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Market-Oriented Land-Use Planning:
A Conceptual Note

by Hans Lind
Associate Professor
Department of Infrastructure
Divison of Building and Real Estate Economics
Royal Institute of Technology, Stockholm


The development in many countries has been described as a movement towards a more market-oriented land-use planning. Here it is argued that "market-oriented planning" covers several distinct types and that these can be analyzed by looking at the role of the local government in three dimensions: formulation of visions of urban development, legal rights to determine land use, and economic resources. Market-oriented planning then means a stronger role for the private/business sector in one or several of these dimensions. Five specific types are identified, related to in which dimensions the private/business sector is dominating.


I want to thank the Swedish Research Council for Environment. Agricultural Science and Spatial Planning for financial support and Professor Thomas Kalbro for many helpful discussions. Constructive comments from two anonymous referees also helped to improve the article.

 Print VersionCONTENTS

  1. Introduction

  2. The Ideal-Type Of Strong Local Government Planning

  3. Market-Oriented Planning Of Type 1 - Planning Based On Compromises With Private Real Estate Investors Made To Attract Private Capital

  4. Market-Oriented Planning Of Type 2 - Developer-Driven Planning With State Support

  5. Market-Oriented Planning Of Type 3 - Planning To Protect The Interests Of The Current Property Owners

  6. Market-Oriented Planning Of Type 4 - Planning To Simulate A Market With No Transaction Costs

  7. Market-Oriented Planning Of Type 5 - Planning In Co-operation To Increase The Competitiveness Of The City

  8. Conclusions



I. Introduction

Land-use planning has changed more or less dramatically in most countries in recent decades. This development is often described in terms of a more market-oriented planning. See, for example, Rodwin and Sanyal (2000) for a description of development in the United States, Allmendinger and Tewdwr-Jones (2000) for England, Mäntysalo (1999) for Finland, and Cars and von Sydow (2001) for Sweden. In many countries there are currently discussions about rising housing costs and problems in the supply of new housing. One theme in this debate is that the planning system still is too bureaucratic, and that a more market-oriented planning system would improve the situation. See, for example, Staley and Scarlett (1998) or Luger and Temkin (2000) concerning the situation in the United States, and Monk and Whitehead (1999) concerning England.

Within this literature there are of course controversies: Is market-oriented planning something good or bad? Is it something that we must accept as inevitable even if it might have negative consequences in certain respects? However, if one looks closer at the debates, it turns out that term market-oriented planning is far from clear. Mäntysalo (1999, p.189) notes that "the picture of market oriented planning styles is becoming more blurred".

The purpose of this note is only to identify a number of different interpretations of the term "market-oriented planning," and to create a framework where these different types can be related to one another. Such a clarification is very important as a basis for constructive debates about the planning system. If one is interested in the effects of a more market-oriented planning on, for example, housing costs or democracy, it is of course very important to give the concept a clear meaning. There is no reason to assume that all variants of market-oriented planning will have the same consequences.

The strategy in this article is to first describe the "anti-thesis" of any kind of market-oriented planning, i.e., land-use planning with a very strong local public sector (section 2). Three central components are identified: The local government formulates the visions, the local government has far-reaching decision-making powers, and the local government has economic resources to implement the plans. In the following sections (sections 3-7) a number of interpretations of market-oriented planning are defined in terms of their characteristics in these three dimensions. The relation between the types will also be discussed in these sections. The final section (section 8) contains an overview of the different types of market-oriented planning, and some comments on the trajectory of land-use planning in some countries. This is a way to indicate the potential usefulness of the distinctions made.

To simplify the discussion, we assume that there are only one or two important levels in the planning system - the local level and the state/national level. The conceptual framework developed here should be useful also for analysis of market-orientation in a multi-level system, but this will not be discussed further here.

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