In recent decades there has been an increase in urbanisation and urban sprawl, which has resulted in a decline of green spaces, especially in urban areas. Urban green spaces include parks, play areas, areas specifically intended for recreational use, private gardens, and urban woodlands. More generally, they are areas of land that consist of permeable surfaces such as grass, trees and soil (Dunnett et al 2002). Increasing urbanisation contributes towards a degradation of the natural environment, as developments are overtaking rural areas at an increasingly rapid rate. Furthermore, this will have an impact on climate change, as less green space increases the effects of global warming, and other environmental issues, such as a higher risk of flooding due to lack of green space. This causes social problems as less green space creates health problems. This leads to economic problems, for instance, it is expensive to recover from disasters such as flooding. Therefore careful and sustainable management of urban green spaces is especially important for social, environmental and economic reasons.
The aim of the following essay is to discuss critically the environmental, economic and social aspects of managing urban green spaces. In order to achieve this aim the essay will be split into three main sections. Section one will look at the characteristics of the environmental problem and who is affected by them, linking this into how environmental problems create economic problems. Section two will look at what is and what could be done to address these problems, such as new forms of green spaces. It will also look at the economic aspects of these courses of action and the economic valuation of urban green spaces. It will argue that making a city ‘greener’ can increase its economic performance, and lead to sustainable economic growth. However, the final part of the essay will challenge this, arguing that creating urban green spaces may not be the best solution for economic sustainability. Finally, the conclusions reached are that there needs to be a well managed balance of ‘green’ and built areas in cities for sustained economic growth.
Market failures in the urban land market
“Today we realise that we must protect networks of open space” (Benedict and McMahon 2002:3).
Regarding natural resource use, market forces determine the choices people make. However, resources such as urban green spaces do not have securely enforced or defined property rights which cause a lack of markets. Therefore, environmental resources cannot be directly traded in an open market, which leads to externality problems. Thus, due to market failures the full costs of urbanisation are not represented in the private costs (Panayotou 2000). The structure of the market means the private costs of using environmental resources, such green spaces, is zero (Gwartney et al 2000). Therefore producers have no incentive to protect environmental resources (Cropper and Griffiths 1994). To illustrate this problem of environmental externalities Pigou (2009) used the example of a company who builds a factory in a residential area and thus destroys some of the amenities of the neighbouring sites. The result is that the company sells its products at a lower price than the full costs felt by the society.
Consequently, as a result of these market failures there has been a rapid increase of urbanisation and urban sprawl without efficient land-use planning, and conservation of green spaces. Nationally, urban areas consist of approximately 14% green space (Comber et al 2008). However, the United Nations in 2001 estimated that in Europe the level of urbanisation will increase to almost 80% by 2015, which will result in a further loss of urban green spaces (cited in Tzoulasa et al 2007). Environmental amenities are usually ignored by urban planners, resulting in a shrinking of urban green spaces as they have gradually been taken over by urban development (Kong et al 2007).
This level of urban growth presents challenges for tackling environmental issues such as climate change and biodiversity (Tzoulasa et al 2007). Less green space increases the effects of global warming, which is especially important in cities where the mean pollution levels are higher. Urbanisation replaces green spaces with impermeable built surfaces which causes negative environmental effects as green spaces provide rainwater interception and infiltration, evaporative cooling and shading functions (Gill et al 2007). Furthermore, urban areas can be up to 7°c hotter than the surrounding countryside (Hilliam 2010). The concentration of buildings and paved surfaces creates higher temperatures, which is known as the ‘heat island effect’ (Dunnett et al 2002). Furthermore, built environments restrict wind flow which in turn restricts the dispersal of pollutants, resulting in even higher air-pollution levels (Morancho 2003). It is important to tackle these issues as in 2003, during the European summer heat wave, 35,000 lives were lost (Gill et al 2007). Moreover, tackling environmental issues in urban areas is increasingly important as in 2001 “nearly eight of every ten people in the United Kingdom lived in urban areas” (Pointer 2005:46). Consequently, a higher population and an increase of built surfaces, means urban areas are where climate change impacts will be mostly felt (Gill et al 2007).
