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“There is one policy instrument that raises the cost of suburban development without hurting local landowners: Transferable Development Rights (TDR’s). This instrument has been successfully tried in the U.S. and our governments could improve on their experience. TDR’s allow the sale of development rights from a protected area to areas suitable for densification.”

Reducing sprawl doesn’t require a heavy hand

SUMEET GULATI

Friday, April 22, 2011

Our homes and personal vehicles generate a large share of carbon dioxide emissions. Approximately 40 per cent, according to the U.S. Energy Information Administration.

While the government’s ‘One Tonne Challenge’ (2004) did not encourage us to reduce our carbon emissions, the right price might. If we paid for our emissions, we would choose the location of our residences, their size and energy efficiency, and our vehicles appropriately. But pricing carbon, especially for individuals, doesn’t sell in politics. In its absence, we pollute too much. We live in big, energy inefficient residences, far from work and other amenities, and operate large, and sometimes multiple, vehicles.

What is the alternative?

Based on a study of 48 U.S. metropolitan regions, economists Ed Glaeser and Matt Kahn estimate the difference in carbon emissions from the average household living in a suburb versus the city. Household carbon emissions include those from gasoline, fuel oil, natural gas, electricity, and public transit use.

Of the 48 regions, in only two, Los Angeles and Detroit, are city dwellers less energy efficient than those in suburbs, and only marginally so. In the Seattle region, the average suburban household emits 2.44 tonnes of carbon dioxide more than the average house in the city. For New York City and Atlanta the corresponding carbon dioxide dividend is 6.72 and 5.99 tonnes, respectively. Canadian metropolitan regions with their vibrant and lived-in cores are more like New York than Los Angeles. It is likely that households in our cities also emit far less carbon dioxide than their suburban counterparts.

Can we give up sprawl and be encouraged to live in dense cities? Studies find geography to be the most compelling reason limiting urban sprawl. Cities that are bordered by mountains, large bodies of water, or lack water to supply their suburbs sprawl less. While our governments do not have control over geography, they do have other mechanisms.

Glaeser and Kahn find that land-use regulations are lower in areas with higher carbon dioxide emissions. Maybe our governments could target land-use restrictions at the suburbs and raise the cost of development. However, simply zoning or using other command and control policies to restrict development in the suburbs is problematic. These instruments are regressive. They impose costs on landowners and cities with already low property values.

There is one policy instrument that raises the cost of suburban development without hurting local landowners: Transferable Development Rights (TDR’s). This instrument has been successfully tried in the U.S. and our governments could improve on their experience. TDR’s allow the sale of development rights from a protected area to areas suitable for densification.

In 1998, Chesterfield, N.J., located about 55 kilometres from Philadelphia, adopted a TDR program to protect its rural character. The aim was to divert new development into a dense new site away from prime farmland and the historic city centre. The township required builders to buy TDR’s in order to build in a planned mixed-use site close to the New Jersey Turnpike. Owners could sell 1 development right per 10 acres of farmland. As of April 2007, approximately 91 per cent of the units proposed for the mixed-used development were contracted, and 3,200 acres of farmland had been preserved. The price for a one TDR in the last auction, held in 2004, was $50,000.

Could TDR’s get us to give up that sprawling lot, and two hour drive, for a more energy efficient life in the city?

Sumeet Gulati is an Associate Professor in the Food and Resource Economics Group at the University of British Columbia.

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