Bad Planning Leads to Half the Rivers in China Vanishing

The Austrailian

ABOUT 28,000 rivers have disappeared from China’s state maps, an absence seized upon by environmentalists as evidence of the irreversible natural cost of developmental excesses.

More than half of the rivers previously thought to exist in China appear to be missing, according to the 800,000 surveyors who compiled the first national water census, leaving Beijing fumbling to explain the cause.

Only 22,909 rivers covering an area of 100sq km were located by surveyors, compared with the more than 50,000 in the 1990s, a three-year study by the Ministry of Water Resources and the National Bureau of Statistics found.

Officials blame the apparent loss on climate change, arguing that it has caused waterways to vanish, and on mistakes by earlier cartographers. But environmental experts say the disappearance of the rivers is a real and direct manifestation of headlong, ill-conceived development, where projects are often imposed without public consultation.

The UN considers China one of the 13 countries most affected by water scarcity, as industrial toxins have poisoned historic water sources and were blamed last year for turning the Yangtze an alarming shade of red.

This month, the carcasses of about 16,000 pigs dumped in the river were pulled from its waters, and 1000 dead ducks were found dumped this week in the Nanhe River in Sichuan province.

Ma Jun, a water expert at the Institute of Public and Environmental Affairs, said the missing rivers were a cause for “great attention” and underscored the urgent need for a more sustainable mode of development.

“One of the major reasons is the over-exploitation of the underground water reserves, while environmental destruction is another reason, because desertification of forests has caused a rain shortage in the mountain areas,” Mr Ma said.

Large hydroelectric projects such as the Three Gorges Dam, which diverted trillions of litres of water to drier regions, were likely to have played a role, he said.

The census also charted a decline in water quality. The report came as new Premier Li Keqiang pledged greater transparency on pollution, which Communist Party rulers fear is a potential catalyst for social unrest.

“We must take the steps in advance, rather than hurry to handle these issues when they have caused a disturbance in society,” Mr Li said, according to state media.

The missing rivers provoked wistful recollections among Chinese internet users. “The rivers I used to play around have disappeared; the only ones left are polluted, we can’t eat the fish in them, they are all bitter,” a person using the name Pippi Shuanger wrote on Weibo, the Chinese version of Twitter.

@Noahopinion @Profstevekeen The Problem is ‘Maths Envy’ Not ‘Physics Envy’ in Supplanting DGSE

Noahopinion has an interesting post The swamps of DSGE despair on the research of  Braun, Korber, and Waki, basically if you drop the simplifying assumption of log-linearisation of underlying non-linerar equations in DGSE then multiple equilibria are possible.

Which then leads to a host of unpourings on the weaknesses of DGSE that will be familiar to most post-keynsians.  But in the comments on discussions of alternatives on the stock-flow-consistent paradigm, such as practiced by Steve Keen et. al. which Noah has previously dismissed as never been being peer reviewed in a (DGSE booster editorial board packed) journal, he dismisses this as ‘physics envy’ and not being microfounded.

No one in the stock flow modelling world would dismiss consistent microeconomic assumptions of agents as not being important, indeed one of the greatest criticisms of the neo-classical paradigm is that it does not treat whole sectors of the economy in a microeconomically consistent way, such as treating the banking sector as merely a ‘veil’ of intermediation between savers and borrowers rather than a sector seeking profits and acquiring and disposing of assets to realise those profits.  See for example the work of Hyung Song Shin as discussed recently in freexchange.  But precisely the wrong way to tackle this, and indeed the wrong way to deal with the Lucas Critique is to collapse all economic agents into a ‘representative consumer’ which removes all distinctions between net savers, net borrowers and net investors.

An individual trades with itself. DGSE fools itself that it is stochastic because the flow of income to that one consumer is a lucasian ‘cash in advance constraint’ for the next period.  But what is missing here is what mathematicians would call a modelling of state, that is whether at any point in time some agents have received a positive increase in some stock (money, assets) and some negative, in other words proper modelling of balance sheets.  Without this you cannot model capitalism  all differential in terms of risk taking in taking on credit, to give just one example from Minsky, and so we cannot model a credit cycle at all.