This also has economic impacts as a lack of green space can increase the costs of public infrastructure and services such as, flood control and storm water management (Goode 2006). Furthermore, a lack of green spaces was often seen to be the main motive for people leaving the city, as they moved to the urban fringe for more green space (Van-Herzele and Wiedemann 2003). The result is economic decline as people move out of urban areas, which creates lower property values, attracting less wealthy people. This makes it hard to secure investment or attract and retain business in the area. A lack of green space also has negative impacts on tourism as fewer people will want to visit the area (Crompton 2001). Furthermore, a lack of green space creates health issues which are costly for the economy as an unhealthy society increases the costs of health care to UK tax payers (Mell 2008). There is a shortage of green space for example; in Greater Manchester the proportion of tree cover is fairly low, with an average of 12% cover, and 16% in ‘urbanised’ Greater Manchester (Gill et al 2007). The next part of the essay will discuss how to tackle these environmental and economic problems.
Solution to the problem
Urban green spaces have many benefits which can be divided into market benefits and non-market benefits. Non-market benefits fall into three categories: use, option and existence value. Option value occurs when the future benefits are uncertain and depletion of the resource is irreversible. Existence value refers to the knowing the resource exists, and use value is from the direct use of the resource. Total value is the sum of all three. Thus, urban green spaces have existence value, and direct use value, such as recreational use. Furthermore, urban green spaces create consumer surplus, as the cost of using urban green spaces is usually free (Goodstein 2010).
These benefits highlight the need to protect urban green spaces. Moreover, the issues discussed above further raise the need for protection and allocation of urban green spaces. In 2004-2005 local authorities in the UK spent an estimated £700 million on renovating and maintaining urban green spaces (Comber et al 2008). Furthermore, London’s draft Climate Change Adaptation Strategy in 2010 (online), proposes that there is a need to increase the city’s green spaces by creating small parks, which will help to absorb rain on wet days and cool the city on hot days (Bulkeley and Betsill 2003). Urban green spaces can also help to reduce pollution and act as sinks for carbon dioxide which is a major contributor to global warming (Dunnett et al 2002). In cities, gardens and parks absorb carbon dioxide (CO2) emissions, which mainly come from private vehicles (Morancho 2003). Vegetation reduces air pollution by absorbing pollutants in the air, and by intercepting particulate matter. Hence the pollution of a car driven 60 miles per day can be offset by only 20 trees. Green spaces also reduce the urban heat island effect by shading heat absorbing surfaces and through evapotranspirational (ET) cooling. Evidence has shown vegetation can lower wall surface temperatures by up to 17°C (McPherson 1994). This will ensure economic sustainability as less money will be needed to recover from natural disasters and climate change impacts. Thus, green spaces are multifunctional, as regenerating a park may increase tourism and reduce pollution levels (Hilliam 2010, Goode 2006).
In a congested environment, existence of greenery within residential zones will improve air quality. This creates social benefits from direct use such as recreation and health benefits as a higher proportion of green space and less air pollution is associated with better population health (Popham and Mitchel 2007). This results in economic sustainability as healthier communities work longer hours, take less sick days and cost less money in health benefits (Goode 2006). Bird (2004 cited in Tzoulasa et al 2007) found that if people live closer to green space then they are more likely to undertake physical activity, which would save the UK’s National Health Service up to £1.8million a year. Moreover, inactivity in children often results in inactive adults, which costs the economy approximately £8.2billion (Tzoulasa et al 2007). Therefore, protecting and creating green spaces ensures there is economic sustainability through a healthier society (Amati and Taylor 2010).
Urban green spaces can act as catalysts for wider economic benefits, such as increases in property prices, attracting and retaining businesses and attracting tourists to urban areas. This is a key part of the solution for economic growth as urban green spaces makes cities more desirable and this can result in local economic stimulation (Dunnett et al 2002). Green amenities attract the highly skilled, who pursue a higher standard of living and quality of life, Florida (2002) describes how green spaces can attract “creative class” workers and the businesses that hire them. Employers locate in areas where the skilled want to live and this further attracts skilled workers, high-end restaurants and retail stores. Therefore, urban green spaces can raise a city’s economic growth. Cities with more skilled workers experience an increase in population, house price and wages. Additionally, people who are highly educated will also be more likely to support investments for environmental protection and are usually willing to pay higher prices for environmental quality. Furthermore, a greener city will also have an insurance against recessions as the city remains attractive and people still want to live there. This will pull other industries into the area over time. Therefore, it is important to protect existing urban green spaces. London’s Green Belt is an example of an attempt to reduce development in order to improve the environment by restricting housing supply (Kahn 2006). The Mayor of London has also set targets to plant 10,000 more street trees by 2012, and enhance up to 1,000 hectares of green space (Environmental Agency 2010). This will help to build a good reputation of the area, which enables the community to grow economically, without damaging the environment, and simultaneously creating a desirable place to live for present and future generations (Benedict and McMahon 2002).
