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5. Subsequent Attenuation of Exclusive Property Rights: Some Empirical Tests
- Hong Kong University Press, HKU
- Chapter
- Additional Information
Chapter Five Subsequent Attenuation of Exclusive Property Rights: Some Empirical Tests Introduction Zoning by contract (as in the case of leaseholds) or legislation (as in the case of Marine Fish Culture Zone) can be a means to establish private property rights and hence constrain rent dissipation in a situation where initial property rights are common or ill-defìned. Town planning (zoning) legislation, however , may also attenuate private property rights that are already in existence. The impact of such attenuation depends on the nature of the planning system and specifìc policies in question. No general analytical conclusion is possible, as argued in Chapters 2 and 3. Using simple statistical techniques, this chapter examines empirically several key aspects of the town planning zoning legislation of Hong Kong which attenuates the rights of the landowners to use, derive income from and alienate land acquired by civil contract1 which are stipulated in the lease conditions. As discussed in Chapter 3, whether such legislation is justifìed is an empirical cost-benefìt analysis question.2 Some generalizations are made about the fìndings within the property rights framework presented in Chapter 3. Under two conditions, zoning legislation can be considered desirable, benefìcial, or effìcient: (1) the benefìts of the zoning legislation exceeds its costs; and (2) superior (in terms of greater net benefìts) alternative legislative or policy measures are not available. The costs of zoning legislation include not only the private costs of loss in value of land due to use, development or development boundary restrictions , and downzoning (i.e. specifying a use of lower value or reducing the intensity of use), but also the social costs of the rise in the transaction costs in the land and development market due to the attenuation of private property 98 Zoning and Property Rights: AHong Kong Case Study rights conferred by lease conditions, notably rent dissipation in the planning application process. The benefits of zoning legislation include the benefits of: (a) achieving more developable space (or in the high-rise built environment of Hong Kong, more Gross Floor Area); (b) enhancing land value by improving the environment through various zoning techniques, like plot ratio reduction, in areas generating ‘negative externalities '; (c) control of layout design quality and public goods provision; and (d) enlarging the land market. The hypotheses presented in this chapter are summarized below, and they will be explained in detail in the following sections. (1) comprehensive development areas (CDA) have less (smaller percentages of) environmental complaints than areas outside CDA (ti的ting impact 0/ zoning on externalities); (2) CDA have smaller price variances than areas outsides CDA (testing impact 0/ zoning on externalities); (3) Property prices of CDA are higher than areas outsides CDA (tl的ting impact 0/ zoning on intangible benφ訂); (4) CDA development under unitary ownership is more efficient than under multiple ownership (testing impact 0/ zoning on transaction cos訂); (5) Downzoning (reduction in plot ratios) in Tsuen Wan industrial areas has created a significant rise in the expected value of residential development (testing impact 0/ zoning on externalities); (6) Planning Areas with more (greater percentages of) building plans (numbers /G.F.A.) vetted under the development control (statutory planning application) process tend to have less (smaller percentages of) environmental complaints than districts with less (tl的ting impact 0/ zoning on externalities); (7) The urban-rural rent gradients have become more elastic (less steep) with the inception of statutory planning in the New T erritories (testing impact 0/ zoning on market enlargement); and (8) In the New Territories, the volume of land transactions have significantly increased with the inception of statutory planning in the New Territories (testing impact 0/ zoning on market el均rgement). The level of sophistication of the tests are limited by the level of data detail released by or obtainable from the government. In many instances, judgement needs to be made. Such judgement is placed within the theoretical framework, elucidated in Chapter 2, to highlight some general property rights implications. The objectives of the tests simply seek to examine whether different forms of zoning are pri伽 facie be吋ìcial. This level of analysis is sufficien [44.211.58.249] Project MUSE (2024-03-29 14:19 GMT) Subsequent Attenuation of Exclusive Property Rights: Some Empirical Tests 99 to either confìrm or cast doubts upon Pigovian interventionist reasoning, which asserts that the existence of externalities always provides a prima facie case for regulation. Restrictions on the rights to alter the boundary of development...