing units were mapped as “losing,” those that gained 30 or more units were mapped as “gaining,” and those that lost or gained up to 29 units were considered as having no significant change.

Two measures of spatial autocorrelation—Global Moran’s I and a Univariate Local Indicator of Spatial Association (LISA)—were used to explore spatial clustering of USPS’s housing unit occupancy change data and thus identify broad areas that were impacted most severely. In this analysis, the GeoDA software package was used to run the Global Moran’s I and Univariate LISA tests, with results shown only for zip code clusters with significance at 0.01 for the Global Moran’s I test and 0.05 for the LISA test.

Four possible results are derived from the Univariate LISA test, in which “high change” refers to an increase in housing occupancy of more than 30 units in a zip code and “low change” refers to a decrease of more than 30 housing units.

1. High-high clustering: high change zip codes surrounded by high change zip codes

2. Low-low clustering: low change zip codes surrounded by low change zip codes

3. Low-high clustering: low change zip codes surrounded by high change zip codes

4. High-low clustering: high change zip codes surrounded by low change zip codes

The high-high and low-low results indicate local clustering, while the high-low and low-high results indicate outliers or “islands” (Anselin 1995).

Findings

This analysis of the USPS occupied housing dataset revealed a number of trends that provide a spatial and statistical context for understanding the foreclosure crisis and numerous paths for further investigation. We had anticipated finding significantly more zip codes with a decline in occupied housing in the 2006–2009 period than the 2000–2006 period. Though the latter period did have 16.4 percent more declining zip codes than the former period, this increase was not as high as expected given the assumption of a boom vs. bust comparison.

However, when the dataset was separated into urban, suburban, and rural areas, much more distinctive trends were evident (tables 1 and 2). Suburban areas registered 42.8 percent more declining zip codes in the latter (2,333) than the former period (1,634) and rural zip codes registered 13.8 percent more declining zip codes in the latter (2,189) than in the former period (1,924), whereas urban areas had only 1.9 percent fewer declining zip codes in the latter period (2,084 versus 2,124).

Figures 1 and 2 illustrate the occupied housing unit gains and losses during both periods. The 2006–2009 interval was marked not only by an increase in the size and number of declining (red) zip codes but a slowing of growth in previously expanding areas, as indicated by the increase in no-change (yellow) zip codes in many previously expanding regions. Decline also became more prevalent in new areas. The upper Midwestern states (Michigan, Wisconsin, Northern Illinois, and Minnesota) and the Sunbelt region (including Phoenix, Las Vegas, Los Angeles, the San Francisco Bay Area, New Orleans, and the outskirts of Florida’s coastal cities) showed noticeable increases in declining zip codes. In contrast, declines in the Great Plains, Mississippi River corridor, western Pennsylvania, and the Pacific Northwest were either less pronounced or reversed in the latter period.

The results of the Global autocorrelation tests indicated spatial clustering existed in the dataset. Not surprisingly, the LISA analysis found declining clusters prevalent in regions that had high percentages of declining zip codes, generally in both intervals (figures 3 and 4). However, it was surprising that fewer low-low (declining) clusters were found in the 2006–2009 period. The 2000–2006 period shows low-low clusters, particularly in the Great Plains states, the Mississippi River corridor, and western New York and Pennsylvania. Despite having more total declining zip codes, less low-low clustering occurred in the 2006–2009 period. However, clustering did occur in new territory including the upper Midwest, South Florida, New Orleans, the Southwest, and California.

Application of the Findings

Since completing the working paper on which this article is based, its findings have influenced further on-the-ground research. Widespread instances of decline in metropolitan areas in the Sunbelt led to more targeted research in cities shown to be among those most severely impacted by the recession of the late 2000s. Three cities are examined as case studies by Hollander (2011): Phoenix, Orlando, and Fresno (figures 5, 6, and 7).

In Phoenix, a fire-hot real estate market led to widespread overbuilding of housing in recent years. Developers converted farms in the Laveen neighborhood into housing subdivisions, in some cases finishing only half of them. In Orlando, inner city neighborhoods that had experienced rebirth in the mid-2000s are stricken by widespread foreclosures today, leading to arson and high vacancy levels. Many of the grand older houses of Fresno are now overrun with weeds and decay as demand for housing has plummeted in this center of California’s agricultural industry. With jobs scarce, people are fleeing former boomtowns and leaving behind a new type of vacancy and abandonment. In these cities and others, entire blocks that had been fully occupied now have half or more of the housing stock unoccupied.

Additionally, the number of new declining zip codes found in Metropolitan Statistical Areas in this study raises more specific questions about how the recent recession has impacted different parts of the country. This finding challenges the belief that urban cores are most prone to decline while suburban growth will continue in perpetuity.

This shift in declining neighborhoods from urban to suburban areas spurred another related study that broke metropolitan regions down into central cities, inner ring suburbs, and outer ring suburbs (Zinder 2010). It used statistical metrics to compare trends within those subsets of the metropolitan region and added another round of evidence that suburban decline is becoming more pervasive in most regions of the country.

Zinder found more new declining zip codes in all suburban regions during the recent recession than in the previous period and determined that outer ring suburbs sustained the largest increase of new zip codes with a net decline in housing occupancy. In contrast, the total number of declining zip codes in central cities decreased. This study also provided additional support for the regional trends reported here showing particularly deep impacts in southwestern cities and outer ring suburbs in the Midwest, South, and Northeast.

Concluding Remarks

The findings from this research effort indicate that the face of declining cities and regions in America has begun to change. Though many areas previously hit by economic downturns have continued to feel their impacts, decline is no longer limited primarily to older manufacturing towns, urban cores, and declining rural farming communities. Places that had prospered in more recent times, including Sunbelt cities and remote suburbs, have begun to see declines in occupied housing stock as well and were, in fact, the places hit hardest by the subprime lending crisis. It is important to note that housing abandonment (i.e., a drop in occupied housing unit density) is one manifestation of neighborhood change, but it is only part of a larger story of metropolitan growth and decline. We focus here on those neighborhoods in decline, but in the future we will be attuned to growing neighborhoods as well.

Our research located some statistically significant clusters of zip codes experiencing home abandonment in recent years. The next question to answer is: What social processes and factors explain this clustering? In future phases of this research, we plan to examine how changes in occupied housing density have been dispersed throughout major Census-defined Urbanized Areas and begin to employ advanced multivariate statistical techniques to understand the key attributes associated with clusters of decline.

Should current trends persist in years to come, planners and policy makers will need to be better prepared, perhaps by looking to models adopted by other communities to build upon existing assets while embracing population decline. Understanding these complex dynamics will help community leaders come to terms with the challenges their cities and regions face. This article provides an introduction to a methodological approach to identify these trends in nearly real time to help quantify impacts on a given zip code, city, or region.

References

Anselin, Luc. 1995. Local indicators of spatial autocorrelation–LISA. Geographical Analysis 27:93–115.

Goodman, Peter S. 2007. This is the sound of a bubble bursting. The New York Times. December 23.

Hollander, Justin B. 2010. Moving towards a shrinking cities metric: Analyzing land use changes associated with depopulation in Flint, Michigan. Cityscape: A Journal of Policy Development and Research 12(1):133–151.

Hollander, Justin B. 2011. Sunburnt cities: The great recession, depopulation, and urban planning in the American Sunbelt. London/New York: Routledge.

Hollander, Justin, Colin Polsky, Dan Zinder, and Dan Runfola. 2010. The new American ghost town: Foreclosure, abandonment, and the prospects for city planning. Working Paper. Cambridge, MA: Lincoln Institute of Land Policy.

Leland, John. 2007. Officials say they are falling behind on mortgage fraud cases. The New York Times. December 25.

Zinder, Daniel H. 2010. Through the rings: A study of housing occupancy declines across major urbanized areas in the United States. Medford, MA. Tufts University.

Acknowledgments

Many thanks go to Nick Giner for his contributions to the spatial autocorrelation analysis used in this research. Much of the methodological explanation is based directly on his work on the spatial distribution of lawns in Massachusetts.

About the Authors

Justin B. Hollander is an assistant professor in the Department of Urban and Environmental Policy and Planning at Tufts University in Medford, Massachusetts, and a research scientist at the George Perkins Marsh Institute at Clark University in Worcester, Massachusetts.

Colin Polsky is an associate professor at the Graduate School of Geography and associate dean for Undergraduate Research & Active Pedagogy at Clark University. He is a geographer specializing in the human dimensions of global environmental change.

Dan Zinder is a recent graduate of masters degree program in Urban and Environmental Planning at Tufts University. His research interests include land use policy, declining cities, GIS, and sustainability.

Dan Runfola is a Ph.D. student at Clark University. His research interests include remote sensing, GIS, land change science, and vulnerability.

La conversión del suelo de producción agrícola a desarrollo urbano e industrial es uno de los procesos de cambio críticos en las economías en vías de desarrollo que experimentan la industrialización, urbanización y globalización. Los cambios en el uso del suelo urbano que están ocurriendo en China han atraído la atención de muchos académicos, especialmente en vista de las grandes reformas económicas, el significativo crecimiento económico y los profundos cambios estructurales que han tenido lugar en las últimas tres décadas. La transición de una economía planificada a una economía de mercado, y de un gobierno provincial y municipal autoritario a un tipo de gobierno más descentralizado ha generado un nuevo marco institucional para los cambios del uso del suelo (Lin y Ho 2005).

La opinión general es la de calificar el cambio del uso del suelo como resultado del crecimiento económico y de los cambios estructurales. Este punto de vista está alineado con el modelo de crecimiento neoclásico en el que el suelo cumple un papel cada vez menor en el crecimiento económico. No obstante, estos cambios en el uso del suelo pueden ser tanto la consecuencia del crecimiento económico como los factores impulsores de dicho crecimiento (Bai, Chen y Shi 2011; Ding y Lichtenberg 2011).

Pero la realidad resulta mucho más compleja. En lugar de estar impulsada por una población en crecimiento, la expansión del suelo urbano en China está motivada por el financiamiento de suelo, en virtud del cual los gobiernos municipales recaudan ingresos y atraen inversiones mediante el arrendamiento y desarrollo de terrenos. Como resultado, la política urbana centrada en el suelo se ha identificado con una de las fuerzas impulsoras más importantes de la espectacular expansión de las ciudades desde mediados de la década de 1990 (Lin 2007). La oferta de suelos agrícolas para fines no relacionados con la agricultura permite de hecho al gobierno municipal “matar varios pájaros de un tiro” (Ping 2011). En consecuencia, el desarrollo del suelo fomenta el crecimiento económico, especialmente en áreas urbanizadas.

Los cambios en el uso del suelo en China también se ven afectados en gran manera por las políticas de oferta de terrenos, que se han visto ajustadas en forma regular a fin de suplir la demanda del desarrollo económico. La oferta ilegal de terrenos es una de las causas principales de una inversión excesiva y descontrolada, que se produce cuando el gobierno municipal no ofrece terrenos a las personas que utilizan el suelo de acuerdo con los planes de uso del suelo en curso o después del permiso definitivo del gobierno central. Como resultado, el gobierno central comenzó a utilizar las políticas de suelo como herramienta fundamental del control macroeconómico nacional a fines del año 2003.

Entre otras medidas, la transferencia de terrenos se ha llevado a cabo mediante subastas o licitaciones desde 2004, y la política sobre oferta de terrenos dio un giro desde el control de la cantidad al control estructural desde 2006. Los índices sobre el uso del suelo distribuidos por el gobierno central a los gobiernos municipales sólo hacían hincapié en la cantidad de terrenos antes de 2006; sin embargo, en la actualidad, la distribución de los usos del suelo en categorías la realiza el gobierno central, que define, incluso, hasta la intensidad del uso del suelo.

Este legado puede observarse en la decisión del Consejo de Estado de establecer el sistema altamente centralizado de Supervisión Estatal del Suelo (SES) en 2006. Se crearon nueve oficinas regionales nuevas, encargadas de investigar la oferta ilegal de terrenos en todo el país (Tao y otros 2010). La nueva política de suelo ha representado un papel activo en la mejora del uso del suelo, mediante la prohibición de arrendamiento de suelo para proyectos que no se encuentren en línea con la política industrial nacional, los planes de desarrollo y las normas de ingreso. Con posterioridad a la introducción de estas reformas y gracias a un estricto control, se ha reducido significativamente la cantidad de suelo ofrecido de manera ilegal, mientras que el PIB generado por unidad de suelo desarrollable ha aumentado sustancialmente (Centro de Derecho sobre Recursos de Suelo y Mineros de China 2007). Se espera que esta estricta política de suelo tenga un impacto significativo en el patrón espacial del uso del suelo y tenga efectos sobre la relación existente entre los cambios en el uso del suelo y el crecimiento económico en China.

