Fundamentals of Environmental Economics

A PARTNERSHIP PROGRAM OFFERED BY

THE FOUNDATION FOR TEACHING ECONOMICS

IN PARTNERSHIP WITH THE FRASER INSTITUTE

Fundamentals of Environmental Economics A Collaboration of The Foundation for Teaching Economics & The Fraser Institute

1

02/25/23

Lesson 5

THE ECONOMICS OF LAND USE

Fundamentals of Environmental Economics A Collaboration of The Foundation for Teaching Economics & The Fraser Institute

2

02/25/23

Land Use Site Selection Simulation Introduction

Living with relative scarcity is difficult. Decisions must be made that carry both relative costs and benefits. Locating a new school within a community is a major decision. People given the responsibility of locating a school must determine the following:

1. what is important,
2. what they value, and
3. what are the expected costs and expected benefits in choosing an appropriate site.

Fundamentals of Environmental Economics A Collaboration of The Foundation for Teaching Economics & The Fraser Institute

3

02/25/23

Simulation Procedure

• Two rounds will be conducted in this simulation.  
• Round one will have your group locate the school on the land map provided. Once you have determined the exact location of the school, be prepared to explain the reason that exact location was selected. Note in your explanation your values as well as the relative costs and benefits you considered in making your location choice. 
• Round two will have your group locate the school on the land map provided, given the list of constraints. Once you have determined the exact location of the school, be prepared to explain: 1) the reason that exact location was selected, and 2) your most difficult trade off. Note in your explanation your values as well as the relative costs and benefits you considered in making your location choice. In addition, discuss the differences in process and final result between rounds one and two.

Fundamentals of Environmental Economics A Collaboration of The Foundation for Teaching Economics & The Fraser Institute

4

02/25/23

Objectives

• Describe how scarcity forces choices, and every choice results in costs and benefits
• Explain that resource management decisions are made by people acting alone or in groups
• Describe the impact that changes in rules and laws have in altering incentives and decisions
• Compare decisions made with varying incentives
• Identify the relative costs and benefits of various rules and laws

Fundamentals of Environmental Economics

A Collaboration of The Foundation for Teaching Economics & The Fraser Institute

5

02/25/23

Instructions for the School Siting Committee

• You are to decide on an appropriate site for a new elementary school to be built in our town.
• Our town of Grayson currently has a very small revenue base, and new industry is encouraged.
• Mr. Gotrocks owns Alexandra Industries, a 400-employee manufacturer of Alexandra label clothes. Alexandra Industries is currently located in Vancouver, but Mr. Gotrocks hates the congestion, as do many of his employees. Mr. Gotrocks’ parents also live in Grayson.
• Last year, Mr. Gotrocks decided to move Alexandra Industries to our town. Three hundred of his loyal employees and their families have chosen to move with the company. This will create 100 new jobs in Grayson.  
• Most of the employees are paid lower/average wages, and many have young children.

Fundamentals of Environmental Economics

A Collaboration of The Foundation for Teaching Economics & The Fraser Institute

6

02/25/23

Instructions for the School Siting Committee (continued)

• The nearest elementary school is 45 miles away, and it is close to capacity. Local parents have been complaining about the long bus trip and its effect, especially on the younger children.
• When Addison Builder heard about Alexandra Industries move, she purchased a large tract of land on which to build a new subdivision. In lieu of paying the impact fee for the school, the School Board agreed to accept Ms. Builder’s donation of a tract of land. (See attached map.)
• Alexandra Industries will complete construction of their new facility in 18 months and will move in immediately after construction. Addison Builder will have her subdivision complete by that time. She has already put in the infrastructure and has begun construction of the homes closest to the school site.
• The average time for construction of the new school is 14 months. Your school district has only $15M to build the school, which is a copy of a prototype school. The prototype school cost $15M to build, too; therefore, there is no money in the budget for unexpected contingencies. Your district combines capital and operational funds.

Fundamentals of Environmental Economics

A Collaboration of The Foundation for Teaching Economics & The Fraser Institute

7

02/25/23

Instructions for the School Siting Committee (continued)

• The teachers in the district, who are already underpaid, are only budgeted for a 3% raise district wide this year, which is approximately $500,000.
• The new school will have a population that includes 15% First Nations People. 
• The Town Council promised Mr. Gotrocks that if he moved to Grayson, the town would ensure that there would be adequate housing and that his employees’ children would go to schools in our town. Mr. Gotrocks is threatening to move his company to another town if the school is not ready when his employees arrive.  
• You have been given a footprint of the prototype school. You are to place it on the donated site in the most appropriate place. The entire circle must fit on the site, not just the square and small circles. For example, if any part of the large circle touches the trees, those trees must be removed.
• Within your committee, you are then to choose a person to present to the entire group your preferred site location and the reasoning behind its exact location.

Fundamentals of Environmental Economics

A Collaboration of The Foundation for Teaching Economics & The Fraser Institute

8

02/25/23

The Map

1. Wetlands
2. Eagles Nest
3. Hazardous Waste Disposal Site
4. First Nations Burial Ground
5. Burrowing Owl Habitat
6. 200-Year-Old Hammock
7. Scrub Habitat for Endangered Species
8. Potential Access Over Highways
9. Adult Nightclub

Fundamentals of Environmental Economics

A Collaboration of The Foundation for Teaching Economics & The Fraser Institute

9

02/25/23

School Footprint

Fundamentals of Environmental Economics

A Collaboration of The Foundation for Teaching Economics & The Fraser Institute

10

02/25/23

Town Meeting

See Link in Notes for Volunteer Role Cards

​

SPEAKERS

1. Mayor’s Aide
2. Young Mother with 3 Small Children
3. 70-Year-Old Woman
4. Teacher
5. First Nations Representative
6. Environmentalist

​

Fundamentals of Environmental Economics

A Collaboration of The Foundation for Teaching Economics & The Fraser Institute

11

02/25/23

Round 1:

Small Groups

10 Minutes

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02/25/23

Round 2:

Small Groups

Handouts 6 & 7: https://docs.google.com/document/d/1GJjSMJS8PXzrG6cvo0zBqm_pEEacpaWyz5k9Hn5FvdQ/edit?usp=sharing

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02/25/23

Simulation Debrief

• After Round 1:
• Where was the school located?
• What was the major reason it was located there?
• What was the alternative site considered?
• What was the major trade off made when locating the school?
• After Round 2
• Where was the school located?
• What was the major reason it was located there?
• What alternative site was considered?
• What was the major trade off made when locating the school?
• What did the simulation prevent regarding school location?
• Were there other ‘innovative’ solutions available, but not allowed for consideration under the simulation rules?

Fundamentals of Environmental Economics

A Collaboration of The Foundation for Teaching Economics & The Fraser Institute

14

02/25/23