# Fundamentals of Transportation/Planning

Urban, city, and town planning integrates land use planning and transportation planning to improve the built, economic and social environments of communities. Transportation planning evaluates, assesses, designs and sites transportation facilities.

There are two approaches to planning

• Planning determines the rules of the game or constitution. This is planning as regulator or referee
• Planning determines the outcome of the game. This is planning as designer or player.

Both are typically undertaken. In land markets, the first is often the case. In transportation, which is often government provided, the second often holds.

## Rationales for PlanningEdit

### Why plan?Edit

• To prepare for future contingencies, lowering the cost (in money, time, political effort) of dealing with anticipatable future outcomes. If the forecast is for rain, it is prudent to carry an umbrella.
• To establish a vision of the future to guide present action. To graduate with a Bachelor's degree in Civil Engineering, I must take CE3201.

### Why plan transportation?Edit

Transportation is, for better or worse, a public enterprise with long lasting consequences for decisions. There exist economies of coordination which may (but not necessarily) be difficult to achieve in the absence of planning. For instance, we want to ensure that roads from two different counties meet at the county line.

### Why plan land use?Edit

Owners of developed land have a right to service from public and private infrastructure. As infrastructure is costly and the economics of financing it are crude (though they need not be), planning is a substitute for the market.

Plans help order and regulate land use in an efficient and ethical way, thus preventing land-use conflicts. Governments use land-use planning to manage the development of land within their jurisdictions

### Economic rationalesEdit

To invoke microeconomic theory:

In a market, equilibrium ($P_p$, $Q_p$) occurs where marginal private cost equals marginal willingness to pay or demand. However if there are externalities, costs that are not borne by the parties to the transaction (e.g. noise pollution, air pollution, and congestion), there is a marginal social cost that is higher than the marginal private cost, leading to overconsumption. The first best solution is to price goods at their marginal social cost, imposing an additional charge. However, the same effect can be achieved by establishing a restrictive quota on demand ($Q_s$).

There are other approaches to the problem besides directly increasing taxes or restricting demand. The libertarian approach for instance is the use of lawsuits, and fear thereof, to bring about good behavior. If you create a nuisance for your neighbors, they could sue you and the courts could force you to behave better. This shifts the problem from legislators and bureaucrats to judges and juries, which may or may not be an improvement. However, while this is easy to do for some kinds of obvious nuisances, it poses more problems for widely distributed externalities like air pollution.

The favored transportation economist solution to congestion is road pricing, charging a higher toll in the peak to provide the right price signal to commuters about their true costs. More radical solutions include road privatization. The central issue with most externalities is the lack of well defined property rights:

Ronald Coase (1992) argues that the problem is that of actions of economic agents have harmful effects on others. His theorem is restated from George Stigler (1966) as "... under perfect competition, private and social costs will be equal." This analysis extends and controverts the argument of Arthur Pigou (1920), who argued that the creator of the externality should pay a tax or be liable, what is now called The Polluter Pays Principle. Coase (1992) suggests the problem is lack of property rights, and notes that the externality is caused by both parties, the polluter and the receiver of pollution. In this reciprocal relationship, there would be no noise pollution externality if no-one was around to hear. This theory echoes the Zen question ``If a tree falls in the woods and no-one is around to hear, does it make a sound?. Moreover, the allocation of property rights to either the polluter or pollutee results in a socially optimal level of production, because in theory the individuals or firms could merge and the external cost would become internal. However, this analysis assumes zero transaction costs. If the transaction costs exceed the gains from a rearrangement of activities to maximize production value, then the switch in behavior won’t be made.

There are several means for internalizing these external costs. Pigou identifies the imposition of taxes and transfers, Coase (1992) suggests assigning property rights, while government most frequently uses regulation. To some extent all have been tried in various places and times. In dealing with air pollution, transferable pollution rights have been created for some pollutants. Fuel taxes are used in some countries to deter the amount of travel, with an added rationale being compensation for the air pollution created by cars. The US government establishes pollution and noise standards for vehicles, and requires noise walls be installed along highways in some areas.

### Legal rationalesEdit

Bruce Spear has written:

Here are some general comments about requirements for travel modeling at MPOs.
Contrary to popular belief, there are no requirements either in Federal legislation or in the joint FHWA/FTA planning regulations that an MPO must specifically have a travel model for transportation planning. The regulation's only requirement is that forecasts of future travel used in an area's transportation plan be based on an "analytical process." The sophistication of that analytical process is generally left to the discretion of the local planning agency.
MPO's representing urbanized areas of less than 200,000 population may self-certify that they are in compliance with the joint planning requirements. MPO's representing urbanized areas of over 200,000 population are designated as Transportation Management Areas (TMAs). TMAs must undergo a more formal certification review by FHWA and FTA field staff every three years. While it is theoretically possible for even a TMA to satisfy its "analytical process" without a travel model, it is not likely to have an adequate transportation planning process without one.
Beyond the Federal joint planning requirements, an MPO may need a travel model to satisfy two other Federal requirements. First, if a TMA is also an air quality nonattainment area that is serious or above for either ozone or carbon monoxide, EPA's Conformity Rule requires that forecasts of regional vehicle emissions must be based on a estimates of VMT derived from a network-based travel model meeting certain minimal modeling requirements. Second, FTA's new start criteria for major transit investment require forecasts of future transit demand that can only be derived using travel models.
There are numerous technical guidance documents and summaries of current practice that have been developed over the years. Many of these documents are available on-line from DOT's Travel Model Improvement Program (TMIP) website "

