Location theories explain the factors that determine the location of services, amenities and facilities (William 2000). As a bundle of services, the housing function’s location can be analysed in the same way as other economic goods and services. One of the primary concerns of a physical planner is to establish an efficient pattern of location of goods and services that serve the population of a given city. Among other responsibilities, planning has the ability to position various land use activities in a pattern that will allow for efficiency and economy in the consumption of every end product of land use activities. Howley (2008) states that, the efficient location of human activities such as where to live, work and relax is not only economical but promotes sustainability in all its ramifications.
Efficient location of persons, goods and services minimizes the costs of friction, that is, the costs of overcoming the friction of space. Howley (2008) argues that consideration of location creates
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an urban land nexus where the different advantages offered by the intersection of variables like, land rent and the spatial requirements of households and firms helps to solve land use dilemmas and address the dynamics of land development.
It is therefore imperative that the location of basic needs like housing is informed by reliable information. This study reviews the following location theories as a basis for inclusionary housing in the inner city of Lagos Central:
i. The central place theory,
ii. Residential location decision theory.
Location theories emerged as an early response to the neglect of space in traditional economic analyses. Firstly developed by Alfred Weber in 1929, and further extended by Edgar Hoover in 1937, Melvin Greenhut in 1956 and Walter Isard in 1956 (Casey 2003), location theory initially aimed to develop formal mathematical models for the most advantageous location of industry in light of the cost of transporting raw materials and final products. It posits that firms tend to locate near markets when the cost of the final product exceeds the monetary weight of the input required to produce the product. Distance is the focal point of location analysis; thus time and space are vital considerations in housing location.
3.4.1 The central place theory
This theory was developed by German geographer, Walter Christaller in 1933 as a spatial theory in urban geography to explain the reasons behind the distribution patterns, size and order of cities and towns around the world. It offers justification for the spatial location of public goods, facilities, services and infrastructure, of which housing is one.
In applying this theory in this study, housing is considered a product and bundle of services provided in hierarchical order within the urban space. Furthermore, in line with Christopher’s argument, housing is considered a central good, that is, a commodity or service which is located in a convenient place for accessibility to consumers. The theory provides a useful context in which to analyse the relationship between dispersed settlements and household travel time.
The argument for inclusionary housing in the inner city of central Lagos is supported by several assumptions of this theory. It posits that agglomeration economies draw all the economic activities of a city into and around the CBD for reasons of efficiency. Productivity is enhanced when the poor who provide labour in the economic sectors of Lagos live closer to where employment is concentrated – the CBD. Should this not be the case, the workforce spends more
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time, energy and resources in getting to work. This negatively impacts their productive resources and the employment, goods and services they desire become less accessible. The central place theory posits that there is a highest order centre in a given city that provides highest order goods.
In this case, that centre is Lagos Central CBD, which remains the most attractive centre in Lagos because of the services and functions it offers. It is the economic nucleus of the city that provides the most jobs and is the space where the largest volumes of goods are traded.
In 1954, German economist August Losch introduced a social dimension to Christaller’s central place theory after observing that the initial theory suffered from economic rigidity and only allowed for profit or economic considerations to dictate the location of goods and services. He noted the need to maximize consumers’ welfare and create an ideal consumer landscape where the need to travel to consume any good could be minimized and economic profit is not the ultimate or the only consideration.
Losch’s (1954) social perspective provides for the consideration of social issues in housing provision for the poor in a good quality and easily accessible location like the inner city of central Lagos. It can therefore be inferred that housing provision in the inner city should not only be considered from an economic or free market point of view. Not all consumers are able to participate freely in such a market, since purchasing power is not uniformly distributed. Thus, consumers’ welfare, equity and justice, especially when it comes to the poor, should be a paramount consideration in the inner city housing market of central Lagos. This would offer the poor access to the economic opportunities provided by the CBD. To this effect, cost minimization should be the controlling factor in the determination of housing location.
3.4.2 Residential location theory
The residential location theory offers insight into the characteristics of housing demand and the location preferences of housing consumers. These directly influence the planning of housing provision and delivery. Like other location theories, residential location theories define the distribution of residential land over the urban space structure as a spread in the form of different residential zones, each with a variety of attributes. Consumers of housing express location preference for the part of the zone they desire to live in. Anand et al. (2010) classify residential location theories into geographic, economic and social models. Table 3.1 on page 52 illustrates the attributes of these classifications.
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Table 3.1: Models along which residential location theories are built
Model type Contributors Salient features
Social Rossi (1955) Use of life cycle determinants, e.g., age of
household head and household size and characteristics.
Adams (1969) Intra-urban residential movement is
dependent on limited mental maps or images of the city.
Spare et al. (1974) Residential location determinants are mainly variables such as amenities, overcrowding, high quality schools, the crime rate, etc.
