NCPA - National Center for Policy Analysis

THE COSTS OF GROWTH

July 1, 2005

A common response to relieve the stresses and strains of population growth is for cities to enact "growth-management" ordinances, but these laws do more harm than good, says Randal O'Toole (A Better Earth).

Growth management ordinances attempt to control growth by imposing design codes, minimum-density zones and other rules to insure that cities "grow up, not out." In their attempt to control growth, the laws have had damaging effects, says O'Toole.

  • They have rapidly made housing unaffordable to low- and middle-income families; for example, a $256,000 house in Bozeman, Mon. would cost $441,000 in Boulder, Col. and $925,000 in San Jose, Calif.
  • Unaffordable housing means that low-income families are less likely to purchase a home and home ownership is an important step away from poverty; barriers to affordable home ownership help keep people poor.
  • Additionally, the Harvard Institute of Economic Research found that housing affordability is strongly related to land-use regulation: more regulation means homebuilders are less able to keep up with the demand for new housing.
  • Lastly, the plan to "grow up, not out" significantly increases congestion, and with more congestion comes more pollution.

Some regions have decided to take another approach. Forgoing regulation, they let people choose for themselves how they want to live, making certain that they pay the full cost of their choices. The most effective approaches rely on private means to solve public problems, says O'Toole.

Growth management has not produced any real benefits to counter the costs of unaffordable housing, congestion, pollution and other problems, concludes O'Toole, so cities should devise a way for growth to pay for itself through user fees and fair taxes.

Source: Randal O'Toole, "The Costs of Growth," A Better Earth, May 25, 2005; and Edward L. Glaeser et al., "Urban Growth and Housing Supply," Harvard Institute of Economic Research, Discussion Paper Number 2062, February 2005.

 

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