Explaining non adoption

4.1. Non adoption in Galicia

Rational institutionalism seem not to be the reason why Galician municipalities are reluctant to land-use planning. The current land management is not improving the efficiency of the use of land. On the contrary, the current urban sprawl is causing high costs for the Galician society (Prada Blanco, 2007; 2008).

The historical institutionalism does not seem to be explanatory either. The current land management practices were established a few decades ago and are not the result of institutionally locked-in arrangements. All the contrary, the situation is caused rather by the disappearance of informal institutions that enable land management until the second half of the 20^th century (Tubío-Sánchez et al., 2013).

Sociological institutionalism is not explanatory either, because as it has been pointed above, there is not a well-established practice of land-use planning among Galician municipalities to the extent that it can be considered shared by the main actors^15.

What explains the resistance to adopting land-use plans in compliance with the new act? In the Galician literature, there are a few explanations about the reasons that municipalities have to reject land-use planning. They appear to be about the individual interests of both land-owners and municipalities, in the same line that Jacobs (2011) explained the reluctance to adopt land-use regulations in the USA. In Galicia the idea exists that land-owners will reject land-use planning because restrictions on the development of plots would reduce the value of the property. This argument (the lack of land-use planning) has been used by scholars to explain why in Galicia rural land is so expensive (López Iglesias, 1996).

However, the results of empirical research do not support this hypothesis. A study on the rural land prices transactions during the last three years shows that the prices of rural land are higher in municipalities with a plan adapted to the act than in municipalities without adapted plans or even without any kind of plan (Crecente-Maseda and Tubío-Sánchez, 2012). Land prices can depend on other factors apart from a land-use plan, like for instance on proximity to urban centres.

15 In Galicia there are a few municipalities with a long tradition of land-use planning. However,

In this sense, this argument is not conclusive.

A few scholars also suggest the idea it is not only land-owners who press, more or less directly, upon municipalities to prevent the adoption of plans that take away their development rights. Municipalities, it is pointed out, have several economic reasons to avoid restrictions in land-use planning. One of them is that taxes related to building activity have become their largest income source (Rodríguez González, 2008; Lois-González and Aldrey-Vázquez, 2011).

However, this seems to be somehow contradictory with other findings on the financial behaviour of the municipalities, which suggests that Galician municipalities have very low property taxes compared with other regions of Spain (Álvarez Corbacho, 2008). Empirical data shows that, for the years 2009, the number of building permits in municipalities with an adopted land-use plan is higher than in municipalities without a land-use plan adapted to the new act (Crecente-Maseda and Tubío-Sánchez, 2012). Furthermore, according to data of the Ministry of Public Administration¹⁶, revenues from land development accounted for around 4% of their total income for the period 2005-2012, when the average in Spain is around 11% (Solé-Ollé and Viladecans-Marsal, 2011).

However, it is necessary to be cautious about this conclusion; in the section 4.3 we return to it.

4.2. Non adoption in the Netherlands

Many practices in the Dutch planning activity, like the use of exemptions to the plan, can be considered an informal institution, completely institutionalized and therefore very resistant to changes. However, the practice of making exemption to plan cannot be explained through rational choice institutionalism because it has been shown that other ways of land development could be more efficient, and nevertheless municipalities were reluctant to carry them out (van der Krabben and Needham, 2008; Buitelaar, 2010). Although it could be considered that land management and in particular the use of exemptions was an election made in the past and became locked in, as historical institutionalism would suggest, some authors suggests that this practice works under a logic of appropriateness (Buitelaar, Lagendijk and Jacobs, 2007). In terms of land-use planning, Dutch municipalities do what other actors expect them to do.

Developers are somehow forced to negotiate with municipalities, because, first, when plans are outdated there is no other possibility to initiate new developments, and second, municipalities like negotiations because in this way they can impose several conditions on the development to improve the quality of plans and to fulfil citizens' needs (Buitelaar, Galle and Sorel, 2011; Needham, 2007). In this way the behaviour of municipalities seems to be legitimated insofar it is “encapsulated in a role, an identity, a membership in a political community or group” (March and Olsen, 2009). Municipalities carry out active land policy and citizens and developers are happy with that.

