As though it were a right

April 7, 2011

I’m in Wales taking the role of an expert on windpower for a consultation by National Grid on grid extensions for new windfarms. You’ll probably be thinking, “Wow, thrilling stuff!”, and you’d be right to think that – especially if you live here.

This development will have a significant impact on the lives of people around it, and no-one is pretending otherwise. The purpose of the consultation is to minimise that impact via the feedback of local people. My role is to put the broader case for the expansion of windpower to give attendees an understanding as to why this work is being carried out.

During the course of this, I’ve noticed something interesting, something I would describe as a potential market failure. The biggest opposition to the proposals comes from a demographic labelled ‘white settlers’ – people who’ve moved out to rural areas, normally from England and normally after retirement.

They’ve bought property out here for various reasons, but the ones I hear cited most often are the quiet and scenery, both of which will be impacted by new pylons and the construction work around them. They say this will affect the price of their property.

The interesting thing – and what I’d describe as a market failure – is that if this does occur it’ll do so without impacting the actual bearer of that value – namely, their house. It will remain the same collection of bricks and mortar as it did when they bought it. The actual property right they bought – the right to their house – has nothing to do with the environment in which it is situated and yet the market behaves as if this is the case.

There are a collection of legal rights associated with living in a particular place, around noise and pollution and so in, but they are attached to persons, not to property, and so have a quite different status. You don’t buy the right to a quiet life by moving out to the country, but the market behaves as if you do.

While some may simply shrug and say ‘Caveat emptor’, that’s not an appropriate response – people feel genuinely betrayed that their purchase hasn’t entitled them to the environment they expected. Is there a possible solution?

I would argue that we need to separate out particular rights relating to amenity explicitly, and confer on them the status of a community right attached to a property. You would not be required to purchase that right if you bought a property, but you would then have no recourse if that right were transgressed by an external party. Developers could then purchase, say, the right to an average level of background noise as a consequence of a particular development, or lease it over a period of construction. This would offset the impact on property values that would otherwise occur, assuming a market rate were paid, and smooth the process of gaining consent for a development.

While it may be objected that such a system would be unbearably complicated, those objecting have clearly never encountered the planning system. We need a mechanism to ensure that the relationship between property rights and nearby development is transparent and equitable, and as a good liberal I’d say expanding the scope of property rights is the way to do it.

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3 Responses to “As though it were a right”

  1. Andrew Brower Latz said

    This is a very interesting idea but I have some questions. If I understand you correctly (not sure I have) you’re suggesting you would buy (into) a community right to, say, low noise pollution. But those with insufficient funds would have fewer rights, which seems unfair. And so long as one person on a street bought the right, everyone else on the street could freeload off them, also unfair. But more fundamentally, is there something wrong with buying rights?
    Also, how would a developer paying money (to whom?) offset value reduction in house prices? At the end of the day, the development will still be there making the same amount of noise.

    • declineofthelogos said

      Hi Andrew,

      You raise some very good points around my half-formed idea. On the subject of the less well-off having fewer rights, this is de facto the case already – cheaper places of residence will be so partly because of environmental factors. For example, the rent on my flat is relatively cheap because it’s next to a main road and is rather noisy. What I’m advocating would merely make that transparent.

      On the freeloading point, it’s a risk you would take on – if there was a future development which resulted in a transgression of that noise limit, you would not be compensated.

      On your final point, the developer would pay money to the holder of the rights – namely, the property owner. If that owner then wished to sell, the difference between the previous market value and the new market value would be offset by this payment. If they did not wish to sell, while still being willing to sell that right, they would have that cash as compensation.

  2. A.H. Gillett said

    Andrew, ‘buying rights’ is hardly a new thing. Think of it like copyright – an external piece of property which is anchored to the individual and gives him the ability to assert or waive ownership of a concept as they wish.

    Obviously copyright has its problems, but it can give a person in a weak position a lot of bargaining strength over those in power, which would be precisely the benefit of an equivalent community right.

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