Public Goods and Urban Green Spaces: Economic Implications of Parks in Developing Cities

Some people may view parks as wasteful government spending and question their value.  After all, parks and protected nature areas within cities do not directly facilitate the transportation or powering of workers and commerce.  Other infrastructure, such as roads, utility lines and pipes, schools, and hospitals, are seen as directly contributing to productivity.  Policymakers have to advocate more passionately and skillfully to convince taxpayers to accept the need to fund and maintain new parks.

Public Goods

Parks are one of many public goods that are provided by local, state, and national governments.  Public goods are goods and services that are nonrivalrous and nonexcludable in consumption, meaning many people can use them at once (nonrivalrous) and it is infeasible to keep out (exclude) those who do not pay for use.  Basically, it is easy for the mass public to use the good or service and too costly to try to make each individual user pay.  As a result, most societies have decided to provide these important goods and services (usually services) through taxation, allowing them to be free at the point of service.

History of Public Goods

National defense is one of the earliest public goods, going back to antiquity.  All persons within a nation were protected by the “defensive shell” of a nation’s military forces.  The birth of a new infant did not realistically reduce the amount of protection available to everyone else (nonrivalrous), and it was not feasible to exclude the protection of non-payers during times of emergency (nonexcludable).  In the early 1800s, modern police departments began to emerge in large cities, protecting all citizens from crime.  Modern fire departments emerged not long afterward, with local governments taking this role from profit-seeking insurance companies.

About the same time as the emergence of modern police departments in the West came about the movement for free public schools.  For the first century or so of these public services, there was significant discrimination and exclusion of certain citizens, including taxpayers, from fair use or receipt of these services.  In the 1950s and 1960s in the United States, the Civil Rights Movement and supportive legislation helped make these public goods more accessible and responsive to women and minorities, who had previously been either ignored or targeted by them.  After the 1960s, most public goods were administered with a goal of inclusivity in Western societies.

History of the Conservation Movement

Parks as a public good are often overlooked, but were born during the same era.  In the United States, the late 1800s saw the first organized conservation movements where nature-lovers and sportsmen advocated for the protection of nature and natural resources.  Prior to the late 1800s, there was little organized attempt to protect nature - companies like logging and mining firms could destroy unlimited acreage through haphazard and negligent actions.  There were few restrictions on the dumping of wastes, using resources on public lands (i.e., The Tragedy of the Commons), or altering landscapes.  During the Progressive Era, however, governments began to create policies restricting these harmful actions.  In 1916, the National Park Service was established in the United States, creating a government agency to protect wild lands.

The National Park Service preserves natural land for the cultural, educational, and recreational benefit of all citizens.  Similar agencies, like the National Forest Service and Bureau of Land Management (BLM), focus on protecting natural resources for sustainability.  These agencies limit companies’ use of natural resources and invest resources into research on protecting and improving natural resources.  Proponents have praised these government agencies for ensuring that sufficient resources are available for economic growth for each successive generation.  Some critics, however, argue that they hinder economic growth by placing excessive regulations on firms that depend on these natural resources.

City Parks and Economic Implications

Although city parks may not be vast reservoirs of natural resources like the hundreds of thousands of acres managed by federal government agencies like the Forest Service or BLM, they also have economic implications.  Like national parks agencies, city parks are significant public sector employers.  Historically, there has been a strong link between parks and providing crucial employment for hardworking but less-technically educated workers, hearkening back to the Great Depression of the 1930s.  During the Great Depression, thousands of unemployed young men were able to build relatively simple infrastructure like roads and parks as part of government agencies like the Civilian Conservation Corps (CCC).

Labor Force Development

In developing cities, parks can be strong sources of public sector employment that provide an initial spending boost to local economies.  This is especially true if the city parks are funded by state or national grants and bring in outside funds instead of taking up local tax revenue.  Parks can also provide many good jobs for young workers, such as teenagers or recent graduates, and thus help improve human capital by developing employees who will go on to take more advanced jobs.  A lack of such jobs can hinder the development of a labor market, with many young workers struggling to find employment at mid-tier jobs due to a lack of work experience.  

Pollution Abatement and Environmental Improvement

City parks and other green spaces can help improve worker productivity across the local economy by improving the physical environment and ecosystem health.  Urban green spaces can substantially improve air quality by processing pollutants and creating oxygen.  These green spaces also reduce the urban heat island effect, which can harm worker health and increase electricity costs of homes and businesses due to increased demand for air conditioning.  City parks also provide a place to send rainwater overflow, which reduces the risk of flooding.  Urban areas without green spaces to capture running water during rainstorms, channeled by cement and concrete, can be vulnerable to expensive flooding.  

Aesthetic Appeal Retains Workers and Taxpayers

Parks and green spaces are not just “pretty” - their aesthetic value has real financial benefit for cities.  People prefer to live in nice neighborhoods, and parks can help cities attract and retain high-quality workers and taxpayers.  Parks may pay for themselves over time by helping develop stable, upwardly mobile neighborhoods of homeowners who invest in maintaining and improving their properties.  Property values in park-adjacent neighborhoods will likely increase, providing the city with greater property tax revenue.

People Come to Visit Parks…and Spend Their Money

Sales tax revenue can also be boosted by good parks in a neighborhood, at least when transportation is convenient.  People will travel to neighborhoods with nice parks and spend money at surrounding businesses, especially restaurants and shops.  In this regard, parks serve as a complementary good to the shopping and/or dining experience.  If two restaurants are equally preferable to a family, but one is by a park that has a nice walking path and interesting statues, the family’s demand for the restaurant near the park is almost inevitably higher: they will receive more utility per dollar spent because access to the park is free.

Biodiversity Has Long-Term Benefits

Cities can affect ecosystems and food webs in unintended ways, potentially leading to long-term environmental harms.  Maintaining some green spaces and city parks within cities allows various species to continue residence, helping keep things balanced.  Removing all natural habitats within a city creates the risk of eliminating some important animals and insects…letting others grow exponentially due to lack of predation.  For example, parks may house bats and birds that keep insect populations under control.  A lack of parks may allow insects and vermin to spread unchecked because their natural predators, from sparrows to hawks to foxes, have fewer places to live.  Rising levels of undesired insects and vermin can lead to an exodus of workers and taxpayers, harming a local economy further.