Cambios en los patrones de uso del suelo en China

La política de suelo en China ha sufrido cambios drásticos desde 2004, por lo que podría también esperarse un patrón diferente del uso del suelo desde entonces. En base a los datos oficiales a nivel de condado de 2004 a 2008, examinamos los cambios en el uso del suelo de las ciudades a nivel de prefectura y analizamos la relación espacial entre los cambios en el uso del suelo y el crecimiento económico. Los datos oficiales sobre cambios en el uso del suelo se dividen en varias categorías de uso del suelo dentro de tres niveles todos los años. El primer nivel incluye el suelo agrícola, el suelo para construcción y el suelo sin utilizar. El segundo nivel incluye diez categorías de utilización del suelo. El tercer nivel incluye 52 subcategorías.

La tabla 1 muestra los cambios en el uso del suelo a nivel nacional de 2004 a 2008, período durante el cual se reconvirtió una mayor cantidad de suelo para usos de construcción, mientras que la cantidad de suelo agrícola y suelo sin utilizar disminuyó. Entre las categorías de suelo agrícola, el suelo para pastoreo y el suelo cultivado se redujeron en 12,69 millones de mu (0,85 millones de hectáreas) y 11,27 millones de mu (0,75 millones de hectáreas), respectivamente. El suelo sin utilizar se redujo en 17,91 millones de mu (1,19 millones de hectáreas).

Debido a las recientes y rápidas industrialización y urbanización, no es de sorprender que las reconversiones de suelo que se llevaron a cabo a mayor velocidad en China hayan sido las destinadas para uso de construcción, que sumaron 18,83 millones de mu (1,26 millones de hectáreas). En la categoría de asentamientos y emplazamientos industriales y mineros, las ciudades, las ciudades designadas y los emplazamientos industriales y mineros fueron los que experimentaron una expansión del suelo más rápida, llegando a tasas de crecimiento del 19,61 por ciento, 13,33 por ciento y 12,42 por ciento, respectivamente, mientras que la superficie de suelo destinada a asentamientos rurales disminuyó. Asimismo, grandes cantidades de suelo se reconvirtieron para su utilización en el transporte, particularmente para la construcción de autopistas.

El presente análisis a nivel nacional oculta diferentes variaciones espaciales en los cambios en el uso del suelo en provincias y regiones concretas (figura 1). Así, analizamos los cambios en el uso del suelo a nivel provincial, centrándonos en los cambios acaecidos en el suelo cultivado, el suelo urbano (que incluye ciudades y pueblos designados), los emplazamientos industriales y mineros autónomos, los asentamientos rurales y el suelo para transporte destinado a autopistas.

La figura 2 muestra que la pérdida de suelo cultivado se dio principalmente en la región este y central de China. El crecimiento económico, la urbanización y la industrialización se han acelerado en las provincias de Hebei, Jiangsu, Zhejiang, Guangdong y Guangxi, donde la mayor parte del suelo cultivado se reconvirtió con fines urbanos, industriales y de transporte. Las provincias de Shanxi, Shaanxi, Chongqing y Sichuan también experimentaron una rápida reconversión de su suelo cultivado para fines de actividades no relacionadas con la agricultura. Dichas provincias se encuentran en el cinturón geográfico de transición en China, donde el suelo cultivado es la mejor opción a la hora de realizar proyectos de construcción y desarrollo. Por el contrario, las provincias del interior, tales como Tíbet, Qinghai, Xinjiang, Mongolia interior y Heilongjiang, experimentaron ciertos incrementos en el suelo cultivado.

El suelo destinado a asentamientos rurales se ve influenciado tanto por las nuevas políticas sobre el campo y el crecimiento de los ingresos rurales. El aumento en los ingresos ha tenido un impacto sobre la reconversión del suelo para asentamientos rurales en las provincias del este, como Guangdong, Fujian, Zhejiang, Guangxi, Hebei y Tianjin, y en ciertas provincias del interior, como Heilongjiang, Mongolia interior, Xinjiang, Qinghai, Tíbet, Yunnan, Guizhou, Hubei y Shanxi. Sin embargo, algunas provincias experimentaron descensos significativos en la cantidad de terrenos utilizados para asentamientos rurales, particularmente en Jiangsu, Jiangxi y Anhui. Este descenso puede tener relación con las nuevas políticas sobre el campo, que literalmente han obligado a los campesinos a mudarse a las ciudades.

La urbanización y la industrialización son los principales motores de la expansión del suelo no destinado a usos agrícolas en China. La tasa de urbanización creció del 40,50 por ciento al 45,68 por ciento entre 2004 y 2008, período en el que todas las provincias experimentaron una expansión del suelo urbano e industrial (figura 3). No obstante, la mayor parte de la expansión del suelo urbano se dio al sur del río Yangtze. En el norte, sólo Shandong, Anhui y Jiangsu experimentaron cambios importantes en el suelo urbano e industrial.

El rápido crecimiento de la cantidad de suelo utilizado para emplazamientos industriales y mineros se observa principalmente en las provincias del este, tanto en términos de cambios absolutos como relativos, en concreto en Fujian, Jiangsu, Zhejiang y Hebei (figura 4). Con tasas de crecimiento relativamente menores, Guangdong, Shandong y Liaoning experimentaron también la reconversión de una gran cantidad de suelo para emplazamientos industriales y mineros. Las provincias de Mongolia interior, Qinghai y Tíbet en el oeste del país experimentaron un rápido crecimiento de terrenos para emplazamientos industriales y mineros, aunque se observó un bajo crecimiento absoluto.

De 2004 a 2008, China dio un gran impulso al desarrollo de redes de transporte mediante la construcción de nuevos ferrocarriles y autopistas para sostener el crecimiento económico. A nivel nacional, el suelo destinado al transporte creció cerca de 10 por ciento durante dicho período. En muchas provincias se observó un crecimiento más rápido en la cantidad de suelo utilizado para el transporte que en el país en su conjunto, incluyendo Mongolia interior, Hebei, Qinghai, Jiangsu, Zhejiang, Fujian, Chongqing, Hubei, Anhui, Jiangxi y Guangxi. La confiscación de terrenos para construir autopistas se concentró principalmente en las provincias del este, y los mayores aumentos absolutos se dieron en las provincias de Zhejiang, Jiangsu y Hebei.

En general, China ha experimentado cambios muy importantes en el uso del suelo, en concreto en las provincias del este y en algunas de la región central. El patrón espacial de cambios en el uso del suelo es coherente con el cambio espacial del crecimiento económico, ya que las provincias del este gozan de ventajas institucionales y de ubicación y economías de aglomeración. Estas provincias han atraído la mayor parte de las inversiones extranjeras, particularmente aquellas relacionadas con las industrias que utilizan el capital y la tecnología de forma intensiva, y son las exportadoras líderes de los productos chinos.

La aceptación dentro de la Organización Mundial de Comercio ha redundado en aún mayores beneficios para las industrias ubicadas en la región este de China, ya que tienen mayor acceso a los mercados internacionales. Por otro lado, a medida que las industrias continúan aglomerándose, la región este ha experimentado un aumento en los costos del suelo, de la mano de obra y del medio ambiente, obligando a algunas industrias tradicionales a mudarse a las provincias centrales. Algunas de estas áreas recientemente han atraído inversiones y han experimentado un crecimiento económico más rápido, lo que elevó su nivel de importancia entre las economías regionales de China.

Correlaciones entre los cambios en el uso del suelo y el crecimiento económico

A fin de investigar la relación existente entre los cambios en el uso del suelo y el crecimiento económico de forma sistemática en todas las ciudades y provincias, calculamos los coeficientes de correlación entre la tasa de crecimiento del PIB de 2005 a 2009 y la tasa de cambios en diferentes categorías de suelo. La extensión de dicha correlación puede depender de diferentes factores económicos, de ubicación e institucionales. Analizamos el impacto que tiene el tamaño de la ciudad, la ubicación, la estructura industrial, la cantidad de inversiones extranjeras directas (IED) y las limitaciones en la oferta de terrenos sobre la relación existente entre los cambios en el uso del suelo y el crecimiento económico. Los coeficientes de correlación se calculan además utilizando submuestras de las ciudades clasificadas según dichos factores.

Los resultados inesperados muestran que sólo existen unos pocos, y pequeños, coeficientes de correlación significativos entre la tasa de cambios en el uso del suelo y la tasa de crecimiento económico (He, Huang y Wang 2012). Los cambios en el suelo destinado a otros tipos de transporte (tales como aeropuertos, puertos y ductos) poseen un coeficiente significativamente positivo. Los coeficientes de correlación para suelo urbano, emplazamientos industriales y mineros, ferrocarriles y autopistas resultaron apenas significativos.

Algunas evidencias muestran que el tamaño de la ciudad, la ubicación geográfica, la situación fiscal, la oferta de terrenos y las IED realizadas pueden moderar la correlación existente entre los cambios en el uso del suelo y el crecimiento económico. Por ejemplo, la expansión del suelo urbano se relaciona con el crecimiento económico de manera positiva en la región central de China, pero de manera negativa en las regiones del este y el oeste. Los emplazamientos industriales y mineros autónomos aumentan significativamente junto con el crecimiento económico en el oeste de la China. Sin embargo, en general, la correlación entre la tasa de cambios en el uso del suelo y el crecimiento económico es algo débil.

Dado que el suelo puede tomarse como un factor en la función productora, la cantidad de suelo puede contribuir en forma directa al crecimiento del PIB. Calculamos los coeficientes de correlación entre el crecimiento absoluto del PIB de 2005 a 2009 y los cambios absolutos en el uso del suelo de 2004 a 2008 a fin de analizar esta relación y descubrir si presentan una estrecha correlación. A nivel nacional, la reconversión de una mayor cantidad de suelo cultivado para fines no relacionados con la agricultura contribuye significativamente al crecimiento absoluto del PIB, con un coeficiente de correlación de -0,26. Una mayor cantidad de suelo para uso urbano y para fines industriales y mineros se relaciona en forma significativa y positiva con los aumentos en el PIB.

La existencia de coeficientes de correlación significativos entre los cambios en el uso del suelo y el crecimiento económico sugiere que el suelo ha sido un importante factor impulsor del crecimiento económico, aunque dicho aporte positivo se ve moderado por diferentes factores, tales como el tamaño de la ciudad, la ubicación, la estructura industrial, la situación fiscal y la utilización de IED. Se observa que la reconversión de suelo cultivado para fines no relacionados con la agricultura contribuye al crecimiento económico, especialmente en ciudades de más de 5 millones de habitantes, que realizaron IED por más de US$200 millones, y que poseen mayores limitaciones en el suelo para fines agrícolas, un dominio de la industria secundaria y una ubicación en la región central de China.

Claramente, el suelo no agrícola es más productivo que el suelo cultivado en las ciudades grandes e industriales. En los últimos años, a medida que la implementación de políticas del gobierno central se centró en el desarrollo de la región central de China, las provincias del interior han atraído mayores inversiones, tanto nacionales como extranjeras, y han experimentado un rápido crecimiento económico a medida que el suelo cultivado se ha ido reconvirtiendo para usos urbano e industrial.

En términos comparativos, la expansión del suelo urbano posee una mayor correlación con el crecimiento del PIB en las ciudades más pequeñas y en aquellas ubicadas en el interior. Estos tipos de ciudades tienen más probabilidades de depender del arrendamiento de suelos a fin de generar ingresos municipales, ya que enfrentan mayores limitaciones fiscales. En dichas áreas, la acumulación de capital derivada del arrendamiento de suelos es una típica estrategia de desarrollo municipal. Además, la expansión del suelo urbano cumple una importante función para estimular el crecimiento económico cuando las limitaciones fiscales son mayores, la oferta de terrenos se encuentra estrictamente controlada, dominan las industrias terciarias y se utilizan más inversiones extranjeras. La expansión del suelo industrial también contribuye de manera significativa al crecimiento económico, especialmente en las ciudades que tienen más limitaciones fiscales y más actividades industriales.