Without a proper modelling of state DGSE is simply mathematically flawed, and to dismiss mathematically correct approaches as ‘physics envy’ displays a basic error of understanding what is necessary to correctly model ANY dynamic system using the fundamental principles of applied mathematics.  Noah needs to get some Maths Envy.

If we correctly model state then we need correct modelling of all factor incomes and investments in future income streams that will yield factor incomes.  Only then will the model be both microeconomically and macroeconomically consistent.  But you have to do both together, at the same time, and only then will you be able to avoid the lucas critique.  The approach that macroeconomics must be microfounded is the wrong way to approach this, it makes the most basic error in all of the social sciences, trying to collapse structure into agency.  See my paper here on this issue.

The National Trust #NPPF report ‘Localism at Risk’

Here commissioned from the LGIU


The government has argued that “seven out of ten local councils have now published Local Plans compared to two out of ten previously, and there is good progress across the remainder”. New research conducted by the LGiU, however, casts doubtnon this analysis. The LGiU estimates that over a quarter (26 per cent) of local authorities will take more than a year to adopt their Local Plan

Respondents to the survey suggested that the Planning Inspectorate, through the examination process, is prioritising development over the views of
local people. The research found that housing land availability was the most common reason for Local Plans being rejected. In contrast, the
research found that communities are most concerned about protection of the natural environment.

Our research has found that the NPPF is, in fact, at risk of undermining localism for two key reasons. First, the challenging schedule set for implementing the NPPF and, second, an apparent centralisation of the planning system. The research also identified two external factors that are making Local Plans challenging to deliver: landbanking and resources in planning departments.

The terminology used in the report is confusing.  All developers need to keep a landbank to ensure flow of sales given the lag from purchase to commencement. The issue is then two fold firstly whether developers are withholding sites from commencement that are viable, to dripfeed the market to keep prices high and secondly to what extent and over what period are sites of marginal viability now considered.  Certainly as we are arguably at the bottom of the market now consideration on strict terms of vaibility now, rather than over say the next 5 years, necessarily pl;aces pressure on green field sites.  These are entirely separate issues and the report somewhat confuses the two.

Further confusion over SHMAs

Supporters of the NPPF have acknowledged that national priorities are taking precedence over the views of local communities. The House Builders Federation, for instance, has criticised some councils for allowing so-called “objective assessments” to be distorted by locally informed “subjective considerations and policy assumptions such as the effect of the recession or environmental and heritage constraints”

Even opponents of the NPPF such as myself acknowledge this is a big big problem, policy based evidence not evidence based policy.  Numbers are distorted everywhere and there is an almost pathological fear of doing SHMAs properly and objectively.  This is an entirely separate issue from once you have established that need what should the targets be and where should it go.  Lets not confuse local views on these policy matters with objectivism on need.




Guardian Picks up on the Duty to Cooperate

Guardian Local government

Planning  rows are often portrayed as pitched battles between councillors and profit-seeking builders, bent on concreting every quarter of countryside. But this year has seen the appearance of another, new and powerful foe: the fast-growing local authority with good reasons to beef about its neighbour’s intentions to curtail development.

In what is being viewed as a precedent, a government-appointed inspector this month declared Coventry’s long-term planning blueprint illegal for a significant reason. It had failed to engage “constructively” with nearby authorities, including Birmingham – Britain’s second largest city – before slashing its house building targets from 30,000 to 11,000.

The Coventry decision is important because it indicates how inspectors will expect councils to construct passable plans and development goals under the coalition government’s new planning regime, the national planning policy framework (pdf). The framework came into effect one year ago with an aim to “secure a swift return to economic growth”.

