Answer to Question #56882 in Microeconomics for Ike

Question #56882
In addition to prohibiting development, reserving land for open space converts a private good (use of the land for commercial development purposes) into a public good (open access to the land for general public enjoyment). One way a society can reserve land for open space for the benefit of all is through zoning – prohibiting development in certain areas. As an alternative, a government may establish a budget category, funded by tax collections, for purchasing lands for public use. Is one approach more likely than the other to lead to a social optimum (i.e., be most consistent with consumer preferences for public and private goods)? What factors or conditions might favor one approach over another?
1
Expert's answer
2016-01-19T08:28:41-0500
One way a society can reserve land for open space for the benefit of all is through zoning is prohibiting development in certain areas.
As an alternative, a government may establish a budget category, funded by tax collections, for purchasing lands for public use.
For my opinion, the second approach is more likely than the other to lead to a social optimum, because it will be consistent with consumer preferences for public and private goods and all this land will be in public or private use. According to the first approach the prohibiting of development will be ineffective, if there will be no demand from public for the use of this reserved land.
But cost factor might favor first approach over the second, because the costs of budgeting such program will be significant and it will be difficult to cover them with taxes.

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