Dr. Katrin Ostertag, Fraunhofer Institut System- und Innovationsforschung
Actual land usage for new residential and commercial developments or for transport infrastructure is much higher than the targets set in the German national strategy for a sustainable development. Therefore, current scientific and political discussions center on economic policy instruments, which may limit additional land use at lowest possible costs. Besides a tax on new land use these economic instruments also include a trading system for land use certificates. In contrast to command-and-control type regulation such a trading system would allow municipalities—and possibly other administrative agencies carrying out development projects at supra-municipal levels as well—high flexibility when deciding on new land usage. Ideally, new land will be used where it is best (most cost-effective) to do so, given environmental and planning objectives of the decision makers. In contrast to a land tax, the total cap on new land usage set under a trading systems will ensure that the overall target for land use will be met. This property is crucial, since land may generally not be substituted for, nor augmented, and it is immobile.
Previous studies focused on crucial design parameters for a system of tradable land use certificates. Since these were primarily theoretical analyses, they could not determine which incentives such systems would actually generate in practice. In particular, it remains unclear to which extent such systems would help achieve the expected efficiency gains. To address these questions, in this project the trading of land use certificates between municipalities will be simulated for various designs. In particular, strategies chosen by participating municipalities will be analysed. First, a simulation game will be carried out with participants from several municipalities. Thus selected participants will be able to make first-hand quasi-realistic experience with such a trading system. Second, controlled laboratory experiments will be conducted with students to analyse the impact of crucial design elements on the outcome and to further identify and explore possible differences between land use certificate trading and other trading systems (e.g. EU Emission Trading Scheme for CO2). Results of these experiments are expected to provide guidance on the design of a trading system for land use. Thus, this research project provides further insights into the actual design of trading systems for land use certificates, and on how long-term targets for a sustainable use of land may be reached.
This two-year project started on 1 February 2007 and is scheduled to be finished by 31 January 2009.
Please contact Dr. Katrin Ostertag (see above) for further details.
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