As previous regional targets disappear, the Coventry case indicates that inspectors are turning to the new “duty to co-operate” rules as an alternative method to force councils to look beyond their own borders when drawing up plans. Colette McCormack, a planning partner at Winckworth Sherwood, a law firm, says she has noticed a definite emphasis on the duty as the coalition’s reforms bedded in.

“It has become more important and definitely came to prominence in the last six months,” she says. “What the inspector is doing is ensuring that there is engagement, and what you can’t do is the old school way. It isn’t about talking to your neighbouring authority and completely ignoring them; it is key to demonstrate it.”

Coventry v Birmingham
Under this duty to co-operate, councils must properly consult with those they share “strategic housing market” areas with. These footprints are determined in part by commuter journeys, often breaching administrative boundaries. In Coventry’s case, they stretch at least 25 miles down the M6 to Birmingham.

As one of the country’s economic powerhouses, Birmingham had warned that Coventry’s low development target was unjustified and would pile unacceptable pressure on its own housing market. The city expects a population explosion of 150,000 over the next 18 years, but has enough space for only 43,000 homes.

Waheed Nazir, Birmingham’s director of planning and regeneration, indicated that Coventry should reinstate a 30,000 target set in the West Midlands spatial strategy, one of the goal-setting plans the government is ripping up. Such “flawed top-down targets” from the Labour years fuelled only resentment and threatened the green belt, communities secretary Eric Pickles thundered this month after revoking two more.

But as regional strategies are incinerated, inspectors will still expect authorities to set targets that reflect market areas rather than their individual wishes. Councils such as Birmingham, with little hope of meeting its own needs, can reasonably expect neighbours in its market area to take the city’s huge population growth into account. Authorities must build their own evidence bases for their plans to be passed as sound by the inspectorate.

Trouble in Salford
Compiling such evidence is no easy task for authorities with dwindling resources, as Salford discovered at considerable cost last year. The city was forced to withdraw its development plan unceremoniously after an unrelenting attack by Peel Holdings, a major landowner and developer which wants to expand its port scheme into a significant stretch of the city’s green belt.

Peel argued successfully that Salford had failed to allocate “sufficient levels of housing and employment development, of the right type and in the right locations”. It claimed also the authority had used an “unreliable” means of predicting growth. The planning inspector agreed with some of Peel’s reasoning, criticising Salford’s plan for failing to provide “an adequate and realistically deliverable supply of housing land”.

In the light of the Salford and Coventry, councils face two tough challenges when attempting to hold back the bulldozer: authorities must keep their neighbours’ demands in mind – a significant ask with a rapidly expanding city like Birmingham on your doorstep – and they must also contend with an aggressive development trade whose growth ambitions are likely to find favour with politicians hungry for economic growth. (TheHome Builders’ Federation pledged this month to take “decisive action” against any authority it considered to be shirking planning responsibilities, as it beefed up its own expert team.)

Councillors have begun to fight back against what they see as centralised planning control returning via the planning inspectorate’s door. Almost 200 have signed an e-petition calling for its powers to be reviewed.

One signatory, Robert Long, a Conservative councillor and former chair of Maldon district council in Essex, is in little doubt about what the outcome of any review should be. “I would suggest that the planning inspectorate is scrapped and a new system organised by local government itself,” he wrote. Given the duty-to-co-operate rules, such an idea may well come back to bite him.


Is coalition Windfarm War over?

Guardian on John Hayes moves from DECC

A new permanent secretary may have realised that the department was becoming dysfunctional, and those in the energy business said it was increasingly difficult to understand the direction of government policy, including on subsidies, prices and targets…

Relations between Davey and Hayes deteriorated so much at one point that Davey disclosed to the Guardian that he asked the prime minister to remove responsibility for green energy from Hayes.

He wrote to Cameron warning him that if Hayes continued in the role they would be open to legal challenge over any decision he made on the subject, since his views were so prejudiced.

Davey sought legal advice from his department, which confirmed that Hayes’s presence increased the danger of the department’s decisions on renewable energy being exposed to judicial review.