Alba and Logon (1991, 1993) Place stratification such as racial and economic segregation is the major determinant of residential location.
Rapaport (1997) Quantity of housing services such as durability, heterogeneity and spatial fixity is used to explain individuals’ residential location choices.
Economic Tiebout (1956) Ellickson (1971)
Friedman (1981)
They emphasize the role of national and local government in housing decision making and its effects on the marginal cost- benefit equation for a given jurisdiction.
Less (1985) Static models such as current housing price
and income, and speculation about future housing prices, etc., determine residential location decisions in urban areas.
Goodspeed (1998) Affordability is the determinant here.
Households are assumed to opt for an optimal package of housing at its lowest possible cost in the housing market.
Geographical Alonso (1964)
Muth (1969)
Knin and Quigley (1970) Evans (1973)
Straszheim (1975)
The residential location decision is dependent on spatial parameters like job location with an emphasis on the assumption that the marginal cost of moving towards the CBD should be equal to the marginal benefit.
Hybrid Smith, Rosen and Fallis (1988)
Werezberger (1995)
Combination of geographical and economic and social models with an emphasis on:
(i) Distance from the CBD
(ii) Nature of land use in the neighbourhood
(iii) Spatial externalities, e.g., neighbourhood status, tax structure, pollution and environmental quality.
Source: Anand et al. 2010
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The geographical model is centred on accessibility parameters like distance to one’s place of work and other basic activities like shopping and social amenities. Alonso (1964), Knin &
Quigley (1970) and Muth (1969) posit that housing consumers will express a preference for a location close to where they work and shop and where social amenities and facilities are fairly accessible, given that households prefer to locate where it is cheaper to access these variables within the urban space structure. The obvious place where this could be achieved is the inner city, because of its competitive advantage of proximity to employment, shopping and social centres.
However, since land is cheaper in the suburbs than in the CBD, it stands to reason that only the affluent can exercise any effective demand for housing in and around the CBD.
Thus, this theory explains why the poor are excluded from the inner city housing market of Lagos Central as well as why they need to live in the inner city because they cannot afford the high cost of commuting to work in the CBD. Adebayo and Adebayo (2010) maintain that locating the residences of the poor closer to the CBD optimizes their economic opportunities.
On the other hand, the economic model of the urban residential location theory considers economic parameters like housing prices, quality, subsidies and taxes that can help increase the affordability level of housing consumers most importantly the poor and the availability of housing finance and support as factors affecting the residential location of housing consumers.
Tiebout (1956), Ellickson (1971) and Goodspeed (1998) argue that households will express a location preference for housing that is affordable. This explains the general exclusion of the poor from the inner city where housing prices are at their peak. Policy interventions such as financial support, subsidies, and inclusionary zoning for the poor would allow low-income earners to participate in the inner city housing market of Lagos Central. Such policy interventions are necessary because market forces allocate housing facilities through the process of demand and supply which makes it impossible for low-income earners to participate.
The social model of the urban residential location theory states that social factors such as age and the structure of households, neighbourhood characteristics, quality, community relations, ethnic and cultural ties, heredity and social recognition determine the choice of residential location. Its proponents argue that the question of where people wish to live has nothing to do with their income, but social satisfaction such as living among family and friends is likely to drive such decisions. The assumptions of these models can be summarised as follows:
i. The total amount of employment in the city is fixed and located at the centre of the city – the CBD. This is typical of Lagos City where over 40% of employment is concentrated in
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the CBD of Lagos Central; thus a large proportion of the population commutes to the CBD on a daily basis. Inner city housing is therefore required in central Lagos.
ii. Each household has one worker who commutes to work daily. The city of Lagos exhibits this attribute, where at least one member of the city’s households commutes to the CBD on a daily basis for formal or informal economic activities.
iii. Housing is only distinguished by location; otherwise, it is homogenous in character. Other than quality, location affects the price of housing in the city of Lagos more than any other factor. Thus, a lack of policy interventions will limit the choice of residential location for the poor in urban centres.
Transportation costs are constant and homogeneous in all directions and the utility maximizing location for a given household is the point at which the marginal savings on housing costs are equal to the marginal costs of transportation. This suggests that the re-introduction and sustainability of the housing function in the inner city of central Lagos will reduce the cost of the household worker commuting to their place of employment. This will help to overcome social friction which Jordan et al. (2004) define as metaphor for transportation and communication costs. However, it should be noted that the CBD is not the only employment centre in the city. As the multi nuclei land use model suggests, city growth and expansion over time produce other CBDs that also offer employment opportunities; ironically the zone within the immediate radius of such CBDs is also characterized by exorbitant housing prices that create an inadvertent exclusionary housing market.
In conclusion, the various models of the urban residential location theory express households’
location choice as a function of the utility maximization problem, in which choice depends on various issues including land rent, transport costs and the cost of all other goods. This study examines how these play out in the inner city of central Lagos.