Cost Benefit Analysis in Town Planning

Prest, A.R. and Turvey, R. , 'Cost Benefit Analysis: A Survey', The Economic Journal , Vol. 75, No. 300 (1965), pp. 683ff.

'Cost Benefit Analysis in Plan Evaluation', The Town Planning Review (1963); 'Planning and the Land Market', Contemporary Problems of Land Ownership, University of Cambridge, Department of Land Economy, 1964 .

Lichfield, Nathaniel , Economics of Planned Development, London: Estates Gazette, 1956, Part IV; 'Value for Money in Town Planning', Journal of the Royal Institution of Chartered Surveyors (1959); ' Cost-Benefit Analysis in City Planning', Journal of the American Institute of Planners (1960).

Cost-Benefit Analysis in Urban Redevelopment, Research Report 20, Real Estate Research Programme, Institute of Business and Economic Research, University of California, Berkeley , U.S.A., 1962; and Crompton, D.H. , 'Cost-Benefit Analysis and Accessibility and Environment', Appendix 2 of Traffic in Towns ; Reports of the Steering Group and Working Group appointed by the Minister of Transport, London: H.M.S.O. 1963; 'Problems of Social Choice', Traffic and Transport, December 1964; 'Spatial Externalities in Urban Public Expenditure: A Case Study', The Public Economy of Urban Communities, Resources for the Future, Inc., Washington D.C., 1965.

Land acquisition costs were based on the compulsory purchase compensation code, which is roughly market value for real estate interests together with compensation for disturbance to trade, etc. Both land and construction costs include an allowance for professional fees and interest on capital during the development period.

The annual cost in the public sector is taken at the annual annuity to repay the loan (interest plus redemption) over 60 years at 6 per cent. The 8½ per cent in the private sector allows a profit and amortisation element over the borrowing rate. Theoretical points arise in the selection of each rate of interest; but these are not discussed here.

As mentioned in 5 above, the compensation paid by the acquiring authority includes an element for disturbance to occupiers. This element is considered in item 4.2.

This assertion will take some swallowing, for each redevelopment project is fought bitterly by very many owners, despite the promise of compensation at market values. But the objections stem from all kinds of reasons-dislike of official action, hope for diversion into other property, difficulty in selling that follows planning proposals, etc. These are certainly costs, but they are assumed here to be compensated for in the acquisition price.

These losses are very significant in practice, for forced relocation is resisted, see Chester Hartman , 'The Housing of Relocated Families'. Journal of American Institute of Planners (1964).

McKean , Effiency in Government through Systems Analysis, op. cit., Chapter 8.

Ministry of Works and Planning , Expert Committee on Compensation and Betterment, Final Report, London: H.M.S.O., 1942, pp. 14-16.

Here is a case where measurement could be made, but it is not necessary to do so to assess the Table A position. This is in contrast to item 3.3 where measurement was difficult but necessary simply in order to classify the Balance Sheet.

Discounting by taking present value at 7½ per cent; costs are assumed to fall at the beginning of each stage and revenues at the end.