Measuring Externalities Of Rural-Urban Land Conversion And Policies Of Internalizing Externalities

China is in the process of rapid industrialization and urbanization, meanwhile, large amount of agricultural lands have been converted to urban lands, then inefficiency or illegal conversion leaded by local government becomes serious problem. To analyze the issue theoretically and achieve optimal rural-urban land allocation, externality of rural-urban land conversion is an essential topic to focus on, since externality is important reason for inefficiency of market mechanism and could cause problems such as food security, ecological security, environmental pollution and urban sprawl. However, these were neglected in land conversion decision-making. Nowadays, it is realized that the pattern of economic development must change to consider resource conservation and environment protection. Therefore study on rural-urban land conversion from the perspective of externality could consider social and ecological benefit of agricultural land and environmental damage, and provide effective and sustainable policies of agricultural land preservation. To achieve the objective, the dissertation regards land conversion eliminating positive externality (external benefit) of agricultural land and bringing extra negative externality (external cost), and considers externality of rural-urban land conversion into benefit-cost analysis to avoid excessive land conversion.In the dissertation, externality measurement of rural-urban land conversion and externality internalization are main foci. The research contents include connotation of externality, method of externality measurement and policies of externality internalization. Specifically, measurement of externality, difference in externality between areas, optimal timing and magnitude of land conversion are analyzed. Meanwhile, the research considers Chinese context into theoretical framework and compare actual state with ideal state for operational suggestions. The Study is as the following.At first, the dissertation tries to measure external benefits of agricultural land preservation. In this section, external benefits of agricultural land preservation are defined theoretically as not being rural collective and farmers, but individual utilities from agricultural land preservation. Following this definition, theoretical analysis found that internal part and external part should be divided and the extent of external part need be specified in the measurement process. In the empirical process, choice experiment (CE) model was used to calculate WTP(willingness to pay) of citizens. As a result, that external benefit of farmland, garden land, forest and pond in Wuhan is30773.2yuan/hm2,653860.0yuan/hm2,119267.Oyuan/hm2and82472.7yuan/hm2respectively. The result has significant difference with methods which ignore division of externalities extent. Secondly, external costs of rural-urban land conversion are estimated in Wuhan metropolitan areas, the research reviews literatures on external costs of rural-urban land conversion and defines external costs in the process of rural-urban land conversion. Basing on the definition, the concept of external cost should be distinguished from non-market value. After that, the study divides external parts and internal parts by homogeneity areas, and separates affected areas and unaffected areas by Loomis'equation which was used in range estimating of public goods. The effects of external cost were generalized from land use types. In empirical study, the model is estimated using survey questionnaire data from urban fringe of Wuhan city and Xiantao city. In farmland and fishery, external costs are guaged by change in productivity method; in rural settlement, willingness to pay for avoiding external costs was estimated with contingent value method and the total value was decomposed by analytic hierarchy process method. The result of Wuhan city suggests that external costs of rural-urban land conversion in Yangdian, Zonghuang, Jinghu, Jinghe, Tianyuan, Sandian, Shekou, Tushan and Liujiazui are4.6×104yuan/hm2/a,7.2×104yuan/hm2/a,32.6×104yuan/hm2/a,1.2×104yuan/hm2/a,5.2×104yuan/hm2/a,1.5×104yuan/hm2/a,4.8×104yuan/hm2/a,4.1×104yuan/hm2/a and3.2x104yuan/hm2/a respectively; In Xiantao city, results are respectively0.6×104yuan/hm2/year,1.45×104yuan/hm2/year,1.17×104yuan/hm2/year,1.16×104yuan/hm2/year in4areas. Theory and methodology about measurement of externalities are discussed then.Thirdly, the author analyzes solutions to externality internalization of rural-urban land conversion and introduces basic models of land conversion decision making. Pigovian solution, Coasian solution and policies of government to internalize externality are generalized. On the basis of the above solution analysis, decision-making principles of rural-urban land conversion are discussed and the dynamic optimization model relating land conversion is constructed. The result shows that policies of taxation or fee have justification and efficient, besides it could generate fiscal revenue instead of regulation or compensation. However, because of some flaws, combination of taxation/fee and regulation would be more effective. As to land allocation between rural and urban land, benefit-cost decision-making models have been suggested by scholars. Supported by dynamic optimization method, the temporal and magnitude of land conversion condition to achieve optimal target could be found.At last, externalities of rural-urban land conversion are stdudied theoretically and empirically basing on model of local governments as decision-makers. Theoretical results presented that policy of land planning control and policy of taxation or fee about rural-urban land conversion could have different effects on decision-making of local government, therefore, combination of two kinds of policies should be used and the quantity standards of policies need to be determined by consistant objective. Empirical results presented that the magnitude of rural-urban land conversion surpass optimal amount from2003-2008in Wuhan metropolitan areas. Policies of land planning control reduced amount of rural-urban land conversion by691.88hm2; taxation and fee policies decreased amount by2203.37hm2. According to the analysis, although the decision-makers of rural-urban land conversion in China are local governments instead of individuals, policies of agricultural land preservation are still used for externalities internalization and optimization of land conversion anounts. To improve welfare relating rural-urban land conversion, policies-makers could adjust quantity standards of policies of agricultural land preservation.