Zoning and Property Rights: Chinese Agriculture

Preface and Acknowledgements

Preface and Acknowledgements This book is an attempt to clari再T the economic nature of zoning. 1t is a modifìed version of the author's doctoral thesis ‘Property Rights Analysis of Zoning' submitted to the University of Hong Kong in February, 1994. Zoning is in many countries the cornerstone ofland use planning. Through segregating ‘incompatible' land uses, integrating ‘compatible' land uses and reserving land for community land uses, zoning can be regarded as a means to overcome the problems of the ‘externalities' and ‘public goods' of an unregulated land market. Such concepts of market failure, which stem from the Cambridge economist Arthur C. Pigou, have been challenged by the property rights economists, with Ronald Harry Coase being the most influential fìgure. Within the Coasian paradigm of transaction costs (1 960) and Steven N.S. Cheung's interpretation of the concept (1990) that social institutions (including the government) are outcomes of public choice to reduce such costs, this book aims to contribute to the existing intellectual discourse on zoning by establishing a coherent property rights framework of zoning against which the existing literature of zoning is reviewed and a number of hypotheses evaluated. This framework depicts a dual character of zoning, i.e. (a) zoning as a government means to assign exclusive property rights; and (b) zoning as a government planning intervention instrument which attentuates private property rights over the most valuable uses of land. The exclusive rights assignment character of zoning, often ignored by economists and planners, is able to (i) constrain ‘rent dissipation' which would occur in a system of common property rights under competition, and (ii) lead to the emergence of market transactions. To test the impact of zoning in this respect, planning for a natural resource, the marine fìsh culture zoning of Hong Kong is examined. It is discovered that in spite of increasing water XVI Preface and Acknowledgements pollution, marine zoning leads to the growth in fìsh output within the fìsh culture zones. This result compares strikingly with the fall in fìsh capture outside the zones, indicating the signifìcant positive influence of exclusive property rights. Other results are also consistent with the positive contribution of exclusive property rights. For instance, more pollution-resistant fìsh species are kept in the more polluted culture zones, an investment behaviour diffìcult to explain under common property. It is also revealed that potentially more polluted cultured fìsh are sold at a discount compared with cleaner captured fìsh. This casts doubts on the popularized environmentalist view that the price mechanism fai1s to reflect the presence of pollution. The second character of zoning, attenuating private property rights, has attracted more attention of economists. It is considered that such attenuation should not be regarded as being necessarily negative in economic terms, although this is a commonly perceived view ofsome economists. It is concluded that, whether the impacts of zoning in this respect are positive, neutral or negative, it is a case-by-case empirical question. Eight empirical hypotheses are evaluated by simple statistical methods. It is found that restrÎctions of freedom of subdivision or combination of land (via comprehensive development area concept by statutory zoning or lease conditions) are economically more benefìcial in terms of land value enhancement, provided that the transaction costs of land assembly are not prohibitive. The imposition of statutory zoning on private agricultural land also appears to be benefìcial in simi1ar terms. However, other aspects of zoning, namely downzoning and planning application in general, do not appear to generate the alleged benefìts of environmental improvement. When 1 studied political theory as an undergraduate at the University of Hong Kong, 1 learnt a great deal from my teacher Stephen Davies on the dialectical way of thinking together with an appreciation of controversies. In my further studies and subsequent professional development, my choice of specialisms, economics and planning, was deliberate. Their apparent contradictions stimulated thought. Some of these thoughts, when expressed, may have been perceived as socially inconvenient but 1 have no regret for that. At fìrst, 1 thought that the logical thinking Preface and Acknowledgements XVII The arguments in Chapters 1 to 3 describe some such issues in detail. Chapter 多 sets out a number of ‘testable' hypotheses of the regulatory tools wellknown to town planners. Other than of obvious theoretical or academic interest, they should provide my professional counterparts in government and the...