Does allowing more urban sprawl lead to affordability?

Spraw externalizes the costs and internalizes benefits

It started with a series of tweets by Cherise Burda, Executive Director of Ryerson University’s City Building Institute (CBI) about a seminar arranged by Ryerson Univesrity’s Centre for Urban Research and Land Development (CUR).

Where as all the above tweets are inter-related, I have already explored the point made in tweet 3 about lack of serviced land or Growth Plan being responsible for housing crisis in GTA in my earlier post “Is Places to Grow Act to be blamed for GTA housing unaffordability?” so will not dwell on it.

The other three hint at benefits of “sprawl” that I would like to explore today. Fortunately for us, LSE and Victoria Transport Policy Institute published a study in 2015 Analysis of Public Policies that Unintentionally Encourage and Subsidize Sprawl that argues against the aforementioned cited benefits:

Social Equity

Social equity refers to the distribution of impacts (benefits and costs), and the degree that this is considered fair and appropriate (DfT 2014; Litman 2002). Sprawl can have various social equity impacts:

– To the degree that sprawl increases external costs, it is horizontally inequitable. As previously discussed, sprawl tends to increase the costs of providing public services, which causes urban residents to cross-subsidize these costs (Blais 2010). Sprawl also increases vehicle travel, and therefore road and parking facility costs, congestion, accident risk and pollution costs imposed on other people. Unless these are efficiently priced with significantly higher development fees, utility rates and taxes in sprawled areas, plus road tolls, parking fees and fuel taxes to internalize all vehicle costs, sprawl tends to be horizontally inequitable.

– Sprawl tends to degrade walking and cycling conditions, and public transit service quality, and increases the distances between destinations, which reduces non-drivers accessibility and increases transport financial costs (CNT 2013). This tends to harm physically, economically and socially disadvantaged groups, leading to social exclusion (physical, social and economic isolation). This is vertically inequitable.

– Sprawl tends to reduce single-family housing costs, but tends to reduce compact housing options and increases household transport costs. This benefits some households (those that prefer larger-lot housing and automobile travel) but harms others (those that prefer adjacent and multi-family housing, and cannot drive)

This indicates that sprawl can reduce social equity by imposing unjustified external costs, and reducing affordable housing and transport options used by disadvantaged populations.

Social Problems

Social problems such as poverty, crime, and mental illness tend to be more concentrated and visible in cities. This occurs because poor people tend to locate in cities in order to access services and economic opportunities (Glaeser, Kahn and Rappaport 2008), while suburbs tend to exclude disadvantaged people by discouraging affordable housing and affordable transport modes (walking, cycling and public transit). As a result, suburban residents tend to be more economically successful and satisfied than urban residents (Mathis 2014; NAR 2013). People sometimes assume that denser development increases social problems and lower density development can reduce them. However, this confuses cause and effect. There is actually no evidence that compact development increases total poverty, crime or mental illness (1000 Friends 1999), on the contrary, research suggests that smart growth policies can reduce total social problems.

Affordability

Affordability refers to households’ ability to afford basic goods such as housing and transport. Affordability is often defined as households spending less than 30% of income on housing, or less than 45% of income on housing and transport combined (CNT 2013). Sprawl tends to reduce some household costs but increase others, as indicated in Table 7. It allows development of inexpensive urban-fringe land, which reduces land costs per hectare but increases lot size and therefore land per housing unit. Pro-sprawl policies such as minimum lot sizes, building density and height limits, restrictions on multi-family housing and minimum setback requirements tend to reduce development of less expensive housing types, such as adjacent and multi-family housing. Sprawl increases residential parking costs and total transport expenses (Glaeser and Ward 2008; Ewing and Hamidi 2014). As previously described, sprawl increases the costs of providing infrastructure and public services which can increase housing costs and general tax burdens.

Critics claim that by restricting urban expansion, smart growth reduces housing affordability (Cheshire 2009; Demographia 2009; Mildner 2014) but their analysis is incomplete. Restrictions on urban expansion may increase land unit costs (per square meter), but smart growth reduces other costs including land required per housing unit, residential parking requirements, infrastructure and utility costs, and household transport expenses. As a result, smart growth policies can increase affordability overall, particularly for lower-income urban residents who live in multi-family housing and rely on walking, cycling and public transit.

External Benefits of Sprawl?

Sprawl can provide various benefits, including larger residential lot sizes which allow residents to have larger gardens and more privacy, reduced exposure to noise and some air pollutants, lower crime rates and better schools (Burchell, et al, Table ES-17). However, these are mostly internal benefits or economic transfers (one group benefits at another’s expense). For example, the lower crime rates and better schools in sprawled neighborhoods largely results from their ability to exclude poor households that cannot afford cars. This can benefit those community’s residents but concentrates poverty and associated costs (crime, inferior schools and increased burdens on social service agencies) in urban areas. Similarly, sprawl residents’ lower exposure to noise and air pollution is often offset by their increased vehicle travel which increases noise and air pollution imposed on urban neighborhoods. There is little evidence that increased sprawl can provide significant external benefits (benefits to people who live outside the sprawled community). This absence of external benefits is expected since rational people and businesses externalize costs and internalize benefits (Rothengatter 1991; Swiss ARE). If sprawl really did provide external benefits, developers or occupants would find ways to capture those benefits, for example, by demanding subsidies.


To summarize

Sprawl has two primary impacts: it increases per capita land consumption, which displaces other land uses, and it increases the distances between activities, which increases per capita infrastructure requirements and the distances service providers, people and businesses must travel to reach destinations. These primary impacts have various economic costs including reduced agricultural productivity, environmental degradation, increased costs of providing utilities and government services, reduced accessibility and economic opportunity for non-drivers, and increased transport costs including vehicle expenses, travel time, congestion delays, accidents and pollution emissions, as illustrated


…our analysis indicates that by increasing the distances between homes, businesses, services and jobs, sprawl raises the cost of providing infrastructure and public services by 10–40 percent. Using real world data about these costs, we calculate that the most sprawled quintile cities spend on average $750 annually per capita on public infrastructure, 50 percent more than the $500 in the smartest growth quintile cities. Similarly, sprawl typically increases per capita automobile ownership and use by 20–50 percent, and reduces walking, cycling and public transit use by 40–80 percent, compared with smart growth communities. The increased automobile travel increases direct transportation costs to users, such as vehicle and fuel expenditures, and external costs, such as the costs of building and maintaining roads and parking facilities, congestion, accident risk and pollution emissions. Figure below illustrates estimates of these costs.


We estimate that in total, sprawl costs the American economy more than $1 trillion annually, or more than $3,000 per capita, and that Americans living in sprawled communities directly bear $625 billion in extra costs, and impose more than $400 billion in additional external costs. This is economically inefficient and unfair: it wastes valuable resources and imposes costs on people who do not benefit from sprawl.

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