Universidad de Puerto Rico Rio Piedras Campus Graduate School of Planning

Land Use Patterns, Housing Markets and Sustainable Economic Development: Islands and Coastal Regions in the Knowledge & Services Economy

By Criseida Navarro-Diaz, PhD Assistant Professor of Regional Planning criseida@alum.mit.edu 1(787)764-0000, ext. 85108 1(787)646-0479 PO Box 23500 San Juan, PR 00931-3500

Proposal Submitted to: 2009-2011 FIPI New Faculty Seed Fund January 30th, 2009

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Summary This document requests funding to startup research about the impacts of economicdevelopment policy on land-use patterns and housing prices in Puerto Rico, other islands and coastal regions. Puerto Rico as many other territories across the world has adopted a high-skilldependent development path. However, growth in economic activity that is dependent on knowledge-intensive labor has been associated with increases in cost of living, particularly in inelastic land and housing markets. Location, global-market patterns, global warming, disasters susceptibility, and growing development restrictions suggest that the Islands land and residential markets could become increasingly inelastic, in which case a high-tech economicdevelopment strategy would be expected to result in increasing costs of living and doing business. While a hike in cost of living, emigration and income inequality has been perceived in Puerto Rico since the implementation of its Science-andTechnology Policy; no one has taken up the initiative of testing whether or not an associative relationship may in fact exist among that hike, economic-development policy and increasingly inelastic land and housing markets. This in many ways is due to the lack of dependable data sources that would allow rigorous measures and hypotheses testing. During the last two years, a housing market transactions database was structured while 1990 and 2003 land use maps were acquired. Funding requested would allow periodic measurement of housing market trends, acquisition of a 2010 land use map, as well as testing the hypothesis of increasing land-use conversion rate and costs of living in high-tech regions over time, among other.

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Narrative Given the New Economys bias towards knowledge creation and innovation, regions attempt to survive by attracting activities that are both dependent on those inputs and that can (re)produce them, under the assumption that multiplier effects will lead to not only direct, but also indirect and induced growth in employment, income, and consumption. (Lauder 2001; Schienstock 2001) However, growth in economic activity that is dependent on knowledge-intensive labor has been associated with increases in cost of living, particularly housing prices. In fact, my doctoral dissertation research, across 50 regions in the continental United States during the 1990-to-2000 period, has shown that as more high-skill labor is demanded and drawn into a region to support high-tech and related services activity, cost of living generates a net emigration of workers of all skill levels jeopardizing the sustainability of that development path. (Navarro-Daz 2005) According to this research, differences in the regional land markets, especially with regards to housing supply price elasticity, could be partly at fault for the trends present in high-tech regions today. High-tech regions with few restrictions on urban growth could exhibit different housing prices and wage patterns than regions that already are urbanized to a large extent, those with zoning restrictions, and/or those with little developable land available, which would allow its residents to stay in the region and enjoy both the employment and wage benefits from economic growth in knowledge-intensive sectors. (Navarro-Daz 2005) Puerto Rico as many other territories across the world has adopted a Science-andTechnology Policy, thus choosing a high-skill-dependent development path. On 1999 the Puerto Rico Industrial Development Corporation (PRIDCO) started to implement this policy by commencing the planning and development phase of the TechnoCaribbean Corridor in the Western Region of the Island. Since then other regional high-tech initiatives have spurred beyond the influence of PRIDCO, including INTECO (Central Eastern Region), INTENOR (Northern Region), DISUR (Southern Region), and the Knowledge Corridor (in the San Juan Metro Area), among other. However, several conditions suggest that the Islands land and housing markets could become increasingly inelastic. First, Puerto Rico has adopted a Sustainable Development Policy and drafted several controversial versions of an Island-wide Land Use Plan and Maps (2006, 2009) that translate to the protection of its natural resources and growing restriction of developable land, with the intention of guaranteeing that future generations would be able to enjoy these riches. Second, due to its location, Puerto Rico is subject to a series of natural phenomena, such as hurricanes and tsunamis, which makes its coast and valleys susceptible to flooding and not adequate for conventional development. Thirdly, as an island, Puerto Rico not only has finite land area but also is subject to rising sea levels due to global warming. The compounded effect of the latter two processes makes its coast highrisk zones for investment. More recently, global fuel and financial market trends 2|Page

