Close the Skill Gap -> Enroll to be a Certified Financial Modeling & Valuation Analyst (FMVA)® Today!

NIMBY

"Not In My Back Yard"

What is NIMBY?

NIMBY, an acronym that stands for Not In My Back Yard, is used to characterize the opposition of residents to a proposed development plan in their area. NIMBY describes the phenomenon in which communities will adamantly resist a development plan near their area regardless of whether positive or negative externalities are generated.

 

NIMBY

 

Understanding the Concept of NIMBY

NIMBY is used to describe communities that act in their own interests and oppose nearby developments that they would otherwise support and benefit from if developments did not take place near their area.

The concept of NIMBY explains (1) the phenomenon of low public acceptance to new developments, and (2) the reason behind strong opposition to new developments from those who live in close proximity to the proposed location.

 

Reasons Why NIMBYs Oppose New Development Projects

According to studies, there is often unjust opposition to development projects; whether a project is beneficial or not to the community, communities fear the unknown. Projects that are beneficial to the community face heavy opposition as NIMBYs feel that the new development projects will generate a negative externality (while it may not be the case!).

NIMBYs oppose new development projects mainly due to:

 

1. Lack of trust

Residents do not believe that developers will act in the best interest of residents. NIMBY acts as a protection mechanism – no matter how beneficial the development may be, communities fear that there may be other motives in play.

 

2. Dilution of culture

Individuals in a community identify with their own group. When a new development plan takes place near their community, residents often feel that their culture is threatened by outsiders.

 

3. Fear of change

Communities fear change. Objections are deeply rooted in the fear that the new development will change the identity or character of the place that residents have a strong connection with.

 

Examples of NIMBY Reactions for Different Development Projects

The following are some examples of NIMBY reactions to two development projects.

 

1. Airports

The construction of airports is a necessity; the preference for air travel continues to grow. Although the construction of airports pose a significant benefit to the overall community through employment opportunities, international connectivity, improve tourism, etc., NIMBYs will highlight the air pollution, increased traffic, noise generation, and height restrictions.

 

2. Housing

The construction of housing structures benefits the overall economy by making housing more affordable, improving the location’s economic conditions, and providing employment opportunities. NIMBYs will highlight the potential increased crime rate, decreased utility for existing residents, and disruption from increased traffic.

 

Practical Example of NIMBY: Vancouver RainCity Housing

The example below illustrates perfectly that some NIMBY reactions are unwarranted. Communities fear the unknown more than whether a project will generate positive or negative externalities. As indicated by Alice Sundberg, co-chair of the Regional Steering Committee on Homelessness, regarding the RainCity Housing example below: “It’s fear of the unknown, it’s fear of change.”

RainCity Housing is a group that provides houses for people living with mental illness, addictions, and other challenges. As the organization prepared to open its housing facility in 2012, the organization faced immense backlash and opposition.

Communities, business owners, and residents attended town-hall meetings to express their discontent and anger with the construction of the housing facility. The concern was that these tenants would pose safety concerns and attract drug dealers to the neighborhood. The project by RainCity Housing became so controversial that an executive director received a death threat.

Six years later, the initial NIMBY reaction dwindled down as the tenants integrated successfully and found employment. People who strongly opposed the project realized that no negative externalities were generated. In fact, the community even experienced improvement.

Source

 

More Resources

CFI is the official provider of the global Financial Modeling & Valuation Analyst (FMVA)™ certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional resources below will be useful:

  • Commercial Real Estate Broker
  • Asset Class
  • Project Finance
  • Real Estate Joint Venture

Financial Analyst Certification

Become a certified Financial Modeling and Valuation Analyst (FMVA)® by completing CFI’s online financial modeling classes and training program!