AREC FINAL STUDY GUIDE I Policy Outcomes A Pareto Improvement 1 A Change in conditions that leaves some individuals or groups better off and all other individual or groups at least as well off as they were before the change 2 Conditions policy allocation of resources B Pareto Efficient 1 No additional change can be made that is a Pareto improvement 2 Is a free market outcome w o externalities C Kaldor Hicks Compensation Principle 1 Some groups individuals are worse off losers and some are better off winners 2 The amount that the winners gain is more than the amount the losers lose the winners could compensate the losers 3 The decision on whether or not to actually use gains to compensate the losers is a political decision not an economic decision 1 The compensation principle is the basis 2 If the total of all the benefits is greater than the total of all the costs then the policy action is preferred to the status quo 3 A policy action with the highest net benefit benefit minus costs is the most preferred option among competing policies actions A The Problem of Applying Benefit Cost Analysis to Chesapeake Bay Issues 1 Many of the economic benefits related to the environment are difficult II Benefit Cost Analysis to measure a Recreation b Aesthetics c Preserving an ecosystem III Economic Value 2 If they are difficult to measure and thus not included in the benefit cost analysis the results of the analysis will be flawed and biased against environmental improvements 1 Must be valued either directly or indirectly by humans a Example of economic value Bay anchovies are an economically valuable species because they are a major food source for Striped Bass rockfish which are valued by humans for food consumption and recreation b Not an example of economic value Bay anchovies are an economically valuable species because they are a major food source for Striped Bass rockfish 2 Measured in terms of tradeoffs what is the maximum one would be willing to give up willingness to pay in terms of 1 A Types of Values Will Influence How We Measure Them 1 Use Value can observe behavior or choices made under different scenarios a Market Value curve ii Ex Commercial fishing b Non Market Value i Price and quantity data available to measure demand i Can observe choice behavior but not prices ii Ex Recreational fishing 2 Non Use or Passive Use Value nothing to observe directly related to what is being valued a Existence Value b Altruistic Value value c Bequest Value d Option Value i Person s willingness to pay to preserve a resource for which he has no current or future plans for personal use i Willingness to pay to preserve someone else s use i Willingness to pay for use value for future generations i Willingness to pay for opportunity to use resource in the future IV Baltimore County A Growth Drivers in Baltimore Country 1 Locational Factors Proximity to Baltimore Washington a b Manufacturing WWII 2 Metropolitan Decentralization a Mortgage insurance programs b Baltimore Beltway c Water and sewer availability shared with Baltimore City d School desegregation White flight e Pursuit of the American Dream and open space f Decline of agriculture Cheap land B Baltimore County Goes to War 1 Total War Effort a Added greater that 200 000 jobs in Baltimore City and County 2 The rapid spread of population and industry into the counties surround Baltimore City since the end of WWII has created a number of problems with respect to planning control of land use and the provision of public facilities B Elements of Smart Growth Success 1 2 3 Urban Growth Boundary Zoning Land Preservation 2 4 5 Environmental Management Renaissance Redevelopment C Baltimore County Urban Growth Boundary 1 Boundary limits sewer and water services 2 Delineates urban and rural land uses 3 Provides a framework for zoning D Land Preservation 1 Maryland Agriculture Land Preservation Fund 2 Maryland Environmental Trust 3 Rural Legacy 4 County land preservation and clustered development 5 Local land trusts NGOs E Maryland Smart Growth Programs 1 Rural legacy provides state funding for land preservation in priority areas 2 Priority funding areas provides state funds for infrastructure sewer water roads to encourage growth within highly developed areas F Planned Growth Areas 1 Accommodating population growth in high density planned growth areas with adequate transportation and water sewer infrastructure G Transit Oriented Development A Exurban Development 1 Low density housing beyond city suburbs 2 Causes a Escalating real incomes b Waning Transportation costs c Technological improvements d Credit Availability 3 Consequences a b Pollution c Aesthetics Infrastructure 1 Distance to highway 2 Distance to city B Zoning Major Development Resource Conservation Zoning adopted C Explanatory variables affecting likelihood of residential development V Geographic Information Technologies D Systems 2 Global Positioning Systems GPS a System of earth orbiting satellites which can provide precise location on the earth s surface 3 Remote sensing RS a Imagery from satellites or aircraft to capture information about the earth s surface 3 b Digital images photos 4 Geographic Information Systems GIS a Software systems with capability for input storage analysis and display of spatial data and information integrating platform they manage analyze communicate VI Hedonic Forest A Hedonic Price Model 1 House value calculated from statistical model Tax assessor s data home sales price lot size zoning a Parcel based analysis b c Dependent variable In home price d Explanatory variables for each parcel from GIS i Structural variables house size building quantity age ii Accessibility travel time to Washington DC and Baltimore fields iii Neighborhood school district income crime iv Open space attributes distance to local park playground v Forest environmental attributes tree cover tree height B Findings 1 Tree Height a Taller trees are highly valued tree characteristics are important 2 Ownership and Externalities a Trees on neighboring properties increase you home s value by 4 to 6 times more than trees on your own property 3 Existing Tree Cover a Additional tree cover is more valuable on properties with low baseline tree cover using a quadratic specification 4 Surrounding Tree Cover a Trees on your own property are more valuable when surrounding neighborhood tree cover is low scarcity effect VII Newburn Lecture on Land Use 1 Patterns of Development a Encourage sprawl i More