are exerting external constraints on current costs of living and doing business and the Islands capacity for economic growth. After the 2004 tsunamis throughout the Indian Oceans coasts and the 2005 Hurricane Katrina in the United States, there has been a growing concern around the globe about the impacts of natural disasters not only with regards to lives and property but also in terms of an economys capacity to recover from these events. Notwithstanding, most knowledge-intensive investment in the Island has been injected to coastal towns, such as Mayaguez, Ponce, and Barceloneta. While INTECO is the only high-tech initiative in Puerto Rico currently lacking coastal access, its leaders have shown interest in annexing coastal municipalities with port facilities, such as Ceiba. Moreover, most if not all other core economic activities promoted in Puerto Ricos economic development model are dependent on water access, including nearly all tourism niches that the Island has explored, as is the case of most Caribbean islands and coastal cities around the globe (Skinner 2006). While a hike in cost of living, emigration and income inequality has been perceived in Puerto Rico since 1999; no one has taken up the initiative of testing whether or not an associative relationship may in fact exist among that hike, the Islands economic development policy and increasingly inelastic land and housing markets. In the previously mentioned 50-region research, regions adjusted to these adverse patterns through interregional migration, which had relatively low social and economic transaction costs in the continental states. However, it is not clear whether or not migration would provide an opportunity for adjustment in the case of Puerto Rico, as an island with limited territory and a unique cultural heritage and idiosyncrasies. My doctoral research highlighted the need for understanding the dynamics of land markets and land use patterns not only in high-tech regions but instead under diverse economic development models or regimes. Yet due to data availability it included regions within the continental United States exclusively. One would expect island land markets to react differently from that of continental land, especially in those areas susceptible to natural disasters, mainly along or near the coastal zone. A better understanding of these dynamics would allow planners and policy makers to device adequate instruments (i.e., affordable housing measures, development practices, urban design regulation, zoning mechanisms, incentives, etc.) that, in place, would make Puerto Ricos development model socially, economically and environmentally sustainable. During the last two years, through the New Faculty Research Incentives Pilot Project, I was able to develop a geo-referenced housing market transactions database for three regions that have adopted a high-skill-dependent development path (INTECO, DISUR, INTENOR) and one that has not (San Juan Metro). In addition, I acquired 1990 and 2003 land use maps for all of Puerto Rico. However, in order to 3|Page

adequately measure past and forecast possible future impacts of the proposed associative relationship, periodic updating and broadening of the database, both in terms of geographic and time coverage, and a current land use map (2010) are needed. Funding requested would provide the necessary components and enable to test the hypothesis of increasing land-use conversion rate and costs of living in high-tech regions over time, among other. Literature Review Since the coining of the smart growth concept, sustainable development has become a goal for most territories. Several research centers have initiated projects to identify sustainable development practices. However, their primary drive is derived from interest in protecting the environment, in striking a balance between mankind and nature on the amount and intensity of land developed. Economic considerations are limited frequently to making desired development practices financially feasible. While the sustainability concept highlights the importance of maintaining a diverse economic base (Harris and Goodwin 2001), explored linkages in research between economic development path and sustainability are often restricted to specific sectors, such as eco-tourism, eco-agriculture and other eco-industry. Much less attention has been granted to evaluating the sustainability (social, economic, and environmental) of economic development strategies at the regional scale. At the national level, however, there is a growing consensus that the singleminded pursuit of economic growth, often referred to as the expansion of consumption or gross national product, should not dominate development policy. Instead, it should share the stage with the urgent need for social equity and environmental protection (Harris and Goodwin 2001). Knowledge- and innovation-intensive activities are associated with the establishment and maturation of economic clusters (Fingleton et al. 2007). These phenomena result from the agglomeration and effective linkage of a specializedlabor pool, suppliers, and competitors organized in these clusters (Porter 1995). Network and organizational theory proposes that innovation, being based on tacit, embodied knowledge, flourishes when face-to-face interaction is maximized. In addition, it suggests that innovative individuals seek these contacts and relationships (Stolarick and Florida 2006). As a result both high-skill labor and hightech firms are drawn into regions by the presence of these clusters. Given limited availability of space in cities, a higher demand for land and housing for these workers and firms could drive up prices and lock in or displace others who cannot afford higher housing prices to low-cost pockets across the region, in a gentrifying pattern (Milken Institute 1999). Depending on the elasticity of land and 4|Page

