Agenda Packets - 1995/02/06 - Laserfiche WebLink

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,a;' -''''-';‘',47.14:;..,!--::14' 1 A 1978 World Bank paper reports that the issue that the price of land is "too high" or is rising "ton 'P,':''';' fast" is a common complaint in cities with limited land area. The reports states that "....if one s the same boundaries of a city and if that city is growing, the assertion that average land prices w i- s 3i increasing rapidly is neither surprising nor very interesting. Such increases are necessary for the :',-:-:' f efficient allocation of space." (World Bank, 1978, p 67). The relationship that price plays in the conservation and efficient allocation of a resource is an 1 f r important one. As land in a city becomes more expensive and space for new facilities more sca ce, y55�f ` the waste of space or land in inefficient allocation carries with it a loss of "opportunity cost." Again, ' "- from the World Bank report: r, 1-� "The—cost-of-land-plays-an-important role in many decisions by both governments and '`"` "' private agents. In order to delineate the consequences of decisions to use land for specified purposes, one must measure costs in terms of the output of useful goods and '',.,.F . services that would be foregone; this is then the true cost or opportunity cost of the 4 " land." (World Bank, 1978, p73) "The critical attribute of land that distinguishes it from most other resources is that, with minor exceptions, it is non-reproducible. If land is extraordinarily valuable in the center of a city, one cannot devote resources to produce more of that valuable land; amount must be taken as given. The only recourse is to make different uses of the existing stock of land. Hence there is the desiderata that land should be employed in its most valuable use" (World Bank, 1978, p73). In . iscussion of the interaction of project and land opportunity costs for an imaginary new port in a developing country, the World Bank observes that land in the area of the port which had a low value prior to port construction will sustain a large rise in value when the port is finished. "Thus, there are two opportunity costs of land -- one without the project and one with the project completed." The question of whether the port is worthwhile or should be at that location is answered using the without-project opportunity cost of the land. The other question of whether the port has the right st amount of land also must be answered because there may be technologies which can trade land for additional capital. In this tradeoff, "one should make the port compete with other with-project land uses." The first decision is a decision on a "lumpy" investment. In the second case, a "marginal" investment of additional land versus additional capital cost is being considered. "In principle, one should find the most efficient configuration of the port before asking whether it is worthwhile to build it." The above.general comments on utilizing land effectively as a resource and maximizing its opportunity value can now be related to how we make decisions about the utilization of underground space - especially beneath public rights-of-way. 1 8 h4 j z.3 t