The formal warning was sent to the prime minister’s private secretary by Davey’s private secretary. Davey told the Guardian he feared even an unsuccessful legal challenge could be disruptive at a time when the government was trying to create certainty for energy investors. Davey had wanted to remove Hayes from all responsibility for renewables.

The prime minister rejected the warning and refused to remove Hayes from his post.

But of course he has now been moved.

Krugman/Keen Round 2 – IS/LM, Disequilbrium and Non-Performing Loans

A second round has opened up in the Keen/Krugman debate.  Complicated by that this time Krugman is less obviously wrong and Keen made an error in assuming that Krugman had assumed a disequilibrium interpretation of  IS/LM whereas Krugman has now qualified that his interpretation is of an equilibrium interpretation but with less than full employment, and Keen acknowledges this mistake but still argues that a disequilibrium interpretation is necessary.

This is helpful as Krugman despite being the main IS/LM cheerleader together with Brad De Long has never given a clear explanation of its operation and furthermore how the labour market reaches this position.

This represents an open goal for Keen and it is puzzling then he does not pursue this line further.

Of course the weakness of ‘vanilla’ keynsianism is that whilst it gives a good explanation of the state of markets following an economic crash and indeed how to recover from this it gives no real explanation of why the economy got there.  As such this fatal weakness provided the opportunity for the lucasian critique that now dominates economics that markets must be always and forever in equilibrium and economic crises are caused by too many people going on holiday at once.  I only half jest.

Taking up then Keen’s challenge, implicit in Hicks own later self critique – what would a disequilibrium explanation of IS/LM look like?

I turn to a little known paper from Gary Smith in 1977  well ahead of its time as it presents a multisectoral dynamic model, with no assumption of prior equilibrium and a central role for debt.  Pretty similar to Steves models.

As Smith says

In a multiagent environment one has to decide not only whether [any] disequilibrium is absorbed by demanders or suppliers but also which particular demanders and suppliers absorb the disequilibrium.  If for example banks do not meet all loan demands, then each loan may be prorated or the rejections may fall disproportionately on such categories as car loans, education loans, vacation loans, poor families, middle-income families, wealthy families, small businesses, or large corporations.        The importance of this distinction is due to the presence of spillover demands from a disequilibrium market into other markets.  If an agent cannot purchase as much of some commodity as it wishes, then it will have excess funds which must be spent elsewhere or held as cash.   Similarly if an agent cannot sell as much as it wishes then it will have to reduce its spending elsewhere…

One  implication  of  spillover  demands  is  that  in  the analysis  of a  particular  market  one  must  be  alert  for  influences  from disequilibrium markets.     The demand  for housing may be critically dependent  upon rationing  in the mortgage  market.   T’he corporate bond market may be influenced by  disequilibria  in  labor,  commodity,  and  loan markets.

Consider the case the classic Minsky case where property speculation has been driven by Ponzi loans and after the peak of a bubble there is a rash of non-performing loans.

Because of these non-performing loans banks have a reduced budget constraint and so must ration their loans and/or must raise interest rates.

Applying Keen’s own walras/schumpeter law on both sides of the excess supply/demand equation we now have a reduction in the rate increase in credit which must result – a reduction in the actual supply of money to banks from loans must create an excess supply of those goods on which that money would have been bought – such as housing.  If banks then firstly ration loans – then ponzi lenders go bust – or raise interest rates – then some speculative lenders go into the red, loans non-perform and there is a downward spiral – in the manner classically described by Homer Hoyt – of banks now having a further budget constraint and increased housing on the market pushing down prices and reducing profits on speculative loans.

Now the equations for this (bar Keens innovation re credit growth) were set out by Smith over 40 years ago.