housing markets, in terms of constraint for development, an increase in demand from these workers could translate into significant increases in rents or prices affecting the overall cost of living in the region. As a matter of fact, high-tech regions have shown high living costs, relative to other regions, especially with regards to land and real estate prices (ACCRA 1990, 2000). This centripetal force of creative firms and labor towards the cluster is responsible for the spatial patterns and massive exodus of working families observable in Silicon Valley, Research Triangle Park, and Route 128. While dispersion economies, those that due to technology or costs structure enable collaborating firms and supply chains to spread over a region or regions (Polenske 2003), could be more intuitively associated with sprawl, these cases also suggest a strong impact of agglomeration economies on land use and settlement patterns. The most fundamental characteristic of real estate markets is that land is more expensive at advantageous locations, such as lake, rivers, oceans, parks, employment or cultural centers, among other, than far from these (DiPasquale and Wheaton 1996). According to the Neoclassical model, housing and land that is farther from the advantageous location will cost less in order to balance increasing transportation costs towards it. Under this theory, the land-location value is the selling price minus the construction costs of the structure(s) in the land plot. Controlling for household size and housing traits, housing would be occupied by households offering the highest rent, and land would be allocated to the use that would yield the greatest rent (Alonso 1964, Mills 1972, Muth 1969). In the absence of significant wage changes, an economic development policy that would generate increases in competition (demand) between firms and households for advantageous locations would also favor wealthy firms and household who are able to absorb increasing costs of living and of doing business in or near activity centers, making it difficult for working-to-poor families and smaller firms to stay in a region. This competition and resulting land use patterns also highlight the equity-efficiency debate at the very center of sustainable development efforts (Page 1997). Sustainable land patterns are those that provide consistent integration of social, environmental, and economic consideration and promote a sound, coordinated, and harmonious built environment. Thus, land use decisions and land use controls that advance those goals are a major contributing factor towards attaining sustainable development (Salkin 2002). This consistency among the objectives and enforcement of the Islands economic, social and environmental policy has been lacking. Two of the areas where most policy-development contradiction exists are the coastal zone and high agriculture-value land. The effect of their transformation exceeds the local scale. Accelerated land use changes due to urbanization and population growth may contribute to global warming and thus to increasing sea levels (Adger and Brown 1994). Reduction of agricultural productivity due to residential and commercial development places an island whose food stock 5|Page

depends mainly on importation from foreign territories at risk of facing scarcity whenever the flow of imports is interrupted, be it because of increasing transportation cost, changes in foreign relations, and/or natural or man-made disasters that affect air- and sea-ports. Development is placing enormous pressure on coastal resources, including beaches, rivers, and estuaries, among other (DeVoe and Kleppel 2006). To attain sustainable development in coastal areas, land use planning must recognize that building on it tries to impose stability and permanence on a system that is by nature transient and cyclical. Consequently, coastal land use planning calls for development to settle inland of the immediate coastal line and of flooding-prone areas, in order to prevent nature ecosystems and mankind from harming each other (Kundis-Graig 2002). Retrofitting existing development to these criteria has undeniable costs; however, not doing so, in the absence of disaster prevention and mitigation measures, jeopardizes the long-run return on investment from households and businesses. Policy makers must seek to restore the delicate balance between monetary rewards expected from the implementation of a seemingly viable economic growth and development strategy, and managing growth as to sustain in the long run a territorys social, cultural and environmental values (Scott, Holland and Sandifer 2006). In the context of an island such as Puerto Rico, this implies the need for assessment of its economic development policy impacts over the location and intensity of land use patterns, and for devising mechanisms that would align the efficiency interest of that strategy with the territorys sustainability and equity goals. Research Objectives The proposed research, in general, would attempt to fill up the theoretical and empirical gap described above and at the same time allow the UPR Graduate School of Planning to inform economic development policy at the national, regional and municipal level. Among the specific objectives that the proposed research would seek to meet are: 1. Generate a quarterly regional cost-of-living index for Puerto Rico and its regions that would allow economic comparison with other coastal regions in the United States and the Caribbean. The commonly used consumer price index (CPI) controls for differences in the purchasing power of a dollar over time; however, it does not take into consideration divergence across regions. The index has been developed for 1990 and 2000. It would be estimated for 2003, 2009, 2010 and 2011. The index would be periodically updated after the grants duration. 2. Maintain an updated housing and land transaction database for four regions towards which most high-tech economic development investment has been directed, mainly Techno-Caribbean Corridor, INTECO, INTENOR and DISUR, 6|Page

and one that has not followed a knowledge-dependent development strategy. To the degree possible, the database would cover the period starting around 1998 to present. The database currently includes selling price, location, and housing unit traits. In addition, a set of indicators characterizing these markets would be generated and updated quarterly. 3. Acquire or build a current land use map for those regions. It would help complete a dependable timeline of land use change patterns that could be quantitatively measured and monitored. 4. Develop land use conversion indicators that could be monitored over time. 5. Test whether or not regions experience a change in the conversion rate of land use (from agricultural to residential, from residential to commercial, etc.) after the implementation of these high-tech regional initiatives. 6. Test whether or not regions experienced a change in housing and land availability after the implementation of these high-tech regional initiatives. 7. Test whether or not regions experienced a change in housing and land prices, and overall cost of living, after the implementation of these high-tech regional initiatives. 8. Test whether or not the implementation of an increase in development restriction, as part of the Puerto Rico Land Use Plan and Map, affected in any way housing and land prices. 9. Based on these historical data and subsequent updating, be able to simulate the impacts that diverse economic growth scenarios could have over land use patterns, especially in coastal areas that are susceptible to the effects of global warming. 10.Identify best prevention and mitigation practices with regards to the mechanisms that should be in place for a regional economy to be able to quickly recover from a disaster, with especial interest on islands and other coast-dependent regional economies. 11.Produce at least two (2) publishable papers and/or presentations of results during the two-year duration of the grant. 12.Affect land use and economic development policy and decision making processes in Puerto Rico. Methodology A large proportion of the requested budget would be allotted towards data acquisition and analysis that would enable drafting publication-quality papers. Secondary sources would include the Puerto Rico Planning Board, Municipalities, 7|Page

