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Estimates of Transaction Costs in Transfer of Development Rights Programs

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  • Sina Shahab
  • J. Peter Clinch
  • Eoin O'Neill

Abstract

Problem, research strategy, and findings: Local jurisdictions in 36 states have implemented transfer of development rights (TDR) programs to provide a market-based approach to preserving farmlands and open space while redirecting future development to targeted areas. Participation in TDR programs involves transaction costs over and above paying for TDR credits. Planners know little about the magnitude of transaction costs; who, if anyone, incurs a disproportionate share of these costs; or how transaction costs affect TDR participation. In this study we estimate the magnitude and distribution of transaction costs incurred by participants in 4 countywide TDR programs in Maryland, a TDR pioneer, by interviewing multiple participants in these programs. We fi nd that total transaction costs were high and borne largely by private sector participants, although we exclude the initial public sector costs of establishing the programs. Total transaction costs range from 13% to 21% of total TDR costs per transaction. Our findings are based on data reported by participants and may not be scalable; transaction costs, however, might deter landowners from participating in TDR programs, thus thwarting the land use goals of planners.Takeaway for practice: Planners should work to reduce transaction costs by better constructing TDR programs and providing greater information on TDR sale prices and potential buyers and sellers. Lowering and more fairly distributing transaction costs will make the TDR program a more successful approach to achieving land use goals and addressing the externalities arising from land use markets.

Suggested Citation

  • Sina Shahab & J. Peter Clinch & Eoin O'Neill, 2018. "Estimates of Transaction Costs in Transfer of Development Rights Programs," Journal of the American Planning Association, Taylor & Francis Journals, vol. 84(1), pages 61-75, January.
    • Handle: RePEc:taf:rjpaxx:v:84:y:2018:i:1:p:61-75
    DOI: 10.1080/01944363.2017.1406816
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    Citations

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    Cited by:

    1. Song, Min & Yi, Luping & Hu, Can, 2023. "Building up a compensation-oriented transferable development right mechanism: A theoretical and empirical exploration in Hubei, China," Technological Forecasting and Social Change, Elsevier, vol. 187(C).
    2. Jianglin Lu & Keqiang Wang & Hongmei Liu, 2023. "Land Development Rights, Spatial Injustice, and the Economic Development in Net-Incremental Reduction Regions of Construction Land: Evidence from Shanghai, China," IJERPH, MDPI, vol. 20(3), pages 1-25, January.
    3. Wang, Weifang, 2021. "Nuanced insights into land buyer perceptions of engaging in rural land transactions from a cost perspective: Evidence from China’s emerging rural land market," Land Use Policy, Elsevier, vol. 108(C).
    4. Sina Shahab & Leonhard K. Lades, 2020. "Sludge and Transaction Costs," Working Papers 202007, Geary Institute, University College Dublin.
    5. William Curran-Groome & Hallee Haygood & Miyuki Hino & Todd K. BenDor & David Salvesen, 2021. "Assessing the full costs of floodplain buyouts," Climatic Change, Springer, vol. 168(1), pages 1-23, September.
    6. Zhun Chen & Yuefei Zhuo & Guan Li & Zhongguo Xu, 2021. "What Drives Different Governance Modes and Marketization Performance for Collective Commercial Construction Land in Rural China?," Land, MDPI, vol. 10(3), pages 1-23, March.
    7. Keqiang Wang & Jianglin Lu & Hongmei Liu, 2023. "How Does Spatial Injustice Affect Residents’ Policy Acceptance of the Economic–Social–Ecological Objectives of Construction Land Reduction?," IJERPH, MDPI, vol. 20(4), pages 1-19, February.
    8. Vladimir Stojanovski, 2022. "Policy Processes in the Institutionalisation of Private Forestry in the Republic of North Macedonia," Sustainability, MDPI, vol. 14(7), pages 1-20, March.
    9. Grace Sadler & Sina Shahab, 2021. "Self-Build and Custom Housebuilding Registers in England: A Transaction-Cost and Effectiveness Analysis," Sustainability, MDPI, vol. 13(9), pages 1-15, April.
    10. David Asante Edwin & Evam Kofi Glover & Edinam K. Glover, 2020. "When Tradition Meets Modernity in Land Registration: Evidence from Dagbon, Ghana," Land, MDPI, vol. 9(11), pages 1-28, October.
    11. Li Huang & Shougeng Hu & Shixiang Li & Zhenqi Fu, 2019. "Nonmarketization Bargaining and Actual Compensation Level for Land Requisition: A Qualitative Comparative Analysis of China’s Land Requisition Conflict Events," Sustainability, MDPI, vol. 11(21), pages 1-24, November.
    12. Aleksandar D. Slaev, 2023. "The Transaction Costs of Sustainability: Coase’s Proviso and the Roles of Environmentalists and the Government," Sustainability, MDPI, vol. 15(4), pages 1-18, February.
    13. Bruno, Erica & Falco, Enzo & Shahab, Sina & Geneletti, Davide, 2023. "Integrating ecosystem services in transfer of development rights: a literature review," Land Use Policy, Elsevier, vol. 131(C).
    14. Shahab, Sina & Clinch, J. Peter & O'Neill, Eoin, 2019. "An Analysis of the Factors Influencing Transaction Costs in Transferable Development Rights Programmes," Ecological Economics, Elsevier, vol. 156(C), pages 409-419.
    15. Wang, Han & Lu, Siying & Lu, Bo & Nie, Xin, 2021. "Overt and covert: The relationship between the transfer of land development rights and carbon emissions," Land Use Policy, Elsevier, vol. 108(C).
    16. Salomon Espinosa Diaz & Francesco Riccioli & Francesco Di Iacovo & Roberta Moruzzo, 2023. "Transaction Costs in Agri-Environment-Climate Measures: A Review of the Literature," Sustainability, MDPI, vol. 15(9), pages 1-18, May.

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