## Property rightsEdit

Government in general, and land use planning in particular, concerns itself with restricting individual property rights for the common good. Donald Krueckeberg (1995) [1] cites Christman who defines 9 separable kinds of property rights:

Some quotes about property and government:

• "The Government is Best which Governs least." -- Henry David Thoreau in Civil Disobedience
• "Government is there only to do what people can't do for themselves." - Minnesota's former beloved Governor, Jesse Ventura (paraphrased)
• "Proptery is Liberty" - Pierre-Joseph Proudhoun
• "When a Man assumes a public trust, he should consider himself as public property" - Thomas Jefferson
• "Few rich men own their own property. The property owns them. " R. Ingersoll
• "What is politics after all, but the compulsion to preside over property and make other people's decisions for them." Tom Robbins
• "Property is Theft" - all natural inheritances derive in part or whole from force and fraud. As historical fact this is hard to argue with. This forms part of the anarchist worldview. But so what if property is theft? A stable system of property relations is necessary to have a functioning economy, to encourage long term investments. Belief that your property can easily be taken, or taken without recompense, will discourage long term investment.

## Problems in urban land marketsEdit

Whitehead[2] identifies a number of problems in urban land markets.

• Provision of public goods
• Q: Are transportation services truly public goods?
• Existence of locational externalities
• Q: Why do location externalities exist?
• Imperfect information on which to base individual decisions
• Q: Do planners really know better?
• Unequal division of market power among economic agents
• Q: Is unequal division of market power necessary to achieve economies of scale and scope, efficiencies from doing things big or broadly?
• Differences between how individuals and communities value future and current benefits
• Q: Do communities value anything?

Arrow's Impossibility Theorem An illustration of the problem of aggregation of social welfare functions:

Three individuals each have well-behaved preferences. However, aggregating the three does not produce a well behaved preference function:

• Person A prefers red to blue and blue to green
• Person B prefers green to red and red to blue
• Person C prefers blue to green and green to red.

Aggregating, transitivity is violated.

• Two people prefer red to blue
• Two people prefer blue to green, and
• Two people prefer green to red.

What does society want?

• Differences between individual and community risk perception
• Q: How should the economic discount rate, be computed. This rate may be lower for communities than individuals because communities can borrow more cheaply, they tend to be lower risk for lenders than individuals. But each investment, treated on its own, should have the same discount rate applied to it.
• Interdependence in utility arising from "merit goods," consumption of which by one individual benefits others
• Q: Do merit goods exist? While there may be an external benefit to some things, it is rare that there is not a much larger internal benefit. For instance, education or good housing benefit the recipients much more than society.
• Income redistribution
• Do income redistribution schemes reduce the incentive to work? What are the long term consequences of these schemes. While in the U.S. they have been kept manageable, these schemes have undermined the economy of many countries.

## Thought questionsEdit

Is there a right to be free of pollution, noise, or nuisance of various kinds?

We have seen over the past century a century of planning mistakes. One must ask "Why Plan?"

F. A. Hayek, 1974 winner of the Nobel Prize in Economics, called the belief in Soviet Style socialist planning The Fatal Conceit. Planners, even if smarter than any individual in the market, cannot possibly know more than the market as a whole. Acquiring one bit of additional data is just adding a glass of water to the ocean of information that the market possesses.

However, even Hayek conceded the need for so-called "Piecemeal Planning" to achieve coordination in small areas, see The Constitution of Liberty. A second issue is whether that planning is more appropriately done in the public or private spheres.

Which of the following statements is more accurate:

• Hypothesis: Planning was established by the state to provide long term certainty regarding property relations and the need for takings.
• Hypothesis: Planning was established to reduce transactions and coordination costs.

## Discussion QuestionsEdit

Do community decisions require government decisions? To what extent does planning require government? For instance, Columbia, Maryland was largely private sector (with some public provided goods).

Can private arrangements substitute for government mandates? Privatopias, covenant arrangements, etc.

What would transportation look like without land use planners and their plans?

Using the rationales for planning, justify:

• Historic preservation
• Building height restrictions
• Poletown Case
• Subsidized housing
• Subsidized transit
• Public playgrounds and parks

## How is planning doneEdit

The remainder of this unit in the wikibook Fundamentals of Transportation concerns not whether planning should be undertaken, but how it is done, ideally and in practice. Sections include:

## ReferencesEdit

1. Krueckeberg, D. 1995. "The Difficult Character of Property: To Whom Do Things Belong?" Journal of the American Planning Association 61: 301-9.
2. Whitehead, Christine (1983) “The Rationale for Government Intervention.” In Urban Land Policy: Issues and Opportunities, H. Dunkerly, ed. New York: Oxford University Press.
• Coase, Ronald H. (1992). "The Problem of Social Cost, and Notes on the Problem of Social Cost". The Firm, The Market and the Law. University of Chicago Press: Chicago..
• Krueckeberg, D.A. (1995). "The difficult character of property: to whom do things belong?". Journal of the American Planning Association (Routledge) 61 (3): 301--309.
• Stigler, G. (1966). The Theory of Price. New York: Macmillan.
• Pigou, A.C. (1920). The Economics of Welfare. Transaction Pub 2002 reissue.
• Hayek, F.A. (2001). The Fatal Conceit: The errors of socialism. Columbia Univ Press. pp. 362.
• Hayek, F.A. (1960). The Constitution of Liberty. South Bend: Gateway Editions Ltd.
• Thoreau, H.D.. Civil Disobedience.