Senin, 22 Februari 2010

A Two Dimensional Urban Economics Modeling Approach in Analysing River-bank Settlements

Rapid urbanization and inadequate capability to cope with housing needs of people in urban areas have contributed to the expansion of the illegal settlements as found in small growing cities in Central Kalimantan Province in Indonesia. The settlements have been occupying several flood prone areas along riverbanks which should be preserved as open spaces according to the environment laws and local government ordinances. Nowadays provincial, municipal and regent governments in Indonesia are facing challenges to create policies for reducing uncontrolled occupations in risky areas such as flood prone areas. To cope with this significant issue, first, we should construct an analytical model to explain the existence of illegal settlements in flood prone areas, and then proceed to consider policies how to reduce the illegal settlements.
Permana and Miyata (2009) showed a partial equilibrium urban economic model to explain the existence of illegal settlements in flood prone areas in Palangka Raya city in Central Kalimantan Province, introducing the expected damage rate on household asset. Applying this new idea, one can derive the conclusion where the bid rents by low income households get higher than those by high income households in flood prone areas. This is the contrary conclusion being highlighted as compared with that in the traditional urban economics.
Following this paper, Permana and Miyata (2009) extended the partial equilibrium model into a general equilibrium model. However those papers deal with the linear city model slightly lacking the reality. Prior to these papers, Miyata (2009) showed a two dimensional urban economics model internalizing commodity and labor flows, and transport networks. The present article aims to apply the two dimensional spatial model to Palangka Raya city, and examine an income redistribution policy to reduce the illegal settlements.


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