Sunday, June 27, 2010
How much costs Detroit's re-prairiezation?
I am still obsessing about Detroit's abandonment and regression to prairie. It is a large American city completely equipped with all the infrastructure, built up in three centuries, that has been given up by its owners and inhabitants. How many billions are being lost by destroying Detroit and returning it to "Nature"?
I know that in Israel, each new dwelling is charged about 50,000 dollars for municipal development. It includes pavement, and water and sewage connections. But this is not the real cost - the Municipalities calculate their "agrat pituach" (development tax) according to what the market will bear. Moreover, most of the infrastructure is built by the central government, such as the water supply system, water purification plants, the wastewater treatment plants, the connecting roads. Telephone, electricity, gas, etc. are built by private companies. The planning of the infrastructure costs about 8% of the total costs. All in all, I think you could not have the infrastructure of city like Detroit for less than 200,000 dollars per dwelling.
This sum does not include the cost of urban infrastructure such as schools, libraries, parks, cult buildings, theaters, markets, and other public buildings, which in Israel is about 15% of the surface and the total cost. Then it is the cost of the dwellings themselves, which in urban areas (at least in Israel) is equally divided between the cost of the land, and the cost of the building. I presume that the land's worth - of undeveloped prairieland - is less than 1000 dollars per hectare, although it is obvious that a block of real estate in Detroit Downtown in its peak must have been worth many millions.
Presuming that Detroit has/had 400,000 dwellings, and the sunken cost of each one is 500,000 dollars, the prairiezation of Detroit destroys 200 Billion dollars. It is not a terrible loss for a rich country like the USA, which reminds me Edward Teller's dictum that nuclear wars are thinkable and fightible, since the worth of the infrastructure is equivalent of only ten years GNP, so in less than a generation, the country could rebuild itself. Germany post WWII is a good example, by 1955 it was prospering. Of course Germany was not totally destroyed, far from it.
My calculation takes into account the sunk cost of Detroit, and not the commercial value of a working, inhabited, prosperous city. A large office building in Manhattan can easily fetch 100 million dollars, and Detroit in the fifties may have been no less valuable, but I am considering only the physical infrastructure. So please have in mind that I am talking about the cost of the building, irrespective if it is in Manhattan or central Ougadougou.
My conclusion is that the abandonment of Detroit means the loss of an investment of about 200 billion dollars. This loss is the consequence of the collapse of the original owners and inhabitants's faith in their right to own and inhabit the city. Like wars, Detroit was lost because of moral collapse - that of the natives's inner convincement that they were living in their city by right and they had the moral right to defend it.