Additionally, new methods, such as green roofs have been developed to increase green space in urban areas. Green roofs are the roof of a building that is covered by vegetation, the most common being turf roofs. They have several purposes which are similar to urban green space in general such as cooling the heat island effect and absorbing rainwater. They also provide insulation and create habitats for wildlife. The benefits can therefore be divided into private and public benefits. Private economic benefits include saving energy cost and an increase in roof life. Public benefits include storm-water management (Dunnett and Kingsbury 2004). Green roofs are particularly useful in cities that are dense with large populations such as London or Tokyo. London now has a green roof policy and other cities and areas in the UK are developing similar approaches to developing green roofs. However, currently there is only one green roof in Manchester; therefore there is a need to create more green spaces in the form of green roofs (Carter and Fowler 2008).
These trends raise the need for green space protection and allocation, which in turn requires estimation of the value of green spaces (Kong et al 2007). Due to their lack of values expressed in monetary terms, green spaces are often not considered in cost-benefit analyses of urban planning policies. Furthermore, it is the failure of the market system, as discussed above, which creates the need for economic measures to value environmental services and guide policymaking (Freeman 1993). Several methods have been developed to value non-market amenities such as the travel cost method, the contingent valuation method (CVM) and the hedonic pricing models. The hedonic pricing method uses house prices to quantify environmental amenities by how much consumers are willing to pay. The hedonic pricing model is a revealed preference method and is based actual behaviour in the market. Properties have many characteristics which reflect the selling prices such as housing structure, neighbourhood and environmental amenities. The monetary value of each characteristic is calculated by observing the differences in the market price of housing sharing the same attributes. Once all the characteristics are collected the next step is to measure the portion of the property price for each characteristic (Boyle and Kiel 2001). By using the hedonic pricing method the value of green spaces can be estimated from actual behaviour in the market (Kong et al 2007). Hedonic valuation can also be applied to retail situations as “people are willing to pay about ten percent more for products in greener shopping areas” (Miller and Wise 2004:90).
The value of urban green spaces can also be an important factor for affecting property prices. There is evidence which suggests urban green spaces can have a positive impact on house prices. There is usually a shortage of land in urban areas, and therefore proximity to urban green spaces has a positive impact on property values, while proximity to negative impacts such as highways reduces property values, as it is desirable to live close to a park, especially in city centres where demand for land is high (Tajima 2003). The demand for a property increases which raises the price of those properties. Numerous studies have shown that property values are typically 8-20 percent more expensive if they are located near a park (Crompton 2000). Therefore, in dense urban areas the value of nearby parks and green space can be one of the key selling points and a stronger feature than lot itself (Tajima 2003). Furthermore, Morancho (2003) found in Spain that for every 100m further away from a green area there was a drop of approximately â‚¬1800 in the housing price. Therefore, to reduce the impact of urbanisation, and to ensure economic growth, allocation of new and protection of existing urban green spaces is required (Kong et al 2007). However, the value open space is contextual as it rises with increased income. Open space is considered a ‘luxury’ good, as demand for open space increases as income rises. Hence, the willingness to pay for environmental quality is highly elastic with respect to income (Anderson and West 2006).
