Wal-Mart

Here's an interesting item:

"The Hercules City Council is scheduled to vote tomorrow on whether to begin eminent domain proceedings to try to forcibly take 17 acres owned by Wal-Mart.

The retailer wants to put a big-box store on the site.

But city officials have different plans for the property. They say construction of a giant Wal-Mart store near the bay does not fit with development plans for the community of 24-thousand people."

A city government thinks it's role is to take 17 acres from Wal-Mart because it thinks people in the community, people who do not own the property, should be able to have different plans for the development of Wal-Mart's property.

UPDATE 9-14-06: I noticed something written by Warren Meyer at Coyote Blog that suggests Wal-Mart is often on the other side of the use of eminent domain.

Sometimes I Have To Wonder

I just looked at: Timothy Riddiough, "The Economic Consequences of Regulatory Taking Risk on Land Value and Development Activity," J. Urban Econ 41, 56-77 (1997). The author develops a mathematical model of a "real options approach" to land valuation and land development decisions in order to consider the economic impact of regulatory takings with less than full compensation. Here is the author's finale:

". . . Our basic finding is that, as a result of takings threats by regulators, land value can decline significantly because development flexibility has been restricted. . ."

Sometimes I just have to wonder what we economists are up to with our time. The model developed in this paper seems just a fine model, but it seems to me this "basic finding" is pretty evident. I know, there surely is much complexity in land valuation to consider, but at the same time, isn't it pretty clear that the threat of government force directed at land use decisions on my parcel will diminish the value of that land to me and to others?