Economic Costs

Chief amongst the fundamental requirements of proper planning and sustainable development is the measurement of the cost and the benefits to society of land use policy. Since no benefit, private or commercial, in society can be derived from any private or public property without recourse to the use of public infrastructure and services, the obligatory objective must always be to seek to optimise public investment in infrastructure and services through applying locational control criteria to new development. This is the Raison D’être for the planning system – for the common good. Land uses which increase costs to society faster than increasing benefits, result in unmeasured or hidden user costs to the public or undermine national competivness should therefore be discouraged

 

Despite the historical and politically ‘correct’ connotations for the persistent mandating a policy of random one off housing, like all dispersed settlement patterns, this policy quickly looses its rationale once an even elementary economic analysis is applied.

 

  1. Unsurprisingly the cost of providing all public and private services together with providing and maintaining infrastructure to dispersed one-off rural housing is significantly more expensive and inefficient. Dispersed one-off rural housing is therefore economically profligate. To argue against is to argue against logic and human society’s historical trend towards agglomeration in seeking efficiency.
  2.   Each one-off dwelling unit constructed demands more resources than are received in taxes, and the burden of those costs are passed on to other tax payers.
  3.  Most of the significant hidden costs which arise as a result of the existence of each one-off house are externalised with the additional expense borne by the national Exchequer to the detriment of other necessary services. For example, postal services to one-off rural households are four times more than an urban house. Since there is no connection charge for postal services and all householders pay the same, the Government (tax payer) is therefore providing a de facto financial subsidy to all one-off households. On the other hand, an electricity connection to a rural house is 122% higher than for an urban one. A price differential is maintained after that because the annual standing charge for rural areas is 61% higher. The higher rural standing charge for electricity reflects extra costs e.g. those caused by storm damage to overhead wires, is confirmation of the extra costs associated with dispersed rural settlement. However, no other publicly provided service or infrastructure maintains this differential.
  4.  Providing access to rural house plots places a heavy burden on country roads. Local authorities are responsible for maintaining 92,000km of the national road network in Ireland. Since 2000, over €3 billion (c. €500 million per annum) has been allocated to non-national roads. If we allow just half of the total rural allocation to one-off rural houses, the cost is about €7,500 per dwelling during this period. Many of these minor roads are laneways that evolved with farming practice. They were not designed for construction machinery or regular increased vehicular movements, including service vehicles. Maintaining the status quo policy with respect to rural housing would bring heavily loaded trucks and increased traffic volumes onto minor roads. The failure rate of rural roads could rise sharply resulting in an increased requirement for maintenance and additional vehicle collisions. That could add over €10,000 to the development cost of each rural house plot. That expense is currently borne by the central Exchequer.
  5.  Section 48 of the Planning & Development Act 2000 is intended to provide a mechanism whereby the costs associated with the public provision of infrastructure and services can be internalised by the developer and ultimately by the homeowner. However, in most instances throughout rural Ireland the Section 48 development contribution levies applied to one-off rural dwellings on unzoned and unserviced sites are subject to a significantly lower S.48 levy. Financial contributions with respect to wastewater and water supply infrastructure are frequently not applied. In addition, Part V: Social & Affordable Housing does not apply. In the meantime, urban dwellers pay the full range of development contribution levies. This is an entirely inequitable situation whereby the form of development which places the most cost on public services and infrastructure is subject to the lowest levy. If all of the costs of constructing a one-off rural dwelling were in the internalised by the rural house dweller the costs would be generally prohibitive.
  6.  The lack of adequate high speed broadband provision in Ireland is a persistent topic of conversation in recent years undermining Ireland’s objective to become a ‘Smart’ economy. Census 2006 illustrated that just 45,000 households in aggregate rural areas of Ireland had a broadband connection as compared to 250,000 in aggregate town areas. This is because the provision of broadband in rural areas is unsurprisingly much more expensive to private companies. The Government is now rolling out the Rural Broadband Scheme at a cost to the state of €235 million.
  7. The provision of public transport services in rural areas is evidently much more expensive and inefficient often running at a net loss and requiring significant or complete subsidisation by the State. Some expensive services are essentially rural. They include the school transport scheme that costs over c. €100 million each year. 96% of the pupils carried are outside the Dublin area (4 P.A.s). A rural family with 3 children can gain an annual subsidy of over €2,000 from the State. An increase in remote rural housing would add substantially to the cost of this service.
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