Transcript Rural development as public good

Rural Development, Public
Goods, and the West
David Zilberman
Public Goods (PGs) Economics and
Policy
• Economists view PGs as goods with
– Nonrivalry in consumption
– Nonexcludability
• They are underprovided by markets.
• One role of government is to provide them.
• Within the political context, the notion of PGs is
extended to the share values that should be
pursued by government polices.
This Presentation
• Presents some of these broadly interpreted
public goods in the context of the western
United States.
• Argues that there is much heterogeneity
among states and individuals that choices of
– What should be pursued by the public sector
– To what extent
are crucial to the policy debate.
Heterogeneity of the West
Population density
West: 49.5 inhabitants per square mile
National: 77.98 Texas: 78.0 Washington: 86.0
California: 213.4 Wyoming: 5
Agriculture & minerals are more important in
lower density states
Public Goods of Importance
Everywhere
National security
Knowledge
Education
Reduced poverty
Reduced crime and increase in personal safety
Reduced unemployment
Protection against risks
Reduced congestion
Environmental sustainability
Low tax rates
Public Goods Emphasized in the
West
• Preservation of nature/wilderness
• Support of unique resources
– Bodies of water
– Forests
– Land formation
• Lifestyle features
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Preservation of small towns
Freedom
Outdoor amenities (hunting and fishing)
Farming
Policy Challenge
• How to allocate limited public funds among
public goods.
• What should be pursued by government and
what by other organizations.
Unique Resources in the West
Globally unique western natural wonders:
Crater Lake• Giant Sequoias•
Grand Canyon• Meteor Crater• Monument Valley•
Petrified Forest• Yellowstone
Nationally unique:
• Cascades• Devil's Tower• Great Salt Lake• Saguaro Cactus•
Yosemite
Archeological sites:
Mesa Verde National Park• Dinosaur National Monument
History and Special Conditions that Shape
Values and Public Goods
• Everyone values security, poverty elimination, education,
and knowledge
• The West emphasizes freedom.
– Some will argue that owning concealed weapons provides PG.
– Special “crown jewels” (natural and man made) are public goods
with high existence value
– Environmental amenities (clean water, survival of endangered
species)
– Rural western lifestyle
• Minimum taxes
– Which leads to conflict
Public Goods and Private Benefits
• Some public goods are valued because of the private goods
they provide.
– The survival of a river is valued because of fishing opportunities.
– In these cases the payment for private goods can be an
indicator of value of a public good.
– Public goods can be financed by payments for associated
private goods.
• Other public goods have a strong element of existence
value.
• In these cases the value can be inferred from responses
to surveys, voting, and direct contributions.
Heterogeneity and Public Goods
• Some PGs are valued across the board, others are
valued mostly by subsets of citizens.
• Small minority groups may be willing to pay most
for:
– Agricultural land preservation
– Open space
– Old growth forest
• There is no reason why the taxpayers will provide
public goods valued by subsets of individuals.
Financing of Public Goods Valued by
Subgroups
Clubs and NGOs like the nature conservancy collect
funds and provide public goods provided by
members
– As the case for public matching of private contributions
to support these public goods to address free-rider
problems.
Provision by local agencies.
Local governments should support public goods
valued by their constituents.
Conflicting Values and Public Goods
• Development vs. environmental preservation.
• High taxes and public protection vs. low taxes and
personal responsibility.
• People self select (vote with their feet) and live in
communities of like-minded individuals.
• Differences among values of communities will be
reflected in differences of local public goods
(Tiebout).
American Issues of Public Goods
Provision
• Asymmetry between resources and tasks of federal
and state governments.
– High rate of federal taxes
– Low rates of local taxes (my empirical hypothesis)
• Suggest a role for redistribution of federal money
to pursue public goods at local levels.
• The federal government should provide appropriate
public goods.
• Provide funds to local government to provide other
public goods.
On Demography
• Age differences affect policy priorities.
– Communities with aging population value physical and
economic safety preservation of the old, medical
infrastructure.
– Communities with a young demographic value education,
employment opportunities, and growth.
• Policies determine the fate of communities by
investment in infrastructure
– May lead to a gradual reduction in a number of
communities and establishments of a small number of
growing centers.
And Geography
• Land use and value depend on:
– Location:Distance to a reference point (city or transport center)
– Amenities: Natural and physical capital
• Remote locations with minimal amenities may
need to be deserted.
Amenities
Use
Example
• Location
Close
Good view
High income
Marin
Close
So so
Business
Downtown
Medium
Low
Low income
Solano
Far
Far
Good
Low
Ag/recreation
Range
Napa
American Perspective on the Government
• On the one hand government is perceived to be inefficient
relative to private sector (Post Office vs. Federal Express),
yet
• There is a long tradition of valued government activism
– Highways
– Public research
– Support to farmers
• Public agencies are trusted (relative to Europe)
– USDA and FDA(?)
– Public sector scrutiny of airports was demanded after 9/11
History and Role of the Government
• Land grants financed public goods early in
American history (rail roads, education).
• Led to appreciation of government as supplier of
amenities, but without much taxation.
• Conflict among
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Desire for government activities
Unwillingness to pay
Appreciation of unique capacity of private sector
Fear of monopolies and cartels
• Drove debate on public goods in America.
Policy Entrepreneurship
Public sector affected industrial evolution:
• By reducing red tape and enhancing competition.
• By strategic investments
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In education
Infrastructure (highways, Internet)
Incentives to investors and innovators
Regional promotion.
• Public investments affected direction of regional
development (India’s investment in high-quality technical
universities was key to its IT success).
Rural Development Is Assessed
Constantly
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Rural development in the West has not been very successful.
It is constantly assessed.
There is growing knowledge of constraints.
Not sufficient vision and best management practices.
Not every region can be developed successfully.
Regions with better potential should attract much of the
efforts.
• For some regions, the best strategy is out-migration
(turn off the lights).
California Rural Policy Task Force:
Impediments to Rural Development
• The threat of conversion of agricultural land to urban
purposes.
• Lack of technical assistance to rural communities.
• Need for infrastructure/technical development in rural areas.
• Lack of availability of various telecommunications
technology.
• Impact of the Environmental Protection Act (endangered
species).
• State limitations of timber cutting and management
practices.
• Lack of funding for local tourism efforts.
• Inconsistent state and federal policies and priorities.