New Report: Land in Europe: land use patterns, prices, taxes and the environment

This newly released (11 May 2010) report by the European Environmental Agency states that developments in land‑use patterns across Europe are generating considerable concern, particularly in relation to achievement of environmental goals. Land‑use trends — such as urban sprawl and land abandonment — are jeopardising the future for sustainable land use. Moreover, these trends endanger the achievement of European environmental goals in areas such as biodiversity protection and water management and also hinder the effectiveness of instruments in these areas, including the Natura 2000 network and the Water Framework Directive.

Conventional instruments for land‑use planning are often criticised for their command-and-control approach. Particularly in countries where spatial planning is still a poorly developed instrument, attempts to put in place coordinated land‑use planning fail in the face of economic interests and spontaneous (economic) developments.

While the further development of sound spatial planning instruments in Europe is undoubtedly an urgent requirement, the complexity of land‑use developments and newly arising challenges to the environment such as climate change necessitate the consideration of unconventional policy approaches.

It may be possible to integrate new approaches into a policy mix that can deal more effectively with current and future threats to our natural resources.

The use of economic instruments in a future environmental policy mix could help. Economic processes have a strong self-regulatory power, often revealing at an early stage the outcome of future development tendencies. There is, however, scope for greater efficiency within economic mechanisms to increase the likelihood of achieving specific goals.

Land is far from being a ‘homogenous economic good’: plots of land differ markedly in terms of their geographic, environmental and other characteristics. Therefore, this market is not a classical one from an economic point of view, and a full understanding of its functioning is needed to ensure that any economic instruments put in place are appropriate.

In terms of land use, changes often occur when land property changes hands. The arrival of a new category of customer can change the market by creating demand. Such new types of owner can instigate broad land‑use changes. Because one broad goal of environmental policy is to prevent unsustainable land‑use changes, the land market is a focal point of environmental policy.

The study examines:
• Boundaries of land markets. In order to gain a better understanding of the links between land pricing and the environment, it is important to begin by looking at factors that shape land markets and their boundaries — even though for many of these factors, influencing land markets, land prices and even land use are not their primarily goals.
• Main drivers influencing land prices. By investigating the main drivers of land prices, the study asks whether natural values are reflected in (higher) land prices, whether the environment can be a driver of land prices, whether land prices are in turn a driver for changes in land use and if so, what these changes are.
• Interactions between land prices and land‑use patterns in Europe. The study considers whether land prices could be considered an indicator for land‑use changes and whether high land prices could be a potential obstacle for environmental measures, such as protecting areas with high natural values.
• Land prices and taxes — an instrument of environmental policy? Several approaches and case studies on economic instruments that support environmental policy are presented and discussed, in particular environmentally related taxes, fees and charges; tradable permit systems (‘cap and trade’); environmentally motivated subsidies; payments for ecosystem services (PES); and fiscal instruments, including case studies on taxation in the Netherlands and Germany and a case study on fiscal effect analysis in Germany.
• Land-price information and databases — an overview of existing information and data sources and how these should be further developed. Three countries, Italy, Spain and Luxembourg are presented as examples.
• Conclusions and future research agenda — overall reflections and conclusions, including recommendations for future work.

The full report in PDF here, 64 pages, 3.7 MB.

Citation: EEA Technical report No 4/2010, Land in Europe: prices, taxes and use patterns, Luxembourg: Office for Official Publications of the European Union, 2010 ,ISBN 978-92-9213-094-7, ISSN 1725-2237, DOI 10.2800/40386

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