La reciente explosión experimentada en el desarrollo de infraestructura del transporte también ha contribuido al crecimiento económico. El aumento del suelo para construir autopistas ha estimulado el crecimiento económico sin ningún tipo de límites. Las ciudades ubicadas en las regiones del oeste y aquellas que presenten un bajo nivel de recaudación fiscal son las que más se benefician de las nuevas autopistas, mientras que la expansión del ferrocarril se relaciona en menor medida con el crecimiento económico. La construcción de otros tipos de infraestructura de transporte (aeropuertos, puertos, ductos) ha representado un papel fundamental para facilitar el crecimiento económico en ciudades más pequeñas y ubicadas hacia el este, así como también en aquellas ciudades cuyas economías se encuentran dominadas por las industrias de servicios.

El análisis de correlación ofrece pruebas claras que demuestran que el aumento de suelo urbano, industrial y para fines de transporte se relaciona de forma significativa y positiva con el crecimiento económico. La reconversión de suelo cultivado ha contribuido a la expansión económica en varias regiones de China; no obstante, la importancia de la ampliación del suelo no destinado a actividades agrícolas en función del crecimiento económico se encuentra moderada por condiciones sociales, económicas y geográficas.

Conclusión y debate

Desde la implementación de su reforma económica, China ha perseguido un modelo de crecimiento basado en el uso intensivo de recursos que ha obligado al suelo a cumplir un papel fundamental en el sostenimiento de su rápido crecimiento económico. Esto ha dado como resultado una gran oferta de suelo desarrollable y una rápida reconversión de suelos agrícolas en suelos no relacionados con la agricultura. En China, el suelo no es sólo el resultado del crecimiento económico sino también su motor.

La conversión del suelo cultivado para fines no agrícolas se ha concentrado en las regiones del este y del centro del país. Con la implementación de nuevas estrategias de desarrollo del campo y la imposición de limitaciones más estrictas en cuanto a la oferta de terrenos, China ha experimentado una reducción de los asentamientos rurales en la mayor parte de la región central y noreste. La expansión del suelo urbano e industrial ha dominado los cambios del uso del suelo en todo el país. El desarrollo del transporte, incluyendo nuevas autopistas, ferrocarriles, aeropuertos, puertos y ductos, también ha sido una de las principales causas de consumo de terrenos en los últimos años, particularmente en las regiones este y central.

El análisis de componentes principales en base a los datos sobre cambios en el uso del suelo de las ciudades a nivel de prefectura indicó una significativa variación espacial en los cambios en el uso del suelo entre las ciudades chinas y demuestra que tienen una autocorrelación espacial. El análisis de correlación también demostró una débil relación entre la tasa de crecimiento del PIB y la tasa de cambios en el uso del suelo. Sin embargo, en términos absolutos los cambios en el uso del suelo y el crecimiento del PIB presentan una fuerte correlación, lo que indica que la cantidad de terrenos constituye un factor fundamental en el crecimiento económico.

Por lo general, las teorías occidentales sobre crecimiento económico consideran que el suelo cumple una función marginal en el crecimiento económico. Nuestro análisis exploratorio sugiere que, en China, se da la situación contraria. A medida que China se urbaniza, se industrializa y se globaliza, va experimentando cambios significativos en el uso del suelo que presentan una correlación con el crecimiento económico. Esta relación significativa se asocia a los particulares sistemas de propiedad estatal del suelo y de derechos de uso del suelo en China. Como tal, el suelo puede utilizarse como una poderosa herramienta de intervención macroeconómica. El arrendamiento a largo plazo de derechos de utilización del suelo incentiva a los gobiernos locales a vender terrenos para generar ingresos totales que posteriormente se utilizan para financiar el desarrollo urbano e industrial y la provisión de infraestructura.

En consecuencia, el suelo ha cumplido una función fundamental en el rápido crecimiento económico de China. Sin embargo, este tipo de urbanización e industrialización basada en el suelo ya ha causado graves tensiones sociales, una degradación del medioambiente y fluctuaciones económicas. Los ingresos totales generados por el arrendamiento de suelo no son sustentables, si se tiene en cuenta que, aún siendo tan extensa, China posee una limitada oferta de suelo. Puede esperarse que el papel del suelo como factor impulsor del crecimiento económico se reduzca a medida que China experimente gradualmente un avance industrial.

Sobre los autores

Canfei He es profesor asociado en la Facultad de Ciencias Urbanas y Ambientales de la Universidad de Pekín, además de director asociado del Centro de Desarrollo Urbano y Políticas de Suelo de la Universidad de Pekín y el Instituto Lincoln en Beijing.

Zhiji Huang es estudiante de doctorado en la Facultad de Ciencias Urbanas y Ambientales de la Universidad de Pekín y del Centro de Desarrollo Urbano y Políticas de Suelo de la Universidad de Pekín y el Instituto Lincoln en Beijing.

Weikai Wang es estudiante de posgrado en la Facultad de Ciencias Urbanas y Ambientales de la Universidad de Pekín y del Centro de Desarrollo Urbano y Políticas de Suelo de la Universidad de Pekín y el Instituto Lincoln en Beijing.

Referencias

Bai, X., J. Chen y P. Shi. 2011. Landscape urbanization and economic growth in China: Positive feedbacks and sustainability dilemmas. Environmental Science and Technology 46: 132–139.

Centro de Derecho sobre Recursos de Suelo y Mineros de China. 2007. The evolution of land policy’s involvement in macro-control policies of China. China Land 6, 53–56 (en chino).

Ding, C. y E. Lichtenberg. 2011. Land and urban economic growth in China. Journal of Regional Science 51(2): 299–317.

He, Canfei, Zhiji Huang y Weikai Wang. 2012. Land use changes and urban economic growth in China: An exploratory analysis. Documento de trabajo. Beijing: Centro de Desarrollo Urbano y Políticas de Suelo de la Universidad de Pekín y el Instituto Lincoln.

Lin, G. C. S. 2007. Reproducing spaces of Chinese urbanization: New city-based and land-centered urban transformation. Urban Studies 44 (9): 1827–1855.

Lin, G. C. S. y S. P. S. Ho. 2005. The state, land system, and land development processes in contemporary China. Annals of the Association of American Geographers 95(2): 411–436.

Ministerio de Suelo y Recursos. 2008. Land use change survey data. República Popular China.

Ping, Y. C. 2011. Explaining land use change in a Guangdong county: the supply side of the story. The China Quarterly 2107: 626–648.

Tao, R., F. Su, M. Liu y G. Cao. 2010. Land leasing and local public finance in China’s regional development: Evidence from prefecture level cities. Urban Studies 47(10): 2217–2236.

Como consecuencia del colapso en el mercado inmobiliario y la Gran Recesión –que provocaron un aumento sustancial de ejecuciones hipotecarias residenciales y a menudo abruptas caídas de los precios de las viviendas, lo cual probablemente dio lugar a ejecuciones hipotecarias adicionales– muchos observadores especularon sobre si los gobiernos locales iban a sufrir consecuentemente pérdidas significativas en la recaudación del impuesto sobre la propiedad. Si bien las pruebas anecdóticas sugieren que las ejecuciones hipotecarias, en especial en los lugares donde estaban espacialmente concentradas, redujeron los precios de las viviendas y los ingresos del impuesto sobre la propiedad, las investigaciones existentes no proporcionan ninguna prueba empírica que justifique esta conclusión (recuadro 1). Con datos de ejecuciones hipotecarias de la empresa RealtyTrac, que proporciona información sobre las ejecuciones hipotecarias anualespor código postal para el período de 2006 a 2011 (período que tanto precede como sucede a la Gran Recesión), este informe es el primero en examinar el impacto de las ejecuciones hipotecarias sobre los valores y la recaudación del impuesto sobre la propiedad por parte de los gobiernos locales. Después de presentar información sobre la correlación entre ejecuciones hipotecarias y los precios de viviendas en todo el país, nos concentramos en Georgia, para explorar cómo las ejecuciones hipotecarias afectaron a los valores de la propiedad y la recaudación del impuesto sobre la propiedad en los distritos escolares a lo largo del estado. Nuestro análisis empírico indica que, en efecto, las ejecuciones hipotecarias probablemente redujeron los valores de la propiedad y la recaudación del impuesto sobre la propiedad. Si bien aún preliminares, estas conclusiones sugieren que las ejecuciones hipotecarias han tenido una serie de efectos sobre los sistemas fiscales de los gobiernos locales.

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Recuadro 1: Investigaciones existentes sobre el impacto de factores económicos en la recaudación del impuesto sobre la propiedad

Si bien existen investigaciones que examinan los diversos impactos de factores económicos sobre la recaudación del impuesto sobre la propiedad, dichos estudios usan datos que reflejan sólo una recesión previa (por ejemplo, la recesión de 2001) o cubren solamente el inicio de la crisis inmobiliaria de la Gran Recesión. Doerner e Ihlanfeldt (2010), por ejemplo, han estudiado directamente los efectos de los precios de las casas sobre los ingresos de los gobiernos locales usando datos del panel de precios detallados de las viviendas en Florida durante la década del año 2000. Concluyen que los cambios en el precio real de las viviendas unifamiliares de Florida tuvieron un efecto asimétrico sobre los ingresos gubernamentales. Los aumentos de precio no aumentan la recaudación real per cápita, pero los descensos de precio tienden a reducirla. Doerner e Ihlanfeldt también concluyen que las respuestas asimétricas se deben en gran parte a los límites impuestos sobre los aumentos y el monto del gravamen, las demoras positivas o negativas entre los cambios en los precios de mercado y la valuación tributaria, y la reducción de las tasas tributarias en respuesta a un aumento de los precios de las viviendas. Alm, Buschman y Sjoquist (2011) documentan las tendencias generales en la recaudación del impuesto sobre la propiedad en los Estados Unidos entre 1998 y 2009 inclusive, cuando los gobiernos locales, en promedio, pudieron evitar en gran medida los impactos significativos y negativos sobre el presupuesto sufridos por el gobierno federal y los gobiernos estatales, por lo menos hasta 2009, si bien se produjeron variaciones regionales sustanciales en dichos efectos. Alm, Buschman y Sjoquist (2009) también examinan la relación entre los gastos en educación y la recaudación del impuesto sobre la propiedad para el período entre 1990 y 2006. En un estudio relacionado, Alm y Sjoquist (2009) examinan el impacto de otros factores económicos sobre las finanzas de los distritos escolares de Georgia, como las respuestas estatales a las condiciones de los distritos escolares locales. Finalmente, Jaconetty (2011) examinó temas legales relacionados con las ejecuciones hipotecarias, y la Fundación MacArthur ha financiado un proyecto sobre ejecuciones hipotecarias en el condado de Cook, Illinois.

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Vínculos potenciales entre los precios de las viviendas, las ejecuciones hipotecarias y los valores inmobiliarios

Los gobiernos locales en los Estados Unidos dependen de varias fuentes de ingresos propios, tales como impuestos locales sobre los ingresos, sobre la propiedad y generales sobre las ventas, e impuestos específicos sobre el consumo, aranceles y cargos sobre el usuario. De éstos, la fuente de ingresos dominante es, con mucho, el impuesto sobre la propiedad. En 2011, los impuestos locales sobre la propiedad generaron aproximadamente tres cuartos de los ingresos tributarios totales de los gobiernos locales y casi la mitad de los ingresos locales totales propios (incluyendo aranceles y cargos).

Algunos impuestos locales, como los impuestos sobre el ingreso y las ventas, tienen bases tributarias que varían de acuerdo a los niveles de actividad económica, y la Gran Recesión deprimió seriamente los ingresos derivados de dichos impuestos. La base tributaria del impuesto sobre la propiedad es el valor de tasación, que no cambia automáticamente en respuesta a las condiciones económicas; a falta de un cambio formal y deliberado en la tasación, una reducción en el valor de mercado no se traduce necesariamente en una reducción del valor de tasación. Los límites de tasación, las demoras en las revaluaciones y la posibilidad de efectuar cambios deliberados en el tributo unitario o la tasa del impuesto sobre la propiedad se combinan para que las fluctuaciones económicas que influyen en los valores de las viviendas no afecten a la base tributaria del impuesto sobre la propiedad o los ingresos debido a este impuesto de manera inmediata u obvia. Con el tiempo, sin embargo, los valores de tasación tienden a reflejar los valores de mercado, y la recaudación del impuesto sobre la propiedad puede verse afectada.

