Tradable planning permits versus auctioned tradable development rights: different trading agents, different policy outcomes
Abstract
The tradable planning permit (TPP) policy seeks to limit the land take by development. It can be used in countries where development rights are vested by land-use planning to certain landowners only.
TPPs are traded among public authorities. We introduce here a new policy, called the auctioned tradable development rights (ATDR) policy, which takes advantage of unvested rights of development and of trading among private actors.
We compare the TPP, the ATDR policy and our baseline land-use planning model using a set of criteria. There are trade-offs within compared models.
Both trading policies extend opportunities for land protection from development in exchange for higher transaction costs (highest in the ATDR policy). Trading policies seek also to recapture a part of development rent, decrease rent-seeking, and locate new development more effectively from the investors' perspective.
However, trading among public authorities in the TPP model may hinder attaining these effects.