and Realtors. Primary sources would include a quarterly survey of and visit to residential projects that enter the market, containing typical unit traits. This database should include, to the degree possible, GPS geo-referenced location, price, unit traits (such as number of baths, parking spaces, condition, lot size, number of rooms, view, etc.), proximity to open space, density of area development, and construction cost (when available or computable), among other. In order to estimate a regional cost-of-living index, I would use the methodology that the American Chambers of Commerce Association-Regional Analysis Unit (ACCRA) developed for that purpose. It is similar to the process of estimating the CPI, in that the prices of each product in a basket of basic consumption goods are considered; however, rather than comparing these with those for the same region at a different point in time (base year), they are compared to the average of all regions included in the analysis (base region) for the same period of time. This technique requires tracking and analysis of changes in population and households, as well as housing, transportation, education, recreation and food costs as they compare to salary patterns. These data would be acquired from the PR Department of Consumer Affairs, US and PR Departments of Labor and Human Resources, Local Chamber of Commerce, and Census of Housing and Population, among other. As previously mentioned, the index has been developed for 1990 and 2000. It would be estimated for 2003, 2009, 2010 and 2011. The index would be periodically updated after the grants duration. There is a need for modeling land use patterns before and after the implementation of PRs Science and Technology Policy and the drafting of the PRs Island-wide Land Use Plan. Maps for 1990 and 2003 have been acquired. A current land use map is needed. The maps would be built from semi-automatic processes of image interpretation to be conducted with an unmanned airplane and field visits (ground truth). Validating the map and testing its accuracy require field work observation. The abovementioned databases would allow conducting times-series and weighted cross-sectional hedonic price regression analyses that would be sensible to location and proximity to valuable natural resources and/or are susceptible to natural phenomena. It would also facilitate controlling for housing traits in the evaluation of price patterns before and after the implementation of PRs economic development and sustainability strategies. The Island could be broken down into several market areas for which separate regression models could be run. (Schwartz, Zorn, and Hansen 1996, Dale-Johnson and Yim 1990). I would use the generated models to simulate regional economies in the Island to evaluate potential impact on land use patterns under different plausible scenarios, including but not limited to disastrous events as well as changes in economic and land development strategies. This would be done by incorporating the generated models into Xplorah, an island-wide constrained cellular automata-based land use simulator, developed by the UPR Graduate School of Planning (GSP) and the 8|Page

Research Institute for Knowledge Systems (RIKS) in The Netherlands. The GSP would provide access to the software. A visit to RIKS would be necessary to incorporate the produced model into the existing software. Through literature review and simulation, I would identify best practices for the prevention and mitigation of those events that due to the Islands susceptibility could cause the greatest harm.

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BUDGET SUMMARY BUDGETARY ITEM Year 2 1. Graduate Research Assistant $9,000 (PEAF) (x) Masters Level ( ) 12 months 2. Technical Assistance $________ 3. Equipment a) laboratory b) printer, etc. c) other _GPS____ SUBTOTAL 1 $_______ 4. Materials a) office materials $___178_ $___150__ $__2,200_ $___300_ $___150_ $__1,100_ $__3,928_ $_______ $_1,372__ $_2,200__ $_3,572__ ( ) Doctoral ( X ) 10 months $_______ Year 1 $9,000 (PEAF)

b) data purchase from realtors and other sources $__3,000__ c) external drive $________ d) micro-memory cards for GPS $___150__ e) ink cartridges $__2,200__ SUBTOTAL 2 $__5,500__ 5. Travel ( ) local ( X ) exterior

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Per diem transportation $___2,000_ accommodations & conference fees $___2,000_ SUBTOTAL 3 $___4,500_ GRAND TOTAL $__10,000_

$___500_ $_ __500_ $__1,500_ $__2,500_ $_10,000__

$____500_

BUDGETARY JUSTIFICATION Personnel Justification The proposed research requires a graduate-level research assistant with knowledge of econometrics or statistics and above average GIS (Geographic Information Systems) skills. This student would conduct about 75% of all field work (visits to government agencies and validation of generated land use maps) as well as share with the primary researcher the responsibility of building the housing and land market transaction database. The research assistant would also help the primary researcher in the generation of land use maps and geographic simulation models. The School would provide support staff work time and partially disburden the primary researcher of her teaching load (descargue) for that time to be spent on the proposed project. However, it is not included in the annual $10k request as it is assumed to come from PEAF funds instead of FIPI. No computer is requested as the Graduate School of Planning has provided the primary researcher with a laptop. However, a multifunction laser printer is needed (see included estimate) to prepare, send and received questionnaires to/from realtors and other data sources. Although the researcher already has a GPS, acquisition of a second GPS would allow both the researcher and the assistant to conduct field work simultaneously. Materials requested include ink cartridges for the printer, data storage (cards that are placed in the GPS and an external drive for the entire database to be generated), office materials, and data purchases (including sales reports from realtors, and official government data products). Attending professional and academic conferences is part of my plan for dissemination of research results and an opportunity both 11 | P a g e