Un mercado inmobiliario debilitado –con valores de la vivienda más bajos y mayor cantidad de ejecuciones hipotecarias– puede reducir los ingresos tributarios de los gobiernos locales procedentes de distintas fuentes (Anderson, 2010; Boyd, 2010; Lutz, Molloy y Shan, 2010), como los impuestos a la transferencia inmobiliaria, los impuestos sobre las ventas de materiales de construcción de viviendas, y los impuestos sobre la renta de los trabajadores de las industrias de la construcción de viviendas y de mobiliario para el hogar. Los ingresos del impuesto sobre la propiedad suponen una proporción importante de la recaudación tributaria local, sin embargo, los cambios en la recaudación del impuesto sobre la propiedad frecuentemente son mayores que los cambios debidos a dichos otros impuestos relacionados con las viviendas.

Actividad de ejecución hipotecaria en todo el país durante y después de la Gran Recesión

La figura 1 (pág. 26) presenta la cantidad total de ejecuciones hipotecarias a nivel de código postal de 5 dígitos como porcentaje de la cantidad de viviendas ocupadas por sus dueños en 2010. Esta figura demuestra la clara concentración geográfica de las ejecuciones hipotecarias. Arizona, California y Florida fueron afectadas especialmente por el colapso de la burbuja inmobiliaria. No obstante, otras áreas también experimentaron una actividad significativa de ejecuciones hipotecarias.

La Agencia Federal de Financiamiento de Viviendas (FHFA) produce un índice de precios de viviendas para cada área estadística metropolitana (MSA). Cotejamos los datos de ejecuciones hipotecarias de RealtyTrac con el índice de precios de viviendas de la FHFA en 352 áreas estadísticas metropolitanas. La figura 2 (pág. 26) presenta un simple diagrama de dispersión que relaciona las ejecuciones hipotecarias totales entre 2006 y 2011 como porcentaje de la cantidad de unidades de vivienda ocupadas por sus dueños en 2010, con el cambio del índice de precios de las viviendas en el período de 2007 a 2012 en las 352 áreas metropolitanas. El simple coeficiente de correlación entre las ejecuciones hipotecarias por unidades de viviendas ocupadas por sus dueños y el cambio del índice de precios de viviendas es de -0,556; si consideramos solamente aquellas MSA con ejecuciones hipotecarias no nulas a lo largo del período, el coeficiente de correlación es de -0,739. Este simple análisis sugiere que las ejecuciones hipotecarias tienen una correlación negativa significativa con los valores de la vivienda. El próximo paso es explorar el efecto de las ejecuciones hipotecarias sobre la base tributaria del impuesto sobre la propiedad y sobre la recaudación del impuesto sobre la propiedad propiamente dicho. En la próxima sección examinaremos este tema para el estado de Georgia.

Análisis más detallado: Ejecuciones hipotecarias, valores de la propiedad e ingresos del impuesto sobre la propiedad en Georgia

Al examinar el efecto de las ejecuciones hipotecarias sobre los valores de la propiedad y la recaudación del impuesto sobre la propiedad en un solo estado, eliminamos la necesidad de controlar las muchas maneras en que los factores institucionales pueden diferir entre estados. Georgia es un lugar adecuado para concentrarse porque de alguna manera es un estado “promedio”. Por ejemplo, los gobiernos locales de Georgia dependen del impuesto sobre la propiedad sólo un poco menos que el promedio nacional; en 2008, los ingresos del impuesto sobre la propiedad como porcentaje de los impuestos totales de los gobiernos locales fue del 65,1 por ciento en Georgia, en comparación con el 72,3 por ciento en los Estados Unidos en general. (Bourdeaux y Jun 2011).

Medimos la actividad de ejecución hipotecaria con datos de RealtyTrac, agregando las observaciones por código postal en los condados correspondientes. El Departamento de Ingresos de Georgia suministró la base tributaria anual del impuesto sobre la propiedad (que en Georgia se denomina “resumen neto”) y las tasas del impuesto sobre la propiedad. Los ingresos del impuesto sobre la propiedad y los ingresos locales totales de los distritos escolares fueron suministrados por el Departamento de Educación de Georgia. La base tributaria corresponde al 1 de enero del año respectivo. La tasa del impuesto sobre la propiedad se determina en la primavera, las facturas del impuesto se pagan en el otoño, y su recaudación se reporta en el siguiente año fiscal. Los distritos escolares tienen un año fiscal que va del 1 de julio al 30 de junio, de manera que la base tributaria y las tasas unitarias de 2009, por ejemplo, aparecerían en los ingresos del año fiscal 2010. También usamos varios datos demográficos y económicos (ingresos, empleo y población) medidos a nivel de condado para ayudar a explicar los cambios en la base tributaria. Debido a que estas variables se reportan a nivel de condado, para el análisis siguiente agregamos las variables de base tributaria del impuesto sobre la propiedad y su recaudación en los distritos escolares urbanos a los sistemas escolares de condado correspondientes a dichas ciudades para obtener los totales para los 159 condados. Para condados que incluyen todo o parte de un sistema escolar urbano, la tasa tributaria es el promedio de las tasas tributarias escolares del condado y la ciudad, ponderadas por sus bases tributarias respectivas.

En Georgia, las tasaciones de las propiedades con fines tributarios son responsabilidad exclusiva de los gobiernos de condado, pero el estado evalúa todas las bases tributarias del impuesto sobre la propiedad anualmente, comparando ventas reales de parcelas mejoradas durante el año con los valores de tasación, y determina si el nivel de tasación es apropiado con relación al valor justo de mercado, que se fija legalmente en el 40 por ciento. Los “estudios de razón de ventas” resultantes reportan una cifra de base tributaria del impuesto sobre la propiedad ajustada al 100 por cien para cada distrito escolar del estado, junto con una razón calculada. Podemos usar estas bases tributarias ajustadas del impuesto sobre la propiedad, cubriendo los períodos de 2000 a 2011 inclusive, para medir el valor de mercado de la propiedad residencial.

Georgia tiene muy pocas limitaciones institucionales al impuesto sobre la propiedad. Las juntas de distritos escolares pueden fijar generalmente sus tasas del impuesto sobre la propiedad sin aprobación de los votantes, la cual solamente es necesaria si la tasa del impuesto sobre la propiedad en un distrito escolar de condado excede de 20 milésimas del valor de tasación. En la actualidad, solamente cinco sistemas escolares han alcanzado este límite. Además, no hay un límite general en el valor de tasación, si bien un condado ha congelado las tasaciones sobre bienes de familia. En 2009, el estado de Georgia impuso una congelación temporal sobre las tasaciones en todo el estado, que potencialmente afectaba a los ingresos del impuesto sobre la propiedad sólo en el año académico/año fiscal 2010; sin embargo, al disminuir las bases netas y ajustadas del impuesto sobre la propiedad per cápita en la mayoría de los condados de 2009 a 2011 inclusive, es poco probable que esta congelación haya recortado las tasaciones.

Ejecuciones hipotecarias

La tabla 1 muestra la media y mediana de ejecuciones hipotecarias en todo el estado por código postal entre 2006 y 2011 inclusive. La cantidad total de ejecuciones hipotecarias casi se duplicó de 2006 a 2010, disminuyendo en 2011. La media de ejecuciones hipotecarias es mucho mayor que la mediana, lo cual es señal de que la distribución es extremadamente asimétrica.

La tabla 2 muestra la distribución de los códigos postales de Georgia por la cantidad de años que el código postal tuvo alguna ejecución hipotecaria. Más del 65 por ciento de los códigos postales tuvieron ejecuciones hipotecarias en cada uno de los seis años, mientras que sólo el 7 por ciento no tuvo ninguna ejecución hipotecaria en ninguno de los seis años. Esta distribución sugiere que sólo una porción muy pequeña del estado quedó inmune a la crisis de ejecuciones hipotecarias.

La figura 3 (pág. 27) muestra la distribución de ejecuciones hipotecarias en el estado durante el período de 2006 a 2011 inclusive. Como los códigos postales difieren en tamaño y densidad de viviendas, también se muestra un mapa de las ejecuciones hipotecarias por unidades de vivienda ocupadas por sus dueños en 2010 en la figura 4 (pág. 28). Nótese que los códigos postales marcados en blanco no tienen ninguna ejecución hipotecaria o no se tienen datos de ejecuciones hipotecarias. Como era de esperar, los condados urbanos y suburbanos (particularmente en el área metropolitana de Atlanta) sufrieron la mayor cantidad de ejecuciones hipotecarias. No obstante, hay también una gran cantidad de ejecuciones hipotecarias en muchos de los códigos postales menos urbanos.

La figura 5 muestra la distribución anual de ejecuciones hipotecarias por cada cien unidades de vivienda en cada uno de los 159 condados de Georgia. Nótese que la barra del recuadro representa el valor medio, el recuadro captura las observaciones en el segundo y tercer cuartil, los “bigotes” representan 1,5 veces la diferencia entre los porcentiles veinticinco y setenta y cinco, y los puntos son los valores extremos. La mediana de ejecuciones hipotecarias por condado aumentó de 0,17 por 100 unidades de vivienda en 2006 a 1,18 por 100 unidades en 2010, un aumento en la mediana de más de seis veces. Hay una alta correlación positiva entre la actividad de ejecuciones hipotecarias en 2006 y 2011 en todos los condados. Esta correlación es de 0,78 cuando se mide en relación a las unidades de vivienda y 0,74 cuando se mide per cápita, lo que indica que los condados con actividad de ejecución hipotecaria mayor (menor) que el promedio antes de la crisis inmobiliaria siguiron estando por arriba (abajo) del promedio en su pico.

Valores de la propiedad,/b>

En cuanto a los cambios en los valores de la propiedad, las figuras 6 y 7 muestran la distribución de cambios anuales, respectivamente, en la base tributaria neta del impuesto sobre la propiedad per cápita y en la base tributaria 100 por ciento ajustada del impuesto sobre la propiedad per cápita en los 159 condados entre 2001 y 2011 inclusive. Los estudios sugieren que las ejecuciones hipotecarias pueden tener un efecto de contagio sobre los valores de mercado de otras propiedades en la jurisdicción (Frame, 2010). Intentamos estimar el efecto de las ejecuciones hipotecarias sobre los valores de mercado en función de la base tributaria 100 por ciento ajustada del impuesto sobre la propiedad.

Nuestros resultados son preliminares, porque el análisis solamente incluye datos de Georgia. Aun así, sugieren significativos efectos negativos de las ejecuciones hipotecarias sobre los valores de la propiedad, controlando por los cambios porcentuales de año a año en ingresos, empleo y población. Las estimaciones de coeficientes de la variable ‘ejecuciones hipotecarias’ sugieren que un aumento marginal de una ejecución hipotecaria por cada 100 viviendas (o aproximadamente el aumento en la mediana de ejecuciones hipotecarias de 2006 a 2011) está asociado con aproximadamente una disminución del 3 por ciento en la base tributaria 100 por ciento ajustada del impuesto sobre la propiedad en cada uno de los dos años subsiguientes. De igual manera, un aumento de una ejecución hipotecaria por cada 1.000 habitantes está asociado con casi el 1 por ciento de disminución en la base tributaria 100 por ciento ajustada del impuesto sobre la propiedad después de un año, y una disminución porcentual ligeramente menor en el año subsiguiente.

Ingresos del impuesto sobre la propiedad

También exploramos el efecto de las ejecuciones hipotecarias sobre la recaudación del impuesto sobre la propiedad. La figura 8 representa la distribución de cambios nominales por condado de los ingresos totales de mantenimiento y operaciones del impuesto sobre la propiedad desde 2001, que muestra una variación considerable de un sistema escolar a otro en los cambios anuales de recaudación del impuesto sobre la propiedad. Aun en los últimos tres años de disminución de los valores de la propiedad, por lo menos la mitad de los condados tuvo un crecimiento nominal positivo anual en la recaudación del impuesto sobre la propiedad. Para comprender el efecto de la actividad de ejecución hipotecaria sobre los ingresos del gobierno local por impuestos sobre la propiedad, estimamos las regresiones que relacionan las ejecuciones hipotecarias con los gravámenes del impuesto sobre la propiedad y la recaudación de dicho impuesto.

