Rethinking sustainable development: The economic value of green spaces Rethinking sustainable development: The economic value of green spaces ELIZELLE JUANEÉ CILLIERS Student number: 12248029 TRP (SA) M.Art et Scien (Urban Planning) PhD (Urban Planning) Dissertation submitted for the partial fulfilment of the degree Magister Commercii (Economics) North-West University Potchefstroom Campus 2010 Supervisor: Prof. W. F. Krugell Nov 2010 Potchefstroom The economic value of green spaces AAcckknnoowwlleeddggeemmeennttss “If the only prayer you said in your whole life was ‘thank you’, that would suffice...” A sincere thank you to: Prof. Waldo Krugell for his insights and help, and for opening up a new academic world for me Prof. Calie Schoeman for being my mentor and friend Selna Cornelius for inspiration, motivation, and understanding Mom and Dad for being my rock Oca for being patient and allowing me to follow my heart Louise Pekelharing for language editing ERSA and National Treasury for providing funds for studies and workshops Prof. Wim Timmermans for providing international collaboration opportunities Wageningen University in the Netherlands for being my home away from home North West University for providing me with endless opportunities in an academic career God, for letting me be. This document was edited according to the ‘QUOTING SOURCES’ (E.J. van der Walt, 2006), as prescribed and edited by the Information Services of the Ferdinand Postma Library, North West University, Potchefstroom. Abstract Page III The economic value of green spaces AAbbssttrraacctt “Economics is a study of consequences of various ways of allocating scarce resources which have alternative uses. It is not a study of our hopes and values” - Thomas Sowell – Sustainable development is a utopian aspiration for most modern urban areas. Sustainable development, as defined in literature, always includes three dimensions: social aspects, the economy and the environment. Sustainable development is the fine balancing act of these three dimensions. However, ten years since the introduction of the sustainable development concept, it is still not fully realised in practice and implemented in the urban environment, and reasons are being sought to clarify this reality. This study evaluates sustainable development from a spatial planning and economics perspective, arguing that the unequal prioritisation between pro-development approaches and pro-environmental approaches is the greatest reason for unsustainable urban areas. The economy (along with development pressures) and the environment (along with green space protection initiatives) should be planned holistically in order to reach a state of urban sustainability. Reality reveals however, that the environment is often neglected, and sometimes sacrificed to benefit and enhance urban development. This is mainly a result of land-use planning decision-making and the perceptions of local authorities with regard to the function and value of environmental areas (green spaces), in comparison to urban areas. Urban areas are valued higher than green spaces; mainly because urban areas can be measured (valued) in terms of monetary value (property prices or revenue drawn from development) and green spaces mainly have indirect, unmeasurable value (social, environmental). This study aimed to link green spaces and economic benefit in an attempt to quantify the intrinsic value of the green spaces, as a way to enhance green space planning. The increasing rate of worldwide urbanisation is compounding this problem as green spaces are sacrificed for residential and commercial developments. This widespread trend of green space loss is of international concern. From the objectives of urban economics and environmental (green) economics, it is believed that authorities will value green spaces better when a monetary value can be connected to it. The ability to influence land-use decisions is an essential economic development instrument, as land-use is an important factor in urban economic growth and development due to its contribution to desirability and productivity of a city. In this way economic theories and models can significantly enhance and guide future spatial planning decision-making processes. In the attempt to valuate green spaces in South Africa, Potchefstroom where used as a case study, identifying the linkages between local green spaces and residential property prices. Preliminary results were contrary to the general tendency in developed countries that property value increases with proximity to green areas, but it highlighted the city-scale and neighbourhood-scale benefit of green spaces. A tool was proposed for local authorities to evaluate green spaces in order to be able to compare revenue gained from developmental projects versus environmental projects on