Equipment

Materials

Travel

to provide exposure to UPR and the School, and to meet potential collaborators. In the Regional Planning field the most important conferences are those of the Association of Collegiate Schools of Planning, the Regional Science Association, and the American Planning Association. They usually occur in October, March and April, respectively. The grant would allow me to attend at least one of them during the first year. Costs vary from year to year according to the conference location. The estimate provided here is based on the average costs of attending a conference of this nature this year. During the second year, once the models have been generated, a visit to RIKS (Netherlands) has been considered to plug in the models into the software with the assistance of the programmers at the institution.

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Dr. Criseida Navarro-Daz, LPP Education Massachusetts Institute of Technology Regional Planning and Economic Development PhD 2005 University of Puerto Rico, Ro Piedras MCP 1999 Urban and Land Use Planning

Massachusetts Institute of Technology Architecture and Latin American Studies BS 1995 Professional Experience (01/2008- to Present). Xplorah Project Manager. University of Puerto Rico - Ro Piedras. Graduate School of Planning. Development of Spatial Decision Support System for Puerto Rico. (08/2006- to Present). Assistant Professor. University of Puerto Rico - Ro Piedras. Graduate School of Planning. Quantitative Reasoning & Statistical Analysis; Econometrics; Urban Planning and Programming; Regional Development; Technological Change and Social Exclusion; The New Skills and Labor Market Outcomes; Land Markets and Costs of Living; Urban Design. (07/1999 to 08/2006). Executive Director. Planning and Real Estate Division. Estudios Tcnicos, Inc. Hato Rey, PR. Market, Best Use and Financial Feasibility Studies; Land Markets; Strategic Planning; Housing and Labor Market Analysis (Econometric models). (08/2005-05/2006). Adjunct Assistant Professor. University of Puerto Rico - Ro Piedras. Graduate School of Planning. Quantitative Reasoning & Statistical Analysis; Econometrics; Urban Planning and Programming; Regional Development; Technological Change and Social Exclusion; The New Skills and Labor Market Outcomes; Land Markets and Costs of Living; Urban Design. (09/2001 to 06/2005) Instructor. Massachusetts Institute of Technology Department of Urban Studies & Planning. Cambridge, Massachusetts. Quantitative Reasoning & Statistical Analysis; Microeconomics; Calculus; Differential Equations; Planning Economics; Urban Design Studio; Regional Economics; Regional Planning Practicum. (09/2004 to 06/2005). Research Fellow. Harvard University, Kennedy School of Government Belfer Center for Science and International Affairs. Cambridge, Massachusetts. Science, Technology, and Public Policy. Publications Jasper van Vliet, Criseida Navarro, Elias R. Gutirrez, Jelle Hurkens, Hedwig van Delden. Xplorah Municipio, a multi scale spatial decision support system. AGILE Conference Proceedings (forthcoming) Balancing Economic Growth and Social Equity: Less-Educated Workers in High-Tech Regions. Chapter 18 in Heberle & Opp (eds.) Local Sustainable Urban Development in a Globalized World. UK: Ashgate 2008 Cost of Living and Migration in Puerto Rico and the United States. Perspectivas, San Juan, Puerto Rico. November 2005 13 | P a g e