Urban green spaces in isolation will not increase economic growth
However, not all green spaces are equally beneficial. To ensure that urban green spaces enhance economic growth, they must be well maintained, safe and secure. In recent decades there has been a decline in the quality of urban green spaces in England. This can be linked to the declining budgets for local authorities over the past 20 to 25 years (Dunnett et al 2002). This has a negative economic effect as green spaces that are dangerous or unmanaged are likely to decrease the value of nearby homes, which would lead to economic decline (Crompton 2001). Furthermore, if green spaces are perceived to be overgrown or unmanaged this may have a negative effect on people’s well-being by increasing anxiety caused by fear of crime (Tzoulasa et al 2007). Research shows that open spaces which are most highly valued are those which enhance the qualities of urban life and offer a variety of opportunities (Burgess et al 1988). If there is a lack of facilities or the area is in poor condition then people are less likely to use it. Furthermore, lower-income suburban areas usually have a larger proportion of poor-quality green space. Thus, even if green spaces are in large quantities, but are of poor quality then economic and health benefits are not felt by the population (Popham and Mitchel 2007). Additionally, if green spaces are poorly managed so that they become inaccessible, then less people will use them, especially the elderly or people with disabilities. Therefore, quality as well as quantity of green space is a key factor. Moreover, McConnell and Walls (2005) argue for the importance of distinguishing between different types of open space. The value of green spaces depends on its usage for example, whether it is a well managed park or an open field. Barker (2003) also reported that the value of open space depends strongly on its location and use, for instance, green space in the urban core was valued higher than greenbelt land. Anderson and West (2006:782) show that the value of open space depends on the type of open space, how far away it from the house and the neighbourhood characteristics. They found that “sales price rises with proximity to the nearest golf course and falls the closer a home is to the nearest cemetery”.
Furthermore, the net result of restricting housing supply is that prices are driven up. This results in poverty magnets in areas with low property prices, resulting in a segregation of the poor and urban social problems. For example, Glasgow has lost population over time, and relative poverty has grown. Therefore, London’s pursuit to a greener city could further increase house prices and it could be argued that a city can become ‘too green’ when economic growth is damaged. An upward pressure on house prices could have a negative impact on some residents and first time buyers as it would squeeze out the poorer renters and new immigrants (Kahn 2006). The result of this limited supply would not lead to economic sustainability as it would limit economic growth. Therefore, green spaces will not necessarily lead to a sustained economic growth nationally, but only benefits certain regions (Kahn 2006). It is often the wealthier people who benefit most, as studies have shown that vegetation and tree cover is lower in residential areas with higher levels of socioeconomic deprivation. Therefore only certain areas benefit as less wealthy areas might not be able to afford to maintain new green spaces (Pauleit et al 2005). Additionally, an increased economic wealth will also increase the values of losses; making the cost to restore damages after a disaster much greater (Shaw et al 2007). Furthermore, conserving green spaces may restrict the supply of valued goods, such as housing, shops, offices or private open space, resulting in economic decline. This results in distributional effects as those landowners who can build get an increase in their asset value, whereas those unable to develop will experience a reduction in asset values. Part of the market failure associated with urbanisation is the increase in land prices imposed on existing inhabitants by additional workers. Furthermore, policies of containment, such as greenbelts, may increase energy use as commuters move out beyond the greenbelt which results in longer commuter journeys. Therefore, it could be argued that policy in the UK restricts urban growth which leads to higher costs and welfare losses. Hence land regulation can have adverse economic effects as it diverts resources from other growth activities. Therefore the solution maybe not regulating land markets but regulating or taxing energy markets (Cheshire 2009).
To conclude, this essay has highlighted the environmental problem of urbanisation, explaining how this is a result of market failures. It has also shown how this can lead to economic problems. This essay then goes on to argue that a solution would be preserving, maintaining and developing new green spaces in urban areas. It goes on to explain the environmental, social and economic benefits of urban green spaces. It also highlights the hedonic pricing method, which shows how urban green spaces can be valued. It also argues that green spaces create economic benefits by increasing property values. However, the latter part of the essay challenges this, arguing that not all green spaces is equally beneficial. It also argues that preserving green spaces could also have a negative impact as the cost of land increases further, resulting in large increase in house prices.
Therefore, it is important to maintain urban green spaces for the many environmental, economic and social benefits. However, this cannot be in isolation as for green spaces to be beneficial they must be well maintained and managed. Furthermore if too much green space is protected then this could have negative impacts overall. Therefore, urban land policies need to ensure green space is well managed in order to achieve the maximum benefits. Furthermore, methods other than land protections could also be used, such as taxing energy use.
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