Planning and Sustainable Management: A Re-Examination of the Peri-Urban Problem

This paper examines the economics of urban expansion onto rural land in light of the sustainable management requirements of New Zealand's Resource Management Act. It finds that if conversion of land from rural to urban uses is practically irreversible because of the high cost of restoring rural qualities, it creates a user cost or inter-temporal externality which planning controls could address. Comparison of the methods for implementing such a policy show tradable development rights have high efficiency, but there are legal, practical and political obstacles to their use. A form of zoning which differentiates the controls between areas on the basis of the effects of particular activities in those areas may be the best practicable option, albeit at some loss of allocative efficiency.