Cost of Living: Development Indicator or Development Determinant? Perspectivas, San Juan, Puerto Rico. October 2005 Presentations and Conferences Navarro, Criseida; Elas Gutirrez; Aurelio Castro; Guy Engelen; Hedwig van Delden (October 2008). Xplorah: Spatial Decision Support System and Integrated Planning Tool for 21st Century Puerto Rico. San Juan, Puerto Rico: World Congress of the International Federation of Housing and Planning. Navarro, Criseida (July 2008). Housing Market Dynamics, Land Use Patterns and Sustainability in Island Economies: The Tale of Five Regional Economic Development Initiatives in the Knowledge and Services Economy. Chicago, Illinois: Joint Congress Association of Collegiate Schools of Planning Association of European Schools of Planning. Navarro, Criseida (October 2007). Land Use Policy, Land Markets And Costs Of Living: Striving For Sustainability And Equity In High-Tech Regions. Milwaukee, Wisconsin: Association of Collegiate Schools of Planning (ASCP). Navarro, Criseida (March 2006). Caught Between Paradigms: Land-Use Planning in Puerto Rico. Centro de Convenciones de Puerto Rico: Urban Land Institute. Navarro, Criseida (March 2006). Plan de Usos de Terreno de Puerto Rico: Visin y Objetivos. Universidad Politcnica de Puerto Rico: Bortech Institute for Continuing Education. Navarro, Criseida (June 2005). Economic Advancement or Social Exclusion? LessEducated Workers and Costs of Living in High-Tech Region.. Knowledge & Regional Economic Development Conference. Universitat de Barcelona, Facultat de Cincies Eco. Navarro, Criseida (August 2004). Balancing Economic Growth and Social Equity: Less-Educated Workers in High-Tech Regions. 2004 IUPE Conference. Louisville, Kentucky: International Urban Planning & Environment Association (IUPEA). Recent Research Grants and Fellowships 2007-2009 UPR-DEGI New Faculty Research Incentives Pilot Project Grant Recipient ($42,000) - Land Use Patterns, Land Markets and Sustainable Economic Development 2004-2006 U.S. Department of Housing and Urban Development (HUD) Doctoral Dissertation Research Grant Recipient ($25,000) - Economic Growth and Social Exclusion?: Less-Educated Workers in High- Tech Regions 2004-2005 Harvard Belfer Center for Science, Technology and Policy Dissertation Fellowship Recipient (in-kind: office space, access to data, and intellectual community) - Research on the impact of high-tech growth on housing market outcomes, cost of living and migration patterns. 2001-2004 MIT Presidential Fellowship Recipient ($162,000) Research on the impact of high-tech growth on labor market outcomes (employment and salaries). Student Advising Olmedo, Carlos R (2005-2006). Coastal Land Use Ordinance and Design Criteria for Mosquito, Vieques [Thesis]. 14 | P a g e

Aponte, Flix I (2005-2007). Community-based solution to homelessness and urban decay in Gandul, Puerto Rico [Thesis] Machado, Moraima (2006-2008). Active Senior Center as a catalyst for Transit Oriented Development [Thesis]. Uribe, Vctor (2006-2008) Pedestrian-geared transportation alternatives for Old San Juan. [Thesis] Lpez, Yoana (2006-2008) Joint Development Plan for Urban Train Surrounding Areas. [Thesis] Del Valle, Carlos (2006-2008) Strategic Plan for Multimodal Transportation in the San Juan Metro Area [Thesis] Camacho, Anglica (2006-2008) Area Plan for Pinero Avenue, San Juan [Thesis] Santiago, Juan (2006-2008) Commercial Revitalization Plan for Yaucos Urban Center [Thesis] Collaborators Jess Zimmerman (UPR); Elias Gutierrez,(UPR); Norma Pea (UPR); Aurelio Castro (UPR); Hedwig van Delden and Jasper van Vliet (Research Institute for Knowledge Systems, Netherlands); Guy Engelen (VITO: Flemish Institute for Technology Research), Hector Lopez Pumarejo (UPR), Hermenegildo Ortiz (UPR); Jose J. Villamil (UPR); Gabriel Moreno (UPR) Graduate Advisors Anbal Seplveda, PhD at the University of Puerto Rico Frank Levy, PhD at MIT. References Adger, W. Neil and Katrina Brown (1994). Land Use and the Causes of Global Warming. West Sussex, England: John Wiley & Sons Ltd. Archibugi, D. and Lundvall, B. (eds.). The Globalizing Learning Economy (New York: Oxford University Press). Bartik, T. (1991). Who Benefits From State and Local Economic Development Policies? (Kalamazoo, Michigan: Upjohn Institute for Employment Research). Bartik, T. (2001). Jobs for the Poor (Kalamazoo, Michigan: Upjohn Institute for Employment Research). Brown, P. (2001). Skill Formation in the Twentieth Century, in Brown, Green and Lauder, eds. Brown, P. et al. (2001). High Skills: Globalization Competitiveness, and Skill Formation, (New York, NY: Oxford University Press). Clemetson, L. (2003). Poor Workers Finding Modest Housing Unaffordable, Study Says, Sept. 9, 2003, (The New York Times). 15 | P a g e