an equal platform, resulting in a balanced sustainable development vision and guide for future decision-making within the spatial planning process. Abstract Page IV The economic value of green spaces OOppssoommmmiinngg “Ekonomie is nie 'n studie van ons hoop en waardes nie” - Thomas Sowell – Volhoubare ontwikkeling is 'n utopiese strewe vir die meeste moderne stede. Volhoubare ontwikkeling, soos omskryf in die literatuur, sluit altyd drie dimensies in: sosiale aspekte, die ekonomie en die omgewing. Volhoubare ontwikkeling poog om hierdie drie dimensies te balanseer. Tien jaar sedert die bekendstelling van die konsep van volhoubare ontwikkeling, is dit steeds nie ten volle geïmplementeer of gerealiseer in die stedelike omgewing nie Redes word gesoek om hierdie werklikheid te verduidelik. Hierdie studie evalueer die volhoubare-ontwikkeling konsep vanuit 'n ruimtelike beplanning en ekonomiese perspektief, met die argument dat die ongelyke prioritisering tussen pro-ontwikkelingsbenaderings en pro-omgewingsbenaderings, die grootste rede vir onvolhoubaarheid in die stedelike gebiede is. Die ekonomie (en druk vir ontwikkeling) en die omgewing (en groen-ruimte beskermingsinisiatiewe) moet geïntegreerd beplan word ten einde stedelike volhoubaarheid te bereik. Die werklikheid getuig egter daarvan dat stedelike ontwikkeling plaasvind ten koste van die omgewing, dikwels verwaarloos word, en soms opgeoffer word. Dit is hoofsaaklik 'n gevolg van beplanningsbesluite van grondgebruik en die persepsies van die plaaslike owerhede oor die funksie en waarde van die groen ruimtes, in vergelyking met stedelike gebiede. Stedelike gebiede word hoër as groen ruimtes gewaardeer, veral omdat stedelike gebiede gemeet kan word in terme van monetêre waarde (eiendomspryse en inkomste wat uit die ontwikkeling spruit) terwyl groen ruimtes hoofsaak indirekte, onmeetbare waarde inhou (sosiaal, omgewing). Hierdie studie poog om ‘n verband te trek tussen groen ruimtes en ekonomiese voordeel, met die doel om die intrinsieke waarde van die groen ruimtes te kwantifiseer en sodoende groen ruimte beplanning te stimuleer. Die toenemende tempo van wêreldwye verstedeliking vererger hierdie probleem en groen ruimtes word opgeoffer vir residensiële en kommersiële ontwikkelings. Die tendens van groen-ruimte verlies is van internasionale belang. Vanuit die vertrekpunte van stedelike ekonomie en omgewingsekonomie, word daar geglo dat die plaaslike owerhede groen ruimtes beter sal waardeer, indien 'n finansiële waarde daaraan gekoppel kan word. Die vermoë om grondgebruikbesluite te beïnvloed is 'n belangrike ekonomiese ontwikkelingsinstrument, omdat grondgebruik 'n belangrike faktor in stedelike ekonomiese groei en ontwikkeling is, danksy die bydrae tot leefbaarheid en produktiwiteit van 'n stad. Ekonomiese teorieë en modelle kan dus ʼn aansienlike bydrae lewer tot toekomstige ruimtelike beplanning en besluitnemingsprosesse. In die poging om die waarde van groen ruimtes in Suid-Afrika te bepaal, is Potchefstroom as studiegebied gebruik, waar die verband tussen die plaaslike groen ruimtes en woonhuispryse bepaal is. Voorlopige resultate was kontrasterend tot die algemene tendens in ontwikkelde lande waar woonhuispryse verhoog het soos afstand vanaf die groen ruimtes verminder het, maar dit het wel die stad-skaal en woonbuurt-skaal voordeel van groen ruimtes uitgelig. ‘n Instrument om groen ruimtes te evalueer is voorgestel, om sodoende inkomstes van ontwikkelingsprojekte teenoor omgewingsprojekte te kan vergelyk. Dit sal lei tot ʼn gebalanseerde, volhoubare ontwikkelingsvisie vir toekomstige besluitneming binne die ruimtelike beplanningsproses. Abstract Page V The economic value of green spaces TTaabbllee ooff CCoonntteennttss Acknowledgements .................................................................................................................................... III Abstract ...................................................................................................................................................... IV Opsomming ................................................................................................................................................. V Table of Contents ....................................................................................................................................... VI List of Tables ............................................................................................................................................ VIII List of Figures ............................................................................................................................................ IX Table of Acronyms .....................................................................................................................................