Public Policies and Land Use
Land markets work through the private interactions of individual buyers and sellers. Groups of people, especially groups working through their governmental institutions, can affect the way land is used. We provide first a brief catalog of these mean and then set up a simple example to illustrate each one:
1 Working through land markets: Both public and private groups (as well as individuals, for that matter) can simply work through the private land market, buying, selling, exchanging, or otherwise engaging in voluntary transactions that affect the way land is used.
2 Eminent domain : The power of eminent domain essentially means the power that recognized political authorities have to condemn property for a public purpose. Condemnation involves the forced appropriation of property and must be accompanied by fair compensation. This is a power possessed by federal and state government and usually delegated by them to local governments and to some quasi-governmental organization, such as electric companies.
3 Police power: The police power means the power that governmental authorities have to regulate the behavior of citizens so as to ensure the health, welfare, safety, and morals of the public. This is a power regulations include zoning regulations, subdivision controls (e.g., minimum lot-size requirements), building codes, and environmental regulations (e.g., wetlands protection regulations).Whenever these police power tools are applied, the ongoing question in particular circumstance is whether they represent valid exercises of a community's right to govern itself, or "taking" of private property that are forbidden by the U.S. Constitution unless compensation is paid.
4 Taxes: Governments have the power to tax, and property taxes are an important source of tax revenues. But beyond their revenue-raising capacity, they may also be applied in such a way as to encourage or discourage certain types of land use.
The easiest way to illustrate the strengths and weaknesses of these policy approaches is to apply them to a simple example. Suppose there is a parcel of land that is currently owned by a farmer and used to raise crops. Suppose, however, that suburban growth is encroaching into the region and that the land is also valuable as a site for a housing development. Suppose, further, that if the land is used for farming purposes, it produces substantial net benefits from two other sources besides the crop production: scenic values and wildlife protection values.