Dale-Johnson, David and Hyang K. Yim (1990). Coastal Development Moratoria and Housing Prices, Journal of Real Estate Finance and Economics, Vol. 3 No. 2, pp. 165184. Kluwer Academic Publishers. Fingleton, Bernard, Danilo Igliori, Barry Moore, and Raakhi Odreda, (2007). "Employment Growth and Cluster Dynamics of Creative Industries in Great Britain." Chapter 4 in The Economic Geography of Innovation. Edited by Karen R. Polenske. Cambridge, UK: Cambridge University Press. Goetz, S. and Rupasingha, A. (2003). The Returns on Higher Education: Estimates for the 48 Contiguous States, Economic Development Quarterly17:4, 337-51. Hanushek, E. and Kimko, D. (2000). Schooling, labor-force quality, and the growth of nations, American Economic Review 90, 1184-1208. Harris, Jonathan M. and Neva R. Goodwin (2001). Volume Introduction. A Survey of Sustainable Development: Social and Economic Dimensions. Edited by Jonathan M. Harris, Timothy A. Wise, Kevin P. Gallagher, and Neva R. Goodwin. Washington, DC: Island Press. Johansson, Borje, and John M. Quigley, (2004). "Agglomeration and Networks in Spatial Economies." Papers in Regional Science: Journal of the Regional Science Association International 83, no. 1 (2004): 165-176. Katz, L. and Goldin, C. (1996). Technology, Skill and the Wage Structure: Insights from the Past, American Economic Review 86, 252-257. Kleppel, G.S., M Richard DeVoe, and Mac V. Rawson eds. (2006). Changing Land Use Patterns in the Coastal Zone: Managing Environmental Quality in Rapidly Developing Regions. New York, NY: Springer Science + Business Media, LLC. Kundis-Craig, Robin (2002). Oceans and Estuaries. Chapter 10 in Stumbling Towards Sustainability. Edited by John C. Dernbach. Lash, S. (1994). Economies of signs and space (Thousand Oaks, California: Sage Publications). Lauder, Hugh. (2001). Innovation, Skill Diffusion and Social Exclusion, in Brown et al., eds. Milken Institute (1999). Americas High-Tech Economic Growth: Growth, Development, and Risks for Metropolitan Areas (Santa Monica, California: Milken Institute). Page, Talbot (1997). On the Problem of Achieving Efficiency and Equity, Intergenerationally. Land Economics 73, 4 (November 1997), pp. 580-596.

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Polenske, Karen R. (2003). "Clustering in Space versus Dispersing over Space: Agglomeration versus Dispersal Economies." In Innovation, Entrepreneurship, Regional Development, and Public Policy in the Emerging Digital Economy. Trollhtten, Sweden: Universities of Trollhtten/Uddevalla (Papers from Symposium 2002), June 6-8, pp. 393-411. Porter, M. (1995). Global Competition and the Localization of Competitive Advantage, in Proceedings of the Integral Strategy Collegium, (Graduate School of Business, Indiana University, Greenwich, Connecticut; JAI Press). Salkin, Patricia E. (2002). Land Use. Chapter 16 in Stumbling Towards Sustainability. Edited by John C. Dernbach. Schienstock, G. (2001). Social Exclusion in the Learning Economy, in Archibugi and Lundvall, eds. Schor, D. et al. (1999). High Technology and Low-Income Communities (Cambridge, Massachusetts: MIT Press). Skinner, Jonathan (2006). Disaster Creation in the Caribbean and Planning, Policy and Participation Reconsidered. Chapter 5 in Environmental Planning in the Caribbean. Edited by Jonathan Pugh and Janet Henshall Momsen. Hampshire, England: Ashgate Publishing Limited. Stolarick K, Florida R, 2006. "Creativity, connections and innovation: a study of linkages in the Montral Region" Environment and Planning A 38(10) 1799 1817 Swift, M. (2003). Bay State Drain Reversed; Connecticut Sees Influx of Residents, Dec. 4, 2003 (The Hartford Courant). Waddington, H. and Sabates-Wheeler, R. (2003). How Does Poverty Affect Migration Choice? A Review of Literature, Working Paper T3 (Institute of Development Studies, Sussex Universitys Development Research Centre on Migration, Globalization and Poverty). Need for Research Assistants The proposed research requires a graduate-level research assistant with knowledge of econometrics or statistics and above average GIS (Geographic Information Systems) skills. This student would conduct about 75% of all field work (visits to government agencies and validation of generated land use maps) as well as share with the primary researcher the responsibility of building the housing and land market transaction database. The research assistant also would be an aid to the primary researcher in the generation of land use maps and geographic simulation models. This experience would provide this student the opportunity to further develop his/her statistics, econometrics and GIS skills, as well as participate in the 17 | P a g e

implementation of the methodology and necessary statistical tests both on geographic and non-geographic data. Since the Masters that the UPR Graduate School of Planning offers is a professional degree, the student would also gain exposure towards potential employers in the private and public sectors. In addition, partaking in this investigation would make him/her a desirable candidate for doctoral programs.

