1. Land Use 4

2. Types of land use • Commercial • Residential • Public • Waiting

3. Supply of Land in Shot run • Fixed. • Demand determine land price. • Price determine how land is allocated among users

4. Land is an asset • Earns return over many years. • Capitalized or present value of land yeild fixed return. PV= A/I

5. Urban Land Use Models • Concentric zones • Radial – sector • Multiple-nuclei

6. Concentric zones • A city expands from the center in the form of Concentric. • Five successive zones around the CBD. • 1st zone: wholesaling area. • 2nd zone: mixed of slum housing and scattered business. • 3rd zone: low and middle-income residence. • 4th zone: upper-income single family. • 5th zone: high –income suburban commuters.

7. Bid Price Curve and Concentric Zones • As CBD grows outwards there is a pressure on each successive zone to expand. • Thus a successive of land use overtime. • Housing will “filter down” from higher- to lower income families. R1 R2 Rent R3 R4 R5 Distance

8. How can families in Zone 2 outbid high income families? • Speculators hold the land in Zone 2 in its present use waiting for huge capital gain when the land transformed to higher use. • During this waiting period , there is little if any incentive for speculators to keep up the structure on the land ; thus rents or the price paid for land services for a given year will be low enough for low income families. • Higher – income persons have stronger preference for the size of the parcel of land they buy than for distance

9. Redial Sector • Explain residential land-use development. • According to the model a circular city is composed of sectors of similar types of land use radiating from the center. • Four types of land uses around the CBD: • A &B devoted for business and light manufacturing • C&D refer to low-middle and higher income residential area C D A C CBD C B D

10. Determinant of Land use in Redial sector model • Rent bid: • Agglomeration forces will attract firms; thus allowing them to bid higher rent for land in sector A&B. • Similarly, good transportation routs to the city center will attract residence who can offer higher rents, since their commuting cost will decline the closer they locate near the highway. • Topographical condition: • Houses can be built on hillside more easily than shopping centers.

11. Multiple Nuclei • Shortcoming of the previous two models is their assumption of single CBD. • Even cities having single centers have numerous subcenters. • Why subcenters originate Subcenters based on: • Central-place activities (shopping center). • Transport nodes or terminal. • Major agglomerations (sport stadium, or university). • Former small town. • Natural advantage of the site. • Once a given subcenter exist, concentric zone and/or radial sector may emanate from its center in various pattern.

12. The Determinants of Specific Land Use • How a specific parcel of land will be used? • The market is a point of contact between real-estate owner and person who desire to buy, rent, or lease property for their residences or businesses. • If the prospective user is business, its demand price will be determined by: • 1. characteristics of business. • 2. characteristics of site. • 3. The location of the site with respect to competitors, or complementary establishment.

13. The deterarminant demand price for residents • 1. preference. • 2. Income. • 3. The neighborhood characteristics of the perspective site. Rent PL U1 U2 U3 Distance

14. Commercial land Use • Profit – maximizing firm will buy land up to the point where: MR = MC • Marginal revenue Product = MP. P Revenue SL= PL MRPL Unit of Land

15. Rent – bid Curve • Bid curve is steeper when: • Advertisement cost is high. • Greater productivity of land. • Land and non land are poor substitute.

16. Land Use Policy • Efficient allocation of resources is reached when Mr(P) = MC • If P grater than MC society is saying it desire more.

17. Tools of Land Use Policy • Zoning. • Fire and safety ordinance. • Urban Renewal.

18. Zoning • Zoning: certain geographical areas constrained in the type and number of structures that can be placed on the land. • It freezes the use of land in the short term. • There is an economic rational for zoning. • It consider social cost (negative externalities), so MC > P.

19. High Income Low Income Low Income Rent/acre Rent/acre Middle Income Middle Income High Income Distance Distance Rent bid by income Impact of urban renewal on land use Urban Renewal. • To eliminate blight and slums. • This involve changes in land use.