Introduction to Economics                                                  Lesson 1/07           13 February 2007



Zoning is the word used to describe the systematic control of land use by government regulation.  The original method of such control generally involved the division of the land within an area into various designated zones, with each such type of zone restricted and controlled in the use or uses for which land within it could be developed.  Typically such zones were designated residential, commercial, industrial, mixed use and so forth and restricted and controlled accordingly.  The word zoning itself is derived from this generally utilised method of control.

In recent years, the focus for such controls has tended to shift from the retention and protection of existing amenities and values to such things as conservation, improved design standards and the provision of public facilities.  This change of focus, and the desire for flexibility, has caused various other methods of control to be implemented.

Modern town planners have devised various new methods of control, designed to achieve various desired ends.  Often they involve menus of distinct features, such as height controls, setbacks from boundaries and so forth, which features can be individually selected and incorporated into a development, with a points scoring system to determine ultimate acceptability.  Such methods can be applied to the point where the concept of zones is dispensed with altogether, in which case the controls are perhaps more accurately described as town or urban planning.  Typically, however, greater flexibility brings with it increased complexity and difficulty of application, so that the earlier method of basic zoning continues to be widely used 

By definition, zoning is a government measure.  The power to make vary and enforce such regulations subsists in or is assumed by local, state and even national governments.



Despite its current widespread application, zoning, at least in the English-speaking world, is a relatively recent phenomenon. It is largely a 20C creation. 

In the USA, the first city to adopt zoning was New York in 1916.  Thereafter the concept spread rapidly.  Today the only major, American city not subject generally to zoning is Houston, the nation’s fourth largest city, which has rejected its introduction on a number of occasions.  As a consequence, Houston is often used as an exemplar for comparative performance between zoned and non-zoned areas.

In the U.K. a Housing & Town Planning Act was passed in 1909.  But it was not until after WW2 that planning controls were fully introduced into that country. 

Australia tended to follow the U.K. lead.  In 1920 South Australia passed the Town Planning Development Act, which first gave government in Australia limited power to control private land sub-divisions. In 1928, Western Australia passed the first Australian Town Planning & Development Act, which gave local government control over private land.  Similar legislation followed slowly in the other states.  Again it was not until after WW2 however that planning controls were fully introduced in Australia.



One alternative to zoning would be unhampered private property ownership operating within a free market.  Ironically perhaps, proponents of such alternative suggest that the effect of competition within a free market by private owners would be to create zones of land use, similar to that envisaged by zoning legislation and controls, but that such market-created zones would be better and more effective and would operate more fairly and efficiently. 

Private owners competing with their own money or driven by the desire to maximise profit tend to locate on land most desirable or best suited for their own purpose.  The attractiveness or suitability of a particular area is likely to be enhanced or complemented by the fact that others of like mind or purpose have already located there.  Competition for ownership then has the effect of driving up the price.  In the case for example of a potential home owner who has paid significantly for a desirable piece of land, it is unlikely that he will thereafter construct a hovel upon it. The nature and value of the development and use tends to be in line with the nature and value of the land.

The effect is similar with respect to other uses; retailers do not tend to locate in quiet backstreets but to cluster together along busy thoroughfares or within purpose-built retail centres.  Petrol stations open alongside heavily travelled roads, whilst manufacturers and industry generally tends to locate on cheap broadacres with access to highways or rail lines.  Tanneries, rendering plants heavy machinery shops and so forth do not operate in residential areas because it is uneconomic for them to pay the price of residential land upon which to locate.

A variation on the free market alternative to zoning is the concept of the restrictive covenant.  If a sub-divider or developer of land considers that it will enhance the value of his product to confine legally the use that can be made of the lots he is selling he can impose upon the title of each such lot a restrictive covenant to such effect.  Thereafter if the owner of such lot attempts or commences to use it in breach of the terms of such restrictive covenant, such as, for example constructing a sub-standard building, opening a bar, a church or a school or operating a home business, any of his neighbours affected by the breach can take legal proceedings to prevent it


 Arguments for Zoning.

·         It provides a safeguard against inappropriate development detrimentally affecting the value use or enjoyment of neighbouring properties.  Zoning provides a guarantee against inappropriate use, that the natural zoning effect of a free market cannot provide.

·         It provides for the creation of a long term environment considered to be most suitable.

·         It enables development standards and requirements to be set at desirably high levels in aspects such as design and construction, population density, provision of amenities, sanitation and public health and welfare.

·         It allows for the achieving of desirable social goals such as the provision of an adequate supply of low cost housing and potential places of employment and the conservation of areas of natural beauty.

·         It precludes the waste of unplanned development     


 Arguments against Zoning

·         Zoning drives up the cost of property, particularly housing, to the detriment of the poor.

·         Zoning is inflexible and tends to preclude adaptation or improvement within an area, without which, in turn, an area declines and dies.

·         Zoning favours the rich and politically powerful, who are more able and likely to obtain ‘non-conforming use’ exceptions, and it encourages corruption.

·         When changes occur in zone rules, as they inevitably must, they create groups of windfall winners and catastrophic losers.

·         Zoning is used as a method of socio-economic segregation and exclusion whereby the existing residences of the poor or otherwise undesirable in a zone are condemned and they are economically precluded from reentry.

·         The premises of zoning are largely wrong and its promises illusionary; it is simply not possible to create broad-scale, overarching development plans 20 or more years into the future or to guarantee that, what some might consider inappropriate development, will not occur in a zoned area.  Rather than preclude waste it creates it by mandated plans gone awry.  Providing for places of employment, for example, or even creating them, does not mean that there will be employment there.   



                                          David Sharp

                                            13 February 2007       






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