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Relevance to Proponents Long-Term Research Program The proposed research is both an extension of my doctoral dissertation investigation and a basis for my long-term research program. During the late 1990s and early 2000s, I was part of the team that worked on the planning and development phases of the first two high-tech regional initiatives. At that time, I saw a gap between the Islands economic agenda and its social policy. This gap ignited in me the desire to investigate how regions, and people within them, fare under a high-tech development strategy. During my dissertation research, which included 50 regions within the continental United States, I analyzed the impact of high-tech-driven economic development on employment and wages of workers of different levels of skill. This research highlighted that differences in cost of living played an important role on how these worker categories fared in the presence of a development strategy and that interregional migration over time reduced divergence among regions. The clustering of innovative firms and attraction of creative people into a region seemed to crowd out local workers, especially those with lower skills and salaries. Land use conversion from residential to other uses as well as other restrictions on developable land seemed to be at play in the observed patterns. However, since in order to include Puerto Rico in the analysis data need to be generated from secondary sources and field work, it was excluded of the analysis. The proposed research would allow me to include Puerto Ricos regional initiatives in the regression analysis and further explore the impacts over land use that that research suggested, not only until the present or during the duration of the grant, but also to continue tracking generated patterns over time. The proposed research methodology and databases that could be generated from it for specific regions, in the long-run, would be applied to the remaining areas of the Island and updated periodically. This would provide a unique tool not only for the UPR Graduate School of Planning but also for other departments within the UPR system (such as Geography, Economics, Finance, Coastal Marine Biology, etc.) that could derive multiple collaborative research opportunities on issues of Development Finance, Impacts of Demographics and Ecosystems, among many others. In the case of the Graduate School of Planning, the findings also would strengthen Xplorah, an economic modeling tool with a geographic interface that the School has been developing over the last few years, which has the intention of becoming a decision-making support device for land use and economic development policy in Puerto Rico. As for my own research, due to my interest in sustainable development, during the next five years I also would use the data generated to: (a) develop a system of success indicators for these initiatives that could allow for periodic interregional comparisons within Puerto Rico and internationally, especially with other islands in 20 | P a g e

the Caribbean and other coastal regions; (b) further explore the micro-level interaction between these phenomena and ecosystems (urban, rural and coastal); and (c) compare lessons learned with other islands and coastal regions whose economies have been or could be hit with catastrophic events and the mechanisms that have been or could be put in place to prevent harm to life, property and ecosystems; among other. These topics will provide opportunities for collaboration with other faculty members in the Graduate School of Planning, in the UPR and other universities which are working on related issues abroad. Finally, the products of the proposed research and foreseen extensions of it would provide material that Master in City Planning and PhD students could use for their theses or dissertation investigation. All-in-all, the proposed research would generate at least one publication and/or presentation per academic year, after the duration of the grant.

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Dissemination and Publication Strategy As previously mentioned, I have the intention of producing throughout the duration of the grant at least two (2) publishable papers (to be submitted to peer-reviewed journals, such as Economic Development Quarterly, Journal of Planning Education and Research, or Journal of the American Planning Association, among other), and/or presentations at professional and academic conferences, such as those of the American Planning Association, Association of Collegiate Schools of Planning, National Institute of Certified Planners, American Association of Geographers, and/or Regional Sciences Association, among other. In addition, I would produce at least one publication and/or presentation each academic year after the duration of the grant. That excludes the publications that other faculty could produce from access to the database. Depending on the significance of the research findings, I also could generate a book that looks at the various dimensions of the economic growth-land use relationship that determine development sustainability. In addition to this, the findings would be presented to relevant decision-makers in the Island, such as the PR Department of Economic Development and Commerce, the PR Planning Board, municipalities, and nonprofit organizations that promote regional economic development, among other. Finally, critical findings also would be published on the UPR Graduate School of Planning website. The most ambitious objective of the proposed research, with regards to dissemination and publication, is for the findings to inform land-use and economicdevelopment decision-making processes in Puerto Rico, not academic audiences alone; and to give the Graduate School of Planning and UPR greater exposure abroad within this discipline.

External Funds Throughout the duration of the grant, I will seek funding from outside sources. Among the sources that are being considered are: National Science Foundation US Department of Housing and Urban Development US Department of Homeland Security US Environmental Protection Agency 22 | P a g e

PR Planning Board PR Department of Natural Resources and Environment National Association of Realtors Municipalities considering a high-tech development strategy Non-profit regional organizations that promote that type of development path

In addition to the abovementioned, during the next two years, the School plans to establish a Research and Professional Practice Center or Institute, through which faculty members and students will offer professional planning services to private and public entities for a fee. All proceeds would be allocated to research.

Potential Grant Proposal Reviewers 1. Karen R. Polenske, PhD Head of the International Development & Regional Planning Groups Professor of Regional Political Economy and Planning Department of Urban Studies and Planning Massachusetts Institute of Technology Phone: 617-253-6881 77 Massachusetts Avenue, Room 9-535 Fax: 617-253-2654 Cambridge, MA. 02139 USA Email: krp@mit.edu 2. Joseph Ferreira Professor of Urban Planning and Operations Research Head, Urban Information Systems Group Department of Urban Studies and Planning Massachusetts Institute of Technology 77 Massachusetts Ave, Room 9-532 Tel: (617) 253-7410 Cambridge, MA 02139 Email: jf@mit.edu 3. Donald H. Miller, PhD Professor of Urban Design and Planning College of Architecture & Urban Planning University of Washington Phone: 206-543-7355; 206 543-4190 448J Gould Hall, Box 355740 Fax: 206-685-9597 Seattle, WA 98195-5740 Email: millerd@u.washington.edu

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