The new act passed in 2008 introduces the possibility of defining specific uses (like housing types) in a plan, making it no longer necessary for municipalities to own land to achieve their goals (van der Krabben and Jacos, 2013). But, after changing the act, why do municipalities did not change their practice as it has been shown in section 2.2.2? As it has been shown above, municipalities were reluctant to change their behaviour. Apart from the traditional quest to control land development, municipalities had also important financial

16 http://serviciosweb.meh.es/apps/EntidadesLocales/BDatosPL.aspx

reasons to avoid changing their practices related to exemptions and keep sticking to the use of exemptions. In a context where plans are outdated and new development initiatives emerge, the privileged position of municipalities in negotiations with developers (since developers do not have other choice than negotiate with the municipalities to initiate developments) allow them to pass the cost of revising the land-use plans to the applicants (through legal fees or by drawing up agreements) (Buitelaar, Galle and Sorel, 2011). This will not longer be possible when in 2013 all municipalities have adopted the act.

The municipalities' quest of control of development process relies on their financial interests. Some authors even argue that one of the informal objectives of this way of managing land is the generation of income stream for local authorities (Overwater, 2011). Between 1999 and 2007, Dutch municipalities made profits from land development of around of 1848 million Euros (Korthals Altes, 2010).

These earnings are comparable to all local government earnings from taxes and charges in the same yeas. For instance, in 2005, almost at the peak of the housing market, around 12% of the total income of municipalities was from land development; that is three times higher than the revenues obtained from property taxes (Korthals Altes, 2008).

Despite of (or maybe due to) the principle of prudence in the accounting of land-developmentprojects of Dutch land-development agencies, these profits made out of land development formed the main source for the financial flexibility of the municipalities. Although strong evidence is lacking, as van der Krabben and van Dinteren (2010) point out, it is notunthinkable that financial driving forces play a role in municipalities’ development decisions. Therefore, it is not (or not only) the ”logic of appropriateness” in the decision-making that justifies the existence of these planning practices, but also to serve the economic interests of the municipalities.

Today, the change of the municipal behaviour with regard to land management may be due more to the economic crisis than to the willingness to be in compliance with the act, for municipalities are now very reluctant to buy land, what markedly reduces their bargaining capacity. Nowadays many municipalities will not be able to earn back the investments made in the past (Deloitte Real Estate Advisory, 2011). In this new context the new act contains more options for public cost recovery and for provision of public goods when municipalities do not own the land (Buitelaar, 2010; van der Krabben and Jacobs, 2013). This will significantly induce municipalities to adapt the new act and change their land management practices.

4.3. Comparing not-adoption adoption sources

The sources that the three institutionalism envisage as sources of continuity are not completely explanatory for continuity, if we do not include terms like economic interests. As Hall and Thelen (2009) point out, “the durability of an institution can rest substantially on how well it serves the interests of the relevant actors” (Hall and Thelen, 2009; pp. 11). Economic interests play a key role. Even when more efficient alternatives are available, the sources of continuity depend more on the uncertainty regarding the distribution of gain and losses that a new policy reform brings (Fernandez and Rodrik, 1991; Hall and Thelen, 2009). Under a change (which on the ground is a risky environment), like for instance the adoption of a land-use plan, actors are much more averse to losses of some magnitude than they are to gains of the same magnitude (Kahneman and Tversky,

1979). In the Netherlands, municipalities always wanted to control development and tried to achieve societal goals, like promoting affordable housing. But the municipalities had also economic interests in doing so. Again, institutions can survive over time if they serve the interests of relevant actors. In this case, institutions are not at odds with self-interests positions, they are, rather, aligned with them.

In Galicia, neither the institutional sources of resistance nor the self-interests of land-owners seem to be completely explanatory of the low degree of adoption of the act. However, the fact that the consequences of that self-interest and rent seeking in agricultural land-prices are not demonstrable, it does not imply that they do not exist. Like in the Dutch case, it is difficult in Galicia to separate between what is economic and self-insterest and what is no interest in planning.

As it has been said in the section 4.1, Galician municipalities are not very interested in recouping the developments costs. More than the half of them do not see any benefit from adapting the plans to the new act. In a context where the regional government does not have enough legitimacy to enforce the act, and where the municipalities do not consider it useful, it is difficult to say if self-interest is the main element of resistance, or if self-self-interest is what arises when there is not a strong government at work.