Sunday, October 9, 2011

New Directions for Urban Economic Models of Land Use Change: Incorporating Spatial Heterogeneity and Transitional Dynamics

by Elena G. Irwin

Key policy questions concerning global environmental change center on the multiple feedbacks between humans and natural systems (Grimm et al. 2008a; Levin 2006; Lui et al. 2007; Pickett et al. 2001; Turner et al. 2007), including the cumulative environmental impacts of individual and community resource decisions and the behavioral responses of individuals to policies that seek to manage these impacts (Daily et al. 2009). Among human-induced impacts, land use is second only to climate in its effects on the functioning of the Earth’s terrestrial and aquatic ecosystems (Grimm et al. 2008a). Urban and urbanizing land, while only a small fraction of the total land area worldwide, generates a disproportionate share of environmental impacts (Alberti 2005; Collins et al. 2000). A growing interest in the underlying processes of land use and land cover patterns among biophysical scientists has led to increased emphasis on a “more humanist perspective” within these sciences (e.g., Wu and Hobbs 2002) and for integration of socioeconomic and demographic models of human settlement, consumption and land management dynamics with biophysical models (Grimm et al. 2008b, Pickett et al. 2001). In a recent list of the “ten top research questions” in landscape ecology, for example, research on the causes and processes of land use and land cover change was described as one of the most important and challenging research areas (Wu and Hobbs 2002). Research funding agencies, most notably the National Science Foundation, now allocate considerable funds annually to interdisciplinary research on human environment interactions.
In many ways, economists are well-positioned to respond to these calls for greater integration of behavioral land use and biophysical models and indeed some have done so. Questions of household and firm location decisions, land use and land development decisions are central to urban and regional economics and have spawned a rich and diverse body of theoretical and empirical work. However, differences in research questions, methods and data traditionally led ecologists and economists to emphasize different aspects of land use and land cover change. Many of these differences persist today. For example, economists have focused on development decisions by landowners or location decisions of households and firms at an individual level within an aspatial or highly stylized spatial setting. This approach has permitted consideration of key dimensions of decision making, e.g. durability of capital (Harrison and Kain 1974; Anas 1978), intertemporal decisions (Arnott 1980; Capozza and Helsley 1989; Fujita 1982; Ohls and Pines 1975) and uncertainty (Mills 1981; Capozza and Helsley 1990), and how these features influence the resulting price gradient and land use pattern.


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