Encontramos que un aumento en las ejecuciones hipotecarias está asociado a una reducción en el monto del gravamen, después de controlar por los cambios en la base tributaria del impuesto sobre la propiedad como también en las fluctuaciones de ingresos, empleo y población. Un aumento de una ejecución hipotecaria por cada 100 unidades de vivienda se asocia con alrededor del 1,5 por ciento de disminución subsiguiente en el gravamen, manteniendo constante el resto de las variables. También encontramos que las ejecuciones hipotecarias tienen un impacto negativo sobre la recaudación, manteniendo constante el resto de las variables. Como en nuestras estimaciones anteriores, estos resultados son para Georgia solamente, pero identifican una relación negativa significativa entre las ejecuciones hipotecarias y los gravámenes y la recaudación del impuesto sobre la propiedad por parte de los gobiernos locales. Puede ser que una mayor actividad de ejecución hipotecaria haga vacilar a las autoridades locales sobre la posibilidad de aumentar las tasas tributarias para compensar el efecto de las ejecuciones hipotecarias sobre la base tributaria.

Conclusiones

¿Las ejecuciones hipotecarias causadas por la Gran Recesión afectaron a los valores de la propiedad y la recaudación del impuesto sobre la propiedad por parte de los gobiernos locales? Nuestros resultados sugieren que las ejecuciones hipotecarias han tenido un impacto negativo significativo sobre los valores de la propiedad y, por esta vía, un efecto similar sobre la recaudación del impuesto sobre la propiedad, por lo menos en el estado de Georgia. Nuestros resultados también sugieren la presencia de efectos adicionales sobre los gravámenes y la recaudación de dicho impuesto, después de controlar por los cambios en la base tributaria. Hacen falta más investigaciones para saber si estos resultados se extienden a otros estados.

Sobre los autores

James Alm es profesor y director del Departamento de Economía de Tulane University.

Robert D. Buschman es asociado de investigación senior en el Centro de Investigaciones Fiscales de la Escuela Andrew Young de Estudios Políticos de la Universidad Estatal de Georgia.

David L. Sjoquist es profesor y titular de la cátedra Dan E. Sweat en Política Educativa y Comunitaria en la Escuela Andrew Young de Estudios Políticos.

Recursos

Alm, James y David L. Sjoquist. 2009. The Response of Local School Systems in Georgia to Fiscal and Economic Conditions. Journal of Education Finance 35(1): 60–84.

Alm, James, Robert D. Buschman, y David L. Sjoquist. 2009. Economic Conditions and State and Local Education Revenue. Public Budgeting & Finance 29(3): 28–51.

Alm, James, Robert D. Buschman, y David L. Sjoquist. 2011. Rethinking Local Government Reliance on the Property Tax. Regional Science and Urban Economics 41(4): 320–331.

Anderson, John E. 2010. Shocks to the Property Tax Base and Implications for Local Public Finance. Paper presented at the Urban Institute-Brookings Institution Tax Policy Center and the Lincoln Institute of Land Policy Conference, “Effects of the Housing Crisis on State and Local Governments,” Washington, D.C. (Mayo).

Bourdeaux, Carolyn y Sungman Jun. 2011. Comparing Georgia’s Revenue Portfolio to Regional and National Peers. Report No. 222. Atlanta, GA: Fiscal Research Center, Andrew Young School of Policy Studies, Georgia State University.

Boyd, Donald J. 2010. Recession, Recovery, and State and Local Finances. Paper presented at the Urban Institute-Brookings Institution Tax Policy Center and the Lincoln Institute of Land Policy Conference, “Effects of the Housing Crisis on State and Local Governments,” Washington, D.C. (Mayo).

Doerner, William M. y Keith R. Ihlanfeldt. 2010. House Prices and Local Government Revenues. Paper presented at the Urban Institute-Brookings Institution Tax Policy Center and the Lincoln Institute of Land Policy Conference, “Effects of the Housing Crisis on State and Local Governments,” Washington, D.C. (Mayo).

Frame, W. Scott. 2010. Estimating the Effect of Mortgage Foreclosures on Nearby Property Values: A Critical Review of the Literature. Economic Review 95(3): 1–9.

Jaconetty, Thomas A. 2011. How Do Foreclosures Affect Real Property Tax Valuation? And What Can We Do About It? Working paper presented at National Conference of State Tax Judges, Lincoln Institute of Land Policy, Cambridge, MA (Septiembre).

Lutz, Byron, Raven Molloy, y Hui Shan. 2010. The Housing Crisis and State and Local Government Tax Revenue: Five Channels. Paper presented at the Urban Institute-Brookings Institution Tax Policy Center and the Lincoln Institute of Land Policy Conference, “Effects of the Housing Crisis on State and Local Governments,” Washington, DC (Mayo).

Strengthening Municipal Fiscal Health in China

Since 2013, Zhi Liu has been a senior research fellow and director of the China Program at the Lincoln Institute of Land Policy, and director of the Peking University–Lincoln Institute Center for Urban Development and Land Policy (PLC). Prior, Zhi was lead infrastructure specialist at the World Bank, where he worked for 18 years, with operational experiences in a number of developing countries.

Zhi received a B.S. in economic geography from Dr. Sun Yat-Sen University (China), a M.S. in city and regional planning from Nanjing University (China), and a Ph.D. in urban planning from Harvard University.

LAND LINES: The Lincoln Institute recently initiated a global research agenda on municipal fiscal health. This effort arises from the recognition that a number of cities in the United States and in many other countries including China suffer financial hardship. What is the nature of municipal fiscal distress in China?

ZHI LIU: It’s very different from the financial troubles faced by cities in the United States. The two countries are at very different stages of urbanization. While the U.S. is highly urbanized, with more than 80 percent of citizens living in urban areas, according to the 2010 census, China is only halfway through the urbanization process. Today, 750 million Chinese citizens live in cities, accounting for 55 percent of the total population. By 2050, the urban population is expected to reach 1.1 billion, or 75 percent of the total population. Over the last two decades, with the exception of a few mining cities, almost all municipalities have seen rapid population growth and spatial expansion, generating a significant demand for public investment in urban infrastructure.

In China, the main sources of funding for urban infrastructure investment are revenues from land concessions and local borrowing from commercial banks, often using land as collateral. Urban land is owned by the state, and rural land is collectively owned by villages. The Land Administration Law stipulates that only the state has the power to convert rural land into urban use. This sets the stage for the municipal governments to take rural land for urban development through the land concession process. As it goes, municipal governments expropriate rural land, service it with infrastructure, and sell the land use rights to real estate developers. The compensation to farmers for the farmland taken is low, based on the land’s agricultural production value instead of market value for urban use. When the demand for real estate development is high, the land concession fees are bid high, and the municipal governments stand to collect a huge amount of revenues. For the last 10 years, revenues from land concessions have accounted for more than one-third of total local fiscal revenues.

Moreover, municipal governments further expand their financing capacity by using land assets as collateral to secure commercial loans from commercial banks. Before a recent amendment, the Chinese Budget Law did not permit local governments to borrow. However, most municipal governments bypassed the law by creating their own local financing vehicles—known as urban development investment corporations (UDICs)—that borrowed commercial loans or issued corporate bonds for the governments. The size of outstanding local debts has grown rapidly over the last few years, reaching at least one-third of the GDP now.

The land-based financing mechanism has helped municipal governments in China raise a significant amount of funds for capital investment. However, the success has also created incentive for municipal governments to rely on land concessions and UDICs too heavily. Today, China’s economy is growing more slowly than before, and the mechanism is running out of steam in many localities where conversion of rural land for urban use exceeds the real demand. Some cities have borrowed much more than they can repay, leaving them heavily indebted.

Many empirical studies, including some funded by the Lincoln Institute, find that China’s land-based financing mechanism is one of the main causes of other urban issues that we face today. Skyrocketing housing prices, growing local debts, excessive land-taking, growing tension between the farmers and municipal governments over land-taking, and widening gaps of income and wealth distribution between urban and rural populations are among the major issues.

LL: The international mass media has been reporting on these issues. How will China address them?

ZL: There is a high level of consensus on the root causes of the problems. In November 2013, the central government announced a set of reforms, and a few are directly related to urbanization policy and municipal finance. For example, the scope of land expropriation will be narrowed to the confine of public purposes, and villages are allowed to develop their land for urban use under the premise that it conforms to planning. The reforms also call for acceleration of property tax legislation; reform of hukou, the household residential registration system, to help farmers become urban residents; and government efforts to make basic urban public services available to all permanent residents in cities, including all rural-to-urban migrants.

LL: What are the implications of hukou reform on municipal finance?

ZL: The government is phasing out China’s longstanding hukou system, and the implications for municipal finance will be significant. Hukou was designed to identify a citizen as a resident of a certain locality, but for several decades the government used the system to control rural-to-urban migration. A rural hukou holder could not become an urban hukou holder without the government’s approval. Without urban hukou, a rural migrant worker is not eligible for public services provided by the urban governments.

Since the economic reform, the expanding urban economy has absorbed a large number of rural-to-urban migrant workers. Earlier, I mentioned China’s urbanization rate of 55 percent and urban population of 750 million. These numbers include the 232 million rural migrants who stay in cities for more than half a year. If they were excluded from the calculation, the level of urbanization would be just 38 percent. Due to their rural hukou status, however, migrant workers don’t have access to many services enjoyed by urban hukou holders, despite the fact that many have labored and lived in cities for years. Municipal governments determine the extent of many urban public services—such as public schools and affordable housing—according to the number of urban hukou holders inside the municipal jurisdiction. Phasing out hukou would significantly increase the fiscal burden to the municipal governments for public service provision. Some scholars in China estimate that the cost of providing full urban public services to each rural migrant would be at least RMB 100,000 (roughly $16,000 U.S.). The total outlays for all current rural migrants would be at least RMB 23 trillion (about $3.8 trillion U.S.).

LL: China is introducing the residential property tax. What is the status of that initiative?

ZL: The government is drafting the first national property tax law as part of the ongoing reform of public finance. China is one of only a handful of countries without a local property tax. The current taxation system relies heavily upon taxes on businesses and transactions, and very little upon taxes on household income and wealth. In a more urbanized China with a wealthier population who own residential properties, the property tax would be a more viable source of municipal revenues. Today, 89 percent of urban households own one or more residential units, and the value of those properties has much to do with urban public services. Property tax will allow cities to tax urban residential properties whose value would benefit from the improved public services made possible by property tax revenues. It should also fill part of the fiscal gap left by the expected reduction of revenues from land concessions. However, property tax will not be a major source of municipal revenues any time soon. It may take one or two more years for the National People’s Congress to pass the new law. It would also take perhaps two to three years for cities to establish the property database and assessment and administration system.

LL: It must be tough for cities to deal with declining revenues from land concessions without an immediate alternative—especially as they are coping with growing local debt, which has been widely reported. How will Chinese cities get out of this situation?

ZL: The situation is indeed tough. China’s economy is slowing down. The real estate sector is no longer as hot as it was in the last 10 years, resulting in lower demand for land and thus lower revenues from land concessions for municipal governments. Cities are now facing a fiscal gap. One possible way to fill the gap would be local government borrowing. However, as I mentioned earlier, many cities are indebted and have little capacity to borrow further. In fact, most cities in China do not have adequate capacity for debt management. The newly amended budget law permits provincial-level governments to issue bonds within the limit set by the State Council, but also closes the door on other forms of local government borrowing. Currently, the central government actively promotes infrastructure financing through public-private partnerships (PPP). While this is a good move, it won’t be sufficient to fill the infrastructure financing gap, as PPP is suitable mainly for infrastructure projects with a strong revenue flow. There are many other urban infrastructure projects that generate little or no revenues. In the long term, I believe that China should actively establish a municipal government bond market to channel funds from institutional investors to municipal infrastructure investment and enable local governments to access commercial loans based on creditworthiness. To do so, municipal governments need to develop institutional capacity on several fronts, such as local debt management, capital improvement planning, multiyear financial planning, and municipal infrastructure asset management.

LL: Is PLC’s work relevant to the current reform?

ZL: The PLC was jointly established by the Lincoln Institute and Peking University in 2007. By the time I arrived, in 2013, the center had developed its reputation as one of China’s premier research and training institutions on urban development and land policy issues. The center supports a number of activities, including research, training, academic exchange, policy dialogue, research fellowship, demonstration projects, and publication. We focus on five core themes—property taxation and municipal finance, land policy, urban housing, urban development and planning, and urban environment and conservation. Over the last few years, our research projects have touched upon land-based finance, local debts, housing prices, infrastructure capital investment and finance, and other topics relevant to municipal fiscal health. We have also provided training to Chinese government agencies on the international experiences of property tax assessment and administration. I would say that our work is highly relevant to the current reform.

