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Optimal Land Development with Endogenous Environmental Amenities
Author(s) -
Wu JunJie,
Irwin Elena G.
Publication year - 2008
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/j.1467-8276.2007.01057.x
Subject(s) - amenity , land development , urbanization , pace , environmental quality , externality , natural resource economics , quality (philosophy) , land use , dimension (graph theory) , damages , economics , environmental science , environmental resource management , environmental economics , microeconomics , geography , mathematics , economic growth , ecology , philosophy , geodesy , finance , epistemology , political science , pure mathematics , law , biology
A spatially explicit model of the optimal timing and location of land development is presented that incorporates dynamic interactions between land development and water quality. Ignoring two‐way interactions leads to a lower level of water quality, more development, and lower social welfare. The optimal pace and pattern of development can be achieved through the assessment of an impact fee that internalizes pollution damages and irreversibility costs. Our results demonstrate the importance of accounting for the spatial dimension of land use, the interdependence between land use and environmental quality, and development irreversibility in models of urbanization and amenity‐driven growth.