Corporations on the other hand are able to realize their effective demand for labor but unable to find buyers for their effective supply of commodities…Now with actual sales…  less than notional sales there will be insufficient revenue to pay notional wages and dividends…[one alternative] is to reduce employment in order to produce only as many commodities as are demanded

Though he admits this only works in micro terms because

wages and prices (often as a simple mark-up over normal costs) are established for extended periods and variations in aggregate demand do cause variations in employment and output rather than wages and prices

In this ‘short side wins’ world there are differential exercises in ‘short side’ power – to use Bowles and Ginti’s phrase between holders of different factors of production, and the losers in a downward economic spiral are workers – whether employees or entrpreprenuers seeking credit.

So Keens own anyalytic system, if applied methodologically to a disequilbrium solution of effective supply/demand after the peak of a boom can fully explain why less than full employment results.

In many ways Keen and Krugman mirror the debates between and Hawtry and Keynes.  Hawtry/Keen stressing how we got into the mess, and Keynes/Krugman explaining how to get out of it.  Keynes/Krugman stressing identities, Hawtry/Keen stressing causalities, and now a Keenesque approach explaining the process of disequilibrium following the popping of an asset price bubble and Krugman stressing the stagnation of markets resulting at the ZLB and with equilibrium at less than full employment.

Is Pickles Serious – #NPPF will avoid ‘Rabbit Hutch’ Homes


Eric Pickles, the Local Government secretary, appealed directly to readers of The Daily Telegraph to back the reforms, insisting that fears they “will lead to a charge of concrete mixers rolling into the English countryside were completely unfounded”.

The news came as government plans to allow home owners to double the size of ground floor extensions without planning permission were rejected by the Lords.

The new national planning policy framework, which came into force on Tuesday night, requires councils to promote “sustainable development” in planning decisions.

The 52-page NPPF – which replaces more than 1,400 pages of existing guidance – was bitterly opposed by rural campaigners and readers of the Telegraph through its “Hands Off Our Land” campaign.

Sir Andrew Motion, a former poet laureate and chairman of the Campaign to Protect Rural England, suggested the change would “wreck the countryside”.

He said the NPPF was “proving to be ground breaking in all the wrong ways”, adding: “Developing greenfield sites unnecessarily and with inadequate local consultation is entirely the wrong way to make sure that we get the new homes the country so badly needs.

“This is a charter for builders and truly irreversible damage is already underway. It is urgent that something is done about it.”

Sir Simon Jenkins, the chairman of the National Trust, said: “The majority of the English countryside which is not designated for protection is now to be released for development to a degree that we have not experienced since the 1940s.

“That is clearly the case and this is very sad. It just means we are moving away from planning of any sort towards a building permit system as in Ireland.”

The National Trust published a report which appears to show the NPPF is forcing planning inspectors to favour developers over the views of local people.

The report by the Local Government Information Unit found that the Planning Inspectorate, which rules on controversial planning schemes, was increasingly over-ruling local people because of the new National Planning Policy Framework.

It said: “The LGiU has found evidence that for ensuring that local plans are consistent with the NPPF, it is prioritising development over the views of local people.

“The LGiU found that the need for more new homes was the most common reason for local plans being found unsound. Supporters of the NPPF have acknowledged that national priorities are taking precedence over the views of local communities.”

But Mr Pickles warned that people will be condemned to “rabbit hutch houses” unless the planning reforms were allowed to work and development allowed.

Mr Pickles pledged that “every inch of brownfield land” would be built on, rather than greenfield areas as campaigners feared.

He said: “We are making the most of every single square inch of brownfield land, every vacant home and every disused building.

“We’re seeing the right decisions made – less appeals, less challenges, and less overturning. Fewer planning appeals means more local decision-making.”

Of course if the NPPF had a single clause in it preventing ‘rabbit houtch homes’ ‘hobbit homes’ whatever you want to call it then he might be taken seriously.  But with him stripping away local standards and not adopting room size standards the NPPF becomes a charter for rabbit hutch builders.

Raynsford Government Tinkering is holding back Housebuilding


Government attempts to force through too many radical planningchanges are jeopardising the number of new homes being built, formerhousing minister Nick Raynsford has warned.