Implementation of the new comprehensive policy reforms is generating considerable demand for international knowledge and policy advice in the China Program’s focus areas, especially property taxation and municipal finance. We plan to initiate a pilot demonstration project with one or two selected cities in China, to support the institutional capacity required for the development of long-term municipal fiscal health. Our team has started a study to develop a set of indicators to measure municipal fiscal health for Chinese cities. It is the right time for us to initiate this agenda in China.

The Lincoln Institute, with the Land Trust Alliance and the National Park Service Conservation Study Institute, is working with two dozen senior conservation practitioners from public, private, nonprofit and academic organizations across the nation to consider the grand challenges facing the North American land and biodiversity conservation community in the twenty-first century. The conservationists, who shared ideas electronically for several months prior to their March 2002 meeting in Cambridge, explored emerging and needed conservation innovations that may prove commensurate with the challenges. Organized by James Levitt of Harvard’s Kennedy School of Government, Armando Carbonell of the Lincoln Institute and Fara Courtney, an environmental consultant based in Gloucester, Massachusetts, the group exchanged ideas through presentations, case studies and working groups. E.O. Wilson, the distinguished author and biodiversity scholar at Harvard University, addressed the session and participated in the discussions. This article presents several highlights of that leadership dialogue on conservation in the twenty-first century (C21).

“We have entered the twenty-first century, the century of the environment. The question of the century is, how can we best shift to a culture of permanence, both for ourselves and for the biosphere that sustains us?” E.O. Wilson

The Historical Context

Ask almost any American concerned with natural resources, “How and when did we start practicing conservation in this country?” In most cases, the response involves the role of the federal government at the turn of the twentieth century under President Teddy Roosevelt. While Roosevelt and his close associate Gifford Pinchot do stand as giants in the history of conservation in this nation, the record shows that Americans have a remarkable tradition of conservation that stretches back at least to the early days of the Republic.

Individuals and organizations in the private, nonprofit, public and academic sectors have throughout our history brought landmark conservation innovations to life, and they continue to do so. They have focused their attention on sites that span the urban-rural continuum, from city parks to remote wildernesses. In the context of repeated waves of immigration and population growth, a chain of stunning technological advances and a pattern of long-term economic growth, American conservation innovators have acted creatively and often with considerable passion to protect and manage natural and scenic wonders, working landscapes, native wildlife and recreational open space for their own benefit, for the benefit of the public at large, and for the benefit of future generations.

Consider the history of the land trust movement. Thomas Jefferson set an early precedent for private and nongovernmental protection of natural beauty in America. In 1773, three years before he penned the Declaration of American Independence, Jefferson purchased a parcel of land known as Natural Bridge near the Blue Ridge Mountains. He treasured the parcel throughout his adult life, inviting writers, painters and dignitaries to visit the site and record its wonders. By 1815 he wrote to William Caruthers to say that he held Natural Bridge “to some degree as a public trust, and would on no consideration permit the bridge to be injured, defaced or blocked from public view.”

Some 60 years after Jefferson’s death, Charles Eliot, son of the president of Harvard University and a protégé of Frederick Law Olmsted, took another historic step toward the nongovernmental protection of open space. He proposed the formation of a private association to hold parcels of land for the enjoyment of the citizens of Massachusetts, particularly the less affluent residents of Boston who needed an escape from the “poisonous” atmosphere of the crowded city so closely associated with the technological progress and demographic turmoil of the Gilded Age. With a charter from the Commonwealth granted in 1891, that organization, now known as The Trustees of Reservations, became the first statewide nongovernmental land trust.

Eliot’s innovation has proved to be truly outstanding, a landmark conservation innovation that meets all the criteria for outstanding innovations in the public interest set out by the Innovations in American Government program at Harvard’s Kennedy School of Government. The notion behind the Trustees has proved to be novel in conception, measurably effective, significant in addressing an important issue of public concern, and transferable to a large number of organizations around the world. Furthermore, and critically important in the field of conservation, Eliot’s innovation has demonstrated its ability to endure and remain vibrant after more than a century. The Trustees’ current director of land conservation, Wesley Ward, emphasizes that nongovernmental conservation organizations will continue to be called upon in the twenty-first century to “provide leadership by identifying challenges, advocating effective responses and providing relevant models of conservation and stewardship.”

The Lincoln Institute played an important role in the resurgent growth of the land trust movement in the early 1980s, when it focused its resources as an academic institution on how an exchange of information among several dozen land trusts in the U.S. might strengthen conservation standards and practices throughout the entire land conservation community. Jean Hocker, at that time organizing the Jackson Hole Land Trust, remembers well the early discussions convened at Lincoln House by Boston-area lawyer Kingsbury Browne. She explains that emerging from those deliberations was the idea that “we ought to form a new organization called the Land Trust Exchange that could help us all do our jobs better.” Hocker moved to Washington, DC, in 1987 to run the group, which became known as the Land Trust Alliance (LTA). Under her leadership, the organization led the land trust movement into a period of rapid growth and enduring achievement. In 2002, there are more than 1,200 local and regional land trusts in the U.S. that have helped to protect more than six million acres of open space. Furthermore, the LTA’s annual Rally is a now a high point of the year for more than a thousand land conservation volunteers and professionals spread across the continent and beyond who convene to share their best ideas.

The Trustees’ long history of conservation innovation and achievement is paralleled by the histories of many other public, nonprofit, academic and private sectors organizations represented by C21 participants. Nora Mitchell and Michael Soukup of the National Park Service underscore the significance of America’s creation of the world’s first national park at Yellowstone in 1872, an innovation of worldwide significance that was in part the brainchild of two private railroad entrepreneurs, Jay Cooke and Frederick Billings. Laura Johnson, president of the Massachusetts Audubon Society, takes justifiable pride in the achievement of her organization’s “Founding Mothers,” two women who established the nation’s oldest continuously operating Audubon society in 1896 and catalyzed the campaign that led to the signing of the first international migratory bird treaty. Robert Cook, director of Harvard’s Arnold Arboretum, explains the pivotal role of that institution in the emergence of American forestry policy as far back as the1870s. And Keith Ross of the New England Forestry Foundation, who spearheaded the precedent-setting effort concluded in 2000 to place a conservation easement on more than 760,000 acres of forest land owned by the Pingree family in Maine, emphasizes that the family’s private forest stewardship practices date back to the 1840s.

Complex Conservation Challenges

Notwithstanding the conservation community’s collective record of achievement, the land and biodiversity conservationists at the C21 meeting foresee grand challenges of extraordinary complexity and difficulty in the coming 50 to 100 years. In the context of expected growth in North American and world populations, changes in demographic patterns and ongoing technological development, as well as systemic changes in climate and other earth systems, they express deep concern regarding myriad potential changes on the landscape. These may include the accelerating loss of open space; intensified landscape fragmentation; further degradation of wildlife habitat; alarming declines in the viability of a wide range of biological species; and potentially significant stresses to earth systems that provide essential ecosystem services. Will Rogers, president of the Trust for Public Land, notes, “from a conservation viewpoint, the pace of growth and development is rapidly running us out of time.”

The concern of many C21 participants regarding the potential impact of growing human populations starts with the straightforward projection of the U.S. Census Bureau that the population of the U.S. will grow from some 280 million Americans in 2000 to about 400 million by 2050. Beyond the numbers, it is critical for conservation planners to understand that the diversity of the American population is forecast to change significantly, with particularly strong growth in the ranks of Hispanic Americans and Asian Americans. Jamie Hoyte, an authority on conservation and diversity at Harvard University, explains, “one of the most significant challenges we face is broadening and diversifying the community of conservation-minded citizens. Those who advocate for conservation must do so in a way that speaks to people of all backgrounds and races, demonstrating an understanding of the needs of a broad range of people.” Robert Perschel of the Wilderness Society expands on the idea, advising that we need to “enter into a new dialogue with the American people … to touch the hearts and spirits and wisdom of our citizenry.”

C21 participants also pointed out that new conservation initiatives are likely to be launched in the context of continuing economic growth and personal affluence. For perspective, note that real U.S. gross domestic product (GDP) grew more than five-fold between 1950 and 2000, and many economists expect to see comparable growth in coming decades. To protect open space and biodiversity in the midst of such great affluence, conservationists will need to leverage the nation’s economic power. According to Chip Collins of The Forestland Group, “North America’s economic growth has helped fuel the loss of biodiversity. At the same time, North America has led the world in the development and implementation of conservation strategies in large measure because of the extraordinary growth and vigor of its economy. One of the great challenges will be to manage this seeming dichotomy by effectively harnessing the private sector and redirecting its immense capital power base toward constructive conservation initiatives. The private sector, in stride with its nonprofit, public and academic counterparts, must be a full and constructive partner.”

As in the past, new and increasingly powerful technologies are likely to continue to proliferate. While offering considerable social and economic benefits, the new technologies may also be closely associated with large-scale environmental disturbances. In the past half-century, for example, the spread of interstate highways has effectively stimulated the American economy but has also been associated with pervasive environmental disruptions such as urban and rural landscape fragmentation, the creation of unhealthy air quality conditions, and the generation of significant volumes of gases associated with global climate change. Similarly, more recently introduced networked technologies, such as the Internet and advanced wireless communications networks, appear to be enabling continued net migration of Americans to formerly remote and highly environmentally sensitive locations across the continent. Technology-related change is not limited to the U.S., of course. Larry Morris of the Quebec-Labrador Foundation explains that new communications and transportation networks are influencing where and how people live worldwide, from Atlantic Canada to the Middle East.

Biodiversity scientists E.O. Wilson of Harvard and Leonard Krishtalka of the University of Kansas point out that while emerging technologies may be associated with environmental disruptions in coming decades, the same technologies are also proving critical to advancing our understanding of the diversity of life on earth. Krishtalka explains that “researchers are now learning how to harness the vast store of authoritative biodiversity information in natural history museums worldwide (about three billion specimens of animals and plants) and integrate it with other earth systems data for predictive modeling of environmental phenomena.” Such a predictive model was recently built by researchers in Kansas, California and Mexico to examine the fate of a wide variety of Mexican species under a range of global warming scenarios. The outcome of this and similar studies should be particularly useful to organizations striving to prioritize land and habitat protection opportunities in ecosystems throughout the western hemisphere that may be facing significant disruption in future.

In sum, despite remarkable progress, conservationists are in no position or mood to rest. John Berry of the National Fish and Wildlife Foundation advises, “if our standard is that of the ancient Greeks, that is, to leave our nation ‘not only not less, but richer and more bountiful than it was transmitted to us,’ than we have not yet earned the laurel crown.”

A New Generation of Conservation Innovators

Inspired by the precedents set by creative American conservationists in the nineteenth and twentieth centuries, twenty-first century conservation practitioners are highly motivated to identify and implement new initiatives commensurate with the complex challenges of our day. C21 participants expressed interest in a wide variety of areas ripe for game-changing innovation, including the following.

Winning Hearts and Minds

Bill Weeks of The Nature Conservancy emphasizes that “the grandest challenge is to complete the task of getting the overwhelming majority of the public to care and act and vote like they care.” Rand Wentworth of the Land Trust Alliance agrees that conservationists should use the “tremendous power” of mass marketing to help create a national mandate for land conservation. Clare Swanger of the Taos Land Trust adds that the insight of mass marketers, but also of people living on the land, should be employed in such an effort. The outstanding question facing these conservationists is how to leverage modern marketing tools in a truly historic fashion. The aim would be to put together an effort comparable to the highly effective antismoking campaign of the last several decades, so as to build sustained momentum for the long-term protection and stewardship of “land for life.”

Building the Green Matrix

Addressing the multiple problems of open space consumption, loss of working landscapes, habitat fragmentation and biodiversity decline is a job that no single sector can tackle alone. Larry Selzer, president of the Conservation Fund and a proponent of smart conservation that balances economic returns with environmental principles, explains that effective action will require the cooperative efforts of landowners, policy makers and a wide diversity of individuals working across sectors. Furthermore, as Charles H.W. Foster of Harvard’s Kennedy School of Government points out, effective conservation efforts are at least as likely to take place at local and regional levels as at federal and international ones. Just how effective “green matrix” landscapes and organizational structures can be effectively assembled and maintained over the long term remains an area for thorough exploration and experimentation. Among other C21 participants, Peter Stein of the Lyme Timber Company, Jay Espy of the Maine Coast Heritage Trust, and Ian Bowles of the Kennedy School and the Moore Foundation are actively advancing the evolving art of assembling protected landscapes where economic and conservation goals can be pursued simultaneously.

