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An Urban Economic Model Of Ilegal Settlements In Flood Prone Areas In Palangkaraya City, Indonesia -A Partial Equilibrium Analysis-


  • Indrawan PERMANA

    () (Graduate School of Environmental and Life Science Engineering Toyohashi University of Technology)

  • Yuzuru MIYATA

    (Graduate School of Architecture and Civil Engineering Toyohashi University of Technology Author-Email:


This paper presents a theoretical study regarding occupations of flood prone areas by illegal settlements in urban area of Palangkaraya city, Central Kalimantan province, Indonesia. Such unusual urban land use pattern has been observed in many urbanized cities particularly in developing countries. However, scientific explanations about the urban phenomena were not formulated yet as well as literatures on that topic are quite rare. We developed a partial equilibrium model employing bid rent approach to analyze such unusual urban land use pattern. The model incorporated flood damage rate corresponding to household`s assets introducing variants of bid rent function and bid max lot size function. Differently from other traditional urban economics models, our model depicts a reverse conclusion of land allocation particularly in flood prone areas. In the flood prone areas, the bid rent of representative low income households gets higher than that by the representative high income households hence as a result the flood prone areas are settled by low income households emerging colonies of illegal settlements within city areas.

Suggested Citation

  • Indrawan PERMANA & Yuzuru MIYATA, 2012. "An Urban Economic Model Of Ilegal Settlements In Flood Prone Areas In Palangkaraya City, Indonesia -A Partial Equilibrium Analysis-," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(1), pages 29-38, June.
  • Handle: RePEc:hrs:journl:v:iv:y:2012:i:1:p:29-38

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    References listed on IDEAS

    1. Gudmundsson, Henrik & Hojer, Mattias, 1996. "Sustainable development principles and their implications for transport," Ecological Economics, Elsevier, vol. 19(3), pages 269-282, December.
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    More about this item


    urban economics; partial equilibrium model; bid rent approach; illegal settlement; flood prone areas; Palangkaraya city; Indonesia;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General


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