Raynsford, Labour housing and planning minister from 1999-2001 and often labelled a friend of the housing sector, said constant “tinkering” by planning minister Nick Boles was fuelling an uncertainty that prevented new development.

“As housing minster a long time ago now, one of the conclusions I came to was that if you wanted to change the planning system you should do so with care because almost any change is likely to engender a period of uncertainty which would be extremely bad for confidence and probably have an adverse impact on outputs,” he told the Town and Country Planning Association conference this week.

Raynsford added that the government was convinced the old planning system was wrong and was determined to radically change it, despite repeated warnings not to change too much too quickly

“Nick Boles, who I have many discussions with and like on a personal level, is constantly looking for new solutions to problems rather than recognising that government tinkering with the system is one of the main factors in actually inhibiting the outcomes that he says he wants.

“It’s no surprise therefore that the level of residential planning approvals in the last two years has been absolutely at rock bottom,” he added.

But also addressing the conference, Boles defended the government’s planning record and the impact of the new National Planning PolicyFramework, which was introduced one year ago this week.

“The rate of plan-making in the last year or so has been completely remarkable,” Boles said. “When we came to office in May 2010 only 17% of local authorities had an adopted plan and 33% had a draft plan. That suggests plan-making had not been a mainstream activity for local authorities in the years leading up to the election. Now 48% of authorities have an adopted plan and 71% have published a draft plan.

“We have every reason to be confident that over the next year that progress will continue and within a year a vast majority of authorities will have at least a published draft.”

Raynsford’s comments came in the week he announced he would stand down as MP for Greenwich and Woolwich, a constituency he has represented for 21 years, at the next election.

This Graph Says it all Planning Gets the Highest Local Government Cuts



Planning budgets are being hit, with 75% saying there would be cuts in the next 12 months, some by almost 50%. Richard Rogers and other leading architects warn in the Guardian that the cuts will undermine the government’s ambition to give local people more say over planning, instead placing it in the hands of property developers and their lawyers.

Rogers Attacks cuts of up to 58% in Local Authority Planning Budgets


Cuts to town hall planning departments will weaken voters’ influence over the future of their area and place it increasingly in the hands of property developers and their lawyers, leading architects have warned.

Richard Rogers, who advised Tony Blair, Ken Livingstone and Boris Johnson on architecture and planning, said he was “totally bemused” by the extent of cuts to spending on planning and warned that it would undermine Downing Street’s localism policy, which is intended to devolve decision-making powers to community groups.

Councils are slashing as much as 58% from their planning budgets between 2012 and 2014, according to Guardian research, with some of the biggest city councils cutting the most. Manchester is reducing its spending by 54%, Portsmouth by 49% and Liverpool by 35%.

“The success of localism depends on knowing what you are doing, so if they don’t put money into expertise in local areas, who will make the decisions?” said Rogers. “The public can’t be expected to run planning. You need well-informed, well-trained planners taking these decisions.”

The government has ordered councils to produce clear local plans detailing the number of homes they will build over the next five years, a process which absorbs considerable planning resources. If they fail to do so, planning decisions will be made centrally using far broader criteria than employed locally. Some 30% of councils have yet to draw up a plan, according to the government, although planning professionals estimate the number is significantly higher.

“Having fewer staff will impact on local plan-making, which enables local communities to manage growth in the way they want,” said a spokesman for the Royal Town Planning Institute. “Not having a local plan because of a lack of planners means applications will be decided on the basis of broad national planning policies and could leave communities vulnerable to the kind of development they do not want.”

George Ferguson, an architect who was elected mayor of Bristol last year, said the loss was likely to be in the “positive planning area” – in other words, thinking through strategic plans for development in areas of the city rather than simply reacting to incoming applications. He also said town hall design departments and conservation departments, which arguably improve the quality of development, were likely to suffer.

He said some of the cuts could be made through efficiencies but added: “The danger is you let the development industry command the agenda, while a good council should be on top of the agenda in partnership with the developers.”