Following Through with Stewardship

Achieving long-term conservation goals, of course, requires that once protection is gained for a given area a well-crafted stewardship plan, and in some cases an environmental restoration plan, must be conceived, agreed to by the relevant parties and then implemented. Getting this done has proved to be neither simple nor easy. Financing and organizing such stewardship efforts is too often overlooked during intense, short-fused campaigns to protect given parcels of land. Bringing a new level of attention and expertise to land and habitat stewardship and restoration efforts will be an ongoing challenge to the conservation community, particularly as its portfolio of protected lands grows in coming decades.

Fortunately, conservationists can point to some forward-looking stewardship efforts now underway. For example, Ralph Grossi, president of the American Farmland Trust, notes that the 2002 Farm Bill will provide significant levels of funding for USDA-sponsored stewardship efforts on agricultural lands. Similarly, Jaime Pinkham, a member of the Nez Perce Tribe in Idaho, offers eloquent testimony about how tribes can work with local, federal and other authorities to restore keystone species to entire ecosystems, as was accomplished with the gray wolf in the Northern Rockies. Still, there is room for a great deal of progress and innovation in this area.

Synthesizing Conservation Science

Conservation scientists E.O. Wilson, Leonard Krishtalka and Douglas Causey all underscore the argument that very significant progress can be made in the coming century to build large-scale syntheses in conservation biology and ecology. Wilson is particularly emphatic about the need to catalog all living species, a global work-in-progress that is only about 10-percent complete. The All Species Foundation that Wilson helped to form proposes to “complete the censusing of all the plants, animals and micro-organisms in the world in 25 years.” “Is this a pipe dream?,” asks Wilson, rhetorically. “No way,” he answers. “It is megascience backed by the same sort of technology drivers as the Human Genome Project. The important thing is to see the exploration of the biosphere as a crucial task.”

Gaining a comprehensive understanding of the biosphere and the ability to predict ecosystem outcomes under a variety of possible futures is indeed a grand challenge for conservation scientists. Kathy Fallon Lambert of the Hubbard Brook Research Foundation adds, “a complementary challenge is to find clear and concise ways to explain significant field and laboratory research findings to the general public and to key decision makers so that they can carry out policy debates with the best available scientific information.”

From our vantage point at the commencement of this century we cannot accurately predict just what future generations, 50 or 100 years from now, will judge to be our generation’s most significant conservation innovations, comparable to earlier creations of the world’s first statewide land trust or national park. We do know, however, that we face significant and complex conservation challenges, and our ideas for powerful innovation will only yield results if we act on them with great personal and organizational energy and intensity. There is no argument that the best time to begin such efforts is now.

James N. Levitt is director of the Internet and Conservation Project, Taubman Center for State and Local Government, Kennedy School of Government, Harvard University. His research focuses on the potentially constructive and disruptive impacts of new communications and transportation networks on land use and the practice of conservation, as well as opportunities for landmark conservation innovation in the twenty-first century.

The property tax in Brazil is an annual tax on urban land and buildings administered at the local government level. The tax base is derived from market value and is standardized across different local authorities, although procedures for establishing the tax base and rates vary considerably.

In the city of Porto Alegre, the cost approach is the method traditionally employed for assessing real estate property for taxation purposes. No legal requirement exists concerning intervals between valuations, and the last general valuation took place in 1991. In years without valuations, the tax base has been readjusted uniformly according to prevailing inflation rates. The property tax rates are progressive, with sliding rates for six classes of assessed values to insert an element of “ability-to-pay” into the system. The tax is calculated by the sum of each portion of the assessed value multiplied by the respective rate for that class. The maximum rate for residential property reaches 1.2 percent.

Analysis of the Current System

A recent analysis of the property tax system in Porto Alegre sought to provide a full examination of the relationship between assessed values and sale prices. Some of the results are summarized below.

Assessment level and uniformity

Residential apartments in Porto Alegre were assessed on median at only 34 percent of their sale prices, much less than the statutory level of 100 percent. Using the coefficient of dispersion about the median [COD] of the assessed value to sale price ratio as a measure of variability, the results showed a low degree of assessment uniformity (approximately 36 percent). In Brazil, there are neither local nor national standards for evaluating assessment performance. By comparison, a commonly accepted degree of uniformity for single-family residential property in the United States is a coefficient between 10 and 15 percent. Figure 1 illustrates the ample spread of the assessment ratios in this study.

Factors determining assessment inequity

To examine the simultaneous effects of the factors determining assessment bias, a multivariate model was used to investigate both vertical and horizontal inequities. The model detected a large number of factors causing systematic differences in assessment levels, including location attributes, building quality, building year, presence of elevators and similar variables. Vertical assessment regressivity was also identified.

Assessment method

It is plausible to assert that the method traditionally employed for assessing real property, that is, the cost approach, is a major cause of the lack of assessment uniformity identified in this study. Some theoretical weaknesses of the approach are associated with the extensive number of simplifications implemented by the local authority to make its application easier, and these adjustments are likely to have determined assessment bias. Inconsistencies with the standard cost model include the lack of connection between cost tables and the performance of the real estate market, and low correlation between the ad hoc depreciation rates adopted and the reduction in price caused by age, obsolescence, or deterioration of building structures. Furthermore, lack of systematic control over valuation performance seems to have contributed to the high inaccuracy of assessed values.

Time lags between valuations

The method used to make an overall adjustment to assessed values based on prevailing inflation rates for years without valuation has clearly contributed to the reduction of the tax base. For instance, properties were assessed on median at 38 percent of their sale prices in 1993, but only 27 percent in 1995.

Effective versus statutory rates of property tax

Rates for residential property are progressive according to six classes of assessed value. The effective rate results from the actual amount raised from property taxation, without regard to tax evasion, divided by the sale price. The statutory rate results from the expected tax that could be raised per property, if the tax were established on the basis of sale price, divided by its sale price. The effective rate is much lower than the statutory rate and represents on median only 0.17 percent of sale price.

Improper assessment practices have affected the distribution of the tax burden, not only because assessed values do not bear a consistent relationship to sale prices but also because many properties are classified incorrectly. The actual property tax revenue collected in the period under study represented approximately 25 percent of the potential revenue to be raised if assessed values were equal to sale prices.

Causes of Poor Property Tax Administration

Historical factors may help to explain the current poor administration of the property tax in Porto Alegre and its inefficient use as a revenue source. During the 1970s, large transfers of revenue from the central government and private estates to municipalities complemented the revenue raised at the local government level. Consequently, local authorities were not interested in collecting their own taxes, and taxpayers were used to paying insignificant property tax bills. The achievement of good performance in terms of valuation and an acceptable degree of assessment equity were secondary issues.

Recent financial crises combined with the urgent need for public investment in infrastructure equipment and services have stimulated some local authorities to improve their tax systems. However, due to the high visibility of the property tax and taxpayer antipathy, efforts to recover revenue and achieve assessment equity often result in tax revolts. Furthermore, changes in the tax base must be approved by locally elected members of the Chamber of Councilors. Whenever general valuations are planned, the Council members are responsible for supporting capping systems in the name of protecting the poor and retired taxpayers. However, the capping systems actually favor high-income and wealthy taxpayers because low-income and retired taxpayers can receive relief based on their income.

Since 1991, two proposals for altering the property tax base in Porto Alegre have been rejected by the Chamber of Councilors because the estimated value of some properties would have been adjusted over the inflation rate at the time. However, the existing vertical assessment inequity means that high-valued properties are the ones benefiting from poor property tax administration.

Recommendations on Revising Practices and Attitudes

Knowledge about the weaknesses of a particular tax system is fundamental for its improvement, and the analysis undertaken in Porto Alegre provides greater understanding of the current system, the degree of assessment inequity and its main causes. For the first time, the drawbacks and weaknesses of the system are both quantified and measured, including which properties are benefiting from the system and the amount of revenue being lost. Now Porto Alegre has the opportunity to improve its property tax system on the basis of accurate data rather than political expediency.

Several measures would contribute to the overall equity of the tax system while also improving revenue collection to provide the community with higher standards of living:

§ Reassessment of properties based on current market values using the sales comparison approach to assessing residential property, such as multiple regression analysis (MRA), artificial neural networks (NN), or multilevel modeling (hierarchical linear models – HLMs).

§ Systematic control over assessed property values, including testing before the release of the valuation roll to recognize and adjust for eventual bias in the estimated tax base.

§ Assurance of regular assessment updates.

§ Establishment of market adjustments to assessed values based on ratio studies for years without valuation.

§ Transparency in the administration of the property tax, especially in graduating the size of the tax burden, instead of overriding estimates of market values arbitrarily for this purpose.

§ A definition of minimum standards for assessment performance at the local or national level.

The achievement of property tax equity and the provision of a high standard of public services are common goals for politicians, the community, administrators and others. Public officials need to take advantage of new technologies for property tax assessment and data gathering to make tax systems operate both efficiently and fairly. However, technical improvements are just a part of the process. It is also vital to work on public opinion. An important step is to encourage dialogue between community residents and politicians, showing the drawbacks of the current system and the consequences of keeping its structure. Confidence in the property tax system is likely to increase if revisions are discussed seriously in the public domain.

Claudia M. De Cesare is an assessor in the Department of Local Taxation for the Municipality of Porto Alegre. She received a Lincoln Institute Dissertation Fellowship in 1999 to support the research reported here and in her Ph.D. thesis, which she completed at the University of Salford in England. The Lincoln Institute is continuing to develop educational programs with administrators, politicians, scholars and the community in Porto Alegre to help improve the equity and efficiency of the property tax system.

In the context of entirely new fiscal policies and new approaches to property rights in central and eastern Europe over the past decade, taxes on land and buildings have taken on significant new roles—politically as adjuncts to privatization, restitution and decentralization, and fiscally as revenue-raising tools for local governments.

The Lincoln Institute is particularly interested in the complex debate over property-based taxes and in how different countries experience the transition from communism to democracy and from planned to market-driven economies. Over the past four years, the Institute has undertaken a series of educational programs to help public officials and business leaders in eastern Europe understand both underlying principles and practical examples of property taxation and valuation through offering varied perspectives and frameworks for decision making.

The Institute is also sponsoring a series of case studies to compare the implementation of ad valorem property tax systems in eastern European countries. These studies provide a unique perspective from which to review the initiation of land privatization, fiscal decentralization and land markets, as well as to compare the various legal and administrative features adopted for the respective tax systems.

Programs in Estonia

The Baltic country of Estonia was the first of the new independent states to recognize the benefits of land taxation and thus has been the focus of several Lincoln Institute programs. The Institute’s work in Estonia began in September 1993 when Fellow Jane Malme and Senior Fellow Joan Youngman participated in a conference with the Paris-based Organization for Economic Cooperation and Development (OECD) on the design of a property taxation system. Estonia had just instituted its land tax program, and since then the Institute has continued to support programs there relating to land reform and property taxation.

The most recent education program, on “Land and Tax Policies for Urban Markets in Estonia,” was presented in the capital of Tallinn in May to nearly 30 senior-level state and city officials interested in public finance, land reform and urban development. President H. James Brown, Jane Malme, Joan Youngman and a faculty of international experts explored current issues concerning land reform, valuation and taxation. They also discussed methods of urban planning, land management and taxation to both encourage development of urban land markets and finance local governments.

Estonia is also serving as the pilot case study for a survey instrument to gather and analyze information from countries adopting new fiscal instruments for market-based economies. Malme and Youngman are working closely with Tambet Tiits, director of a private real estate research and consulting firm in Tallinn, to draft the survey, research and collect data, and analyze the results.

Other Case Studies and Conferences

A second case study examines Poland, where an ad valorem property tax law is under legislative consideration. Dr. Jan Brzeski, director of the Cracow Real Estate Institute, serves as the country research director and liaison with the Institute. Subsequent studies will survey Latvia, Lithuania and Russia. In addition, Professors Gary Cornia and Phil Bryson of the Marriott School of Management at Brigham Young University in Utah are using the Lincoln Institute survey instrument to study property tax systems in the Czech and Slovak Republics.

The Lincoln Institute was a sponsor of the fourth international conference on local taxation and property valuation of the London-based Institute of Revenues, Rating and Valuation (IRRV) in Rome in early June. The conference attracts about 300 senior level officials from central as well as local governments throughout Europe. Dennis Robinson, Lincoln Institute vice president for programs and operations, was on the conference advisory committee and chaired a session on “Case Studies in Local Taxation in the New Democracies,” at which Jane Malme and Joan Youngman discussed the Institute’s case studies on land and building taxation in transitional economies. Other participants in that session were Institute associates Tambit Tiits of Estonia and Jan Brzeski of Poland. Board member Gary Cornia spoke about his research on property taxation in the Czech Republic. Martim Smolka, senior fellow for Latin America and the Caribbean, presented a paper on “Urban Land Management and Value Capture” at another session chaired by Joan Youngman. Jane Malme also was a discussion leader for a session on “Tax Collection and Administration.”

The Institute is planning another program with OECD in December 1997 for public officials and practitioners in the Baltic countries of Estonia, Latvia and Lithuania to examine policy aspects of land valuation and mass appraisal concepts for ad valorem taxation.

The land market allocates land and access to urban amenities, and it does so with impressive efficiency. Yet, economists and planners continue to debate the extent to which the market fails to achieve broader social goals, how far regulation can offset for that failure, and even whether regulation results in land market outcomes being even farther from the socially desired outcome than would be the case without any regulation. To examine this debate and the underlying issues, more than 30 economists and planners met at the Lincoln Institute in July 2002 to encourage new policy-relevant analysis on land markets and their regulation, and to foster more fruitful communication between the disciplines.

At the center of the substantive debate was the basic question of regulation within a market economy and the unintended consequences that can result. The discussions touched upon many themes including gentrification, the use of public resources for private consumption, distributional issues, urban form and its regulation. If perspectives regarding market regulation differed between the two disciplines, so too did views regarding the strengths and limitations of the analytic tools that academics from different disciplines bring to such thorny problems. Among the challenges are the basic questions of how to define the problem, how to measure the current conditions in light of limited data, and how to interpret findings. Throughout the conference, the differences in the perspectives, assumptions, tools and references between planners and economists were ever present, in particular with regard to the role of politics in planning and policy making.

Unintended Consequences of Land Market Regulations

Despite their differences, concern for land markets and their centrality to social, political and economic life was the common focus of both economists and planners at the conference. They agreed that land markets are about far more than land. These markets have an important role in delivering life experiences and conditioning the welfare of the majority of people in developed and developing countries alike who live and work in cities. In addition, their regulation has both direct and indirect economic effects that extend into many areas of economic life and public policy. For example, the urban poor are likely to have worse schools and to experience higher levels of neighborhood crime because land markets capitalize the values of neighborhood amenities, such as better school quality and lower crime, thereby pricing poorer households into less desirable neighborhoods.

This power of land markets to reflect and capitalize factors that affect a household’s welfare was revealed in a study of impact fees levied on new development in Florida. Ihlanfeldt and Shaughnessy found that impact fees appear to be fully capitalized into house prices for owners of new and existing houses by redistributing the costs of new infrastructure provision from existing taxpayers to a reduced value of development land. In fast-growing Miami the cost of impact fees was borne by developers, yet offset by the increases they received in higher prices for new housing, “while buyers of new homes are compensated for a higher price by the property tax savings they experience. In contrast to the neutral effects that fees have on developers, landowners, and purchasers of new housing, impact fees provide existing homeowners a capital gain” (Ihlanfeldt and Shaughnessy, 26).

One complement to their story of Florida’s impact fees was illustrated in several other papers concerned with the unintended outcomes of regulation. British participants reported that Britain’s containment policy has generated higher densities within urbanized areas, but cities leapfrog out across their Greenbelts (or growth boundaries) to smaller satellite settlements; the consequence is that development becomes less contiguous and travel times increase. Villages become high-density suburbs surrounded by a sea of wheat: London in functional terms extends to cover most of southeastern England.

In a U.S. example based on an econometric simulation, Elena Irwin and Nancy Bockstael found that a clustering policy intended to preserve open space could instead backfire. Using Maryland data, they simulated the effects of a policy that was intended to preserve rural open space and found that it would instead accelerate development if “small to moderate amounts of open space are required to be preserved (specifically, 20 acres or less) and would slow the timing of development if larger amounts of open space are required to be preserved” (Irwin and Bockstael, 26). Their simulation results yield an interpretation that is highly nuanced and requires careful thought. That is, under certain conditions the cluster policy can backfire, while under other specific conditions the policy can yield an intended policy outcome.

These hypothetical clusters in Maryland may be echos of a real situation that Jean Cavailhès and his colleagues observed in the French countryside, where some urban dwellers moved to farm regions to create a mixed-use area that is neither entirely urban nor entirely rural. These former urbanites appear to value their proximity to a functioning rural landscape in exchange for longer commutes and (surprisingly) smaller residential lots. The authors hypothesize that these peri-urban dwellers benefit in different ways from living among the farmers.

In another example of the unintended consequences of regulations, Donald Shoup analyzed curbside parking. Many U.S. municipalities require developers to provide minimal parking per square foot of new commercial or, in some communities, residential space. The requirement for off-street parking, coupled with a systematic underpricing of curbside parking, has a double impact, according to Shoup. It imposes a substantial tax on affected developments (equivalent to up to 88 percent of construction costs), increases land taking, and means that public revenues annually lost an amount equal to the median property tax.

In these cases of unintended consequences of policy or regulatory interventions in the market, the authors argued for more careful design of both policies and regulations so state and local governments could reasonably achieve their policy goals. Despite the fact that the conference debate tended to pit regulation against the market, there was probably a tendency—if not full-fledged consensus—to favor market incentives and disincentives to achieve policy goals, rather than to rely strictly, or even largely, on regulation. Roger Bolton’s comments on Shoup’s paper cogently reflected this viewpoint. He said that Shoup’s work was valuable because it urges us to pay attention to a whole package of “important and related phenomena: inefficient pricing of an important good, curb parking; inefficient regulation of another good, privately owned off-street parking; and missed opportunities for local government revenue.”

Data and Measurement Challenges

Growth management and urban form were referenced extensively throughout the conference. The paper presented by Henry Overman, and written with three colleagues (Burchfield et al.) provided useful grounding to that conversation. They attempted to measure the extent of sprawl for the entire continental U.S. Using remote sensing data they calculated and mapped urban development and the change in urban land cover between 1976 and 1992. They defined sprawl as either the extension of the urban area, or leapfrog development, or lower-density development beyond the urban fringe. They concluded that only 1.9 percent of the continental U.S. was in urban use and only 0.58 percent had been taken for urban development in the 16-year period covered by the study. Furthermore, during this period, urban densities were mostly on the increase.

This study found development to be a feature of the “nearby urban landscape,” whether that was defined as close to existing development, or near highways or the coasts, and thus was perceived as encroaching on where people lived or traveled. The authors use this last observation to reconcile the apparent contradiction between their finding that less than 2 percent of the continental U.S. has been developed and the fact that containing and managing sprawl is at the center of policy agendas in many states and regions across the U.S. While relatively little land might have been consumed by new development in aggregate during the study period, many people see and experience this development on a daily basis and perceive it to represent significant change, often the kind of change they do not like.

The conference discussion touched upon some of the data questions raised by this work. The paper’s discussant, John Landis, noted some challenges he has faced in working with these and similar data to measure growth patterns in California. The estimates by Burchfield et al. are extremely low, possibly for technical reasons, according to Landis. Among the reasons is the difficulty in interpreting satellite images and the different outcomes that can occur when different thresholds are used for counting density, for example. That is, an area can be classified as more or less dense depending on what threshold the analysts establishes. “Ground-truthing” is required to remove some of the arbitrariness from the analysis, but this is an enormously costly undertaking.

Policy analysts are always faced with data limitations. Sometimes the problem is missing data, while other times it is data with questionable reliability. Yet, all too often researchers spend very little time paying attention to how serious that deficiency is for the policy problem at hand. When the available data is a very long time series with frequent intervals that relies on a well-structured and well-understood data collection method, and where few transformations occur between data collection and data use, most researchers and policy analysts would feel extremely comfortable interpolating one or two or even a handful of missing data points. Econometricians relying on data collected at regular intervals from government surveys frequently face this situation and are quite adept at filling in such “holes in the data.” In the world of limited data, that might be considered the best-case scenario.

At the other extreme we might have data that are collected using relatively new methods and that require significant transformation between collection and use. Data reliability likely decreases under these circumstances. Given the imperfect world in which we live, the answer is probably not to insist on using only the “best data.” However, researchers and policy analysts do have the obligation to use care in interpreting results based on weak data and to convey that weakness to their audience.

Another side of the limited data problem is the translation from concept to measure, and it explains why the conference participants spent so much time discussing “What is sprawl?” For researchers this question becomes “How does one define sprawl in such a way that one can measure it?” Burchfield et al. define sprawl as leapfrog or discontiguous urban development. Landis argues for “a more multi-faceted definition of sprawl, one that also incorporates issues of density, land use mix, and built-form homogeneity.”

Definitions are not trivial in policy analysis. If we cannot define the problem or the outcome, and we cannot measure it, how can we know if it is getting better or worse, and if our policies are having an impact? On the other hand, a very precise definition of a different but perhaps related concept may lead to unnecessary intervention. The new policy may improve the score on the measure but have little or no effect on the problem. For a variety of reasons (perhaps in part the customs and cultures within different disciplines) the economists at the conference tended to favor concepts that are simple and for which the data exist. On the other hand, the planners tended to favor concepts that are messy. In the end, one is left with weaknesses on both sides. The uni-dimensional definition, and therefore the uni-dimensional measure, may provide many of the desirable properties that allow statistical analyses. Multi-dimensional concepts are difficult to translate into measures. Which is better for policy making?

The Political Nature of Land Policy

Planning as a political activity was emphasized by several authors, notably Chris Riley (discussant of papers by Edwin Mills and Alan Evans), to emphasize the importance for economists to recognize this role and the constraints it imposes on significant change (particularly given the capacity of land markets to capitalize into asset values the amenities generated by planning policies themselves). Richard Feiock added there was also evidence that the forms of planning policies that communities selected (both the severity of such policies and the degree to which they relied on regulation in contrast to market instruments) could be largely accounted for by the political structure and socioeconomic and ethnic composition of those communities.

Participants reacted differently to the political nature of land policy and planning. For some this was problematic: it meant that the market was not being allowed to work. For others, it meant that the political process in a democracy was being allowed to work: the people had spoken and the policy reflected the expressed will of the body politic.

Reflections on Debate

The differences between economists and planners will continue, and differences among practitioners in different countries and even different parts of the same country (notably the large United States) can either stimulate or thwart future debates over the study of land market policies and implementation. Perhaps, though, the word debate itself thwarts our efforts. In debates, the debaters rarely change their minds. They enter the debate with their point of view firmly fixed and do not get “points” for admitting that their debating opponent taught them something or that they have consequently changed their own mind. However, one purpose of a professional conference is, indeed, for thoughtful people to consider their own assumptions and to be informed and changed by the points of view of others. In the future, perhaps debates will be supplanted with reflective conversation.

Paul Cheshire is professor of economic geography at the London School of Economics, England; Rosalind Greenstein is senior fellow and cochair of the Department of Planning and Development at the Lincoln Institute; and Stephen C. Sheppard is professor in the Department of Economics at Williams College, Massachusetts. They jointly organized the Lincoln Institute conference, “Analysis of Urban Land Markets and the Impact of Land Market Regulation,” on which this article is based.

Conference Papers

The conference participants whose papers are cited in this article are noted below. All conference papers and discussants’ comments are posted on the Lincoln Institute website (www.lincolninst.edu) where they can be downloaded for free

Burchfield, Marcy, Henry Overman, Diego Puga and Matthew A. Turner. “Sprawl?”

Cavailhès, Jean, Dominique Peeters, Evangelos Sékeris, and Jacques-François Thisse. “The Periurban City.”

Feiock, Richard E. and Antonio Taveras. “County Government Institutions and Local Land Use Regulation.”

Ihlanfeldt, Keith R. and Timothy Shaughnessy. “An Empirical Investigation of the Effects of Impact Fees on Housing and Land Markets.”

Irwin, Elena G. and Bockstael, Nancy E. “Urban Sprawl as a Spatial Economic Process.”

Shoup, Donald. “Curb Parking: The Ideal Source of Public Revenue.”