A review by Dom Nozzi of “Perverse Cities: Hidden Subsidies, Wonky Policy, and Urban Sprawl” (2010), by Pamela Blais
January 16, 2012
Blais describes a dizzying, almost countless number of ways in which suburban sprawl is heavily subsidized. Such strong market distortions expose the extreme falsehood of sprawl apologists who claim sprawl is the result of an unfettered free market. Instead, Blais shows over and over again the perversity of those living efficient, sustainable, walkable lifestyles in town center locations who are significantly subsidizing and artificially increasing the demand for inefficient, unsustainable, car-dependent sprawl lifestyle. As Blais notes, it is as if those driving small, fuel-efficient cars are subsidizing the purchase of Hummers.
“Much of the attention [by governments seeking to reduce greenhouse gas (GHG) emissions inducing global warming] has been focused on programs that aim to reduce consumption within the home – energy-efficient appliances, windows, insulation, furnaces, and so on.” But Blais then points out that because household car travel creates such significant levels of emissions, and such travel substantially increases when homes are located in remote suburban locations, “when it comes to reducing energy use and GHG emissions, the location of the home is far more important than are the green features of the house itself…even the greenest house located in the suburbs…and an energy-efficient car, consumes more total energy than does a conventional house with a conventional car located in [a town center].”
How are so many North American cities (inadvertently?) subsidizing sprawl? One extremely important way is by using average cost pricing rather than marginal cost pricing. “…prices charged for [various urban services] rarely reflect the higher costs of servicing a larger or more distant [residential or commercial] lot; rather, prices based on average costs are used. In other words, costs are averaged across a range of different types of development associated with a range of actual costs…those properties that incur lower-than-average costs pay more than their [fair share of] costs, while those properties that incur higher-than-average costs pay less than their [fair share of] costs.”
Examples that Blais cites of this pricing perversity include:
- “those who live on small lots subsidize those living on large lots;
- Smaller residential units subsidize larger residential units;
- Those who don’t drive or drive less subsidize uses that generate more trips;
- Land uses that generate fewer trips subsidize uses that generate more trips;
- Those who live in less expensive-to-service areas subsidize those who live in more expensive-to-service areas;
- Those who live nearer the centre of the city subsidize those who live farther from the centre; and
- Urban dwellers subsidize rural dwellers.”
Blais also notes that average cost pricing also undercharges those living in remote locations for the following goods and services: “water and sewer services, roads, parking, electricity, natural gas, basic telephone, cable TV, broadband internet, postal service, municipal snow clearance, recycling collection, garbage collection.” Each of these, Blais reminds us, tends to cost more to provide in outlying suburbs, yet average cost pricing charges such residents less than their fair share of community costs (and therefore overcharges those living in efficient town center locations).
“Sprawl is underpriced, and so the demand for it is exaggerated. Efficient forms of development – denser development, smaller lots and buildings, low-, medium- or high-rise apartments, mixed use, and central locations – are overpriced, so demand for them is reduced [below what would naturally occur].”
Local governments have been their own worst enemy. “…it may be troubling to think that the problem of sprawl – one that governments have been struggling to solve for decades – has, in fact, been largely created by those same governments…”
Contrary to what we hear from the defenders of sprawl, “[s]prawl is not the result of market forces but, rather, of a particular variety of distorted market forces. Moreover, these distortions emanate largely from public policy.” We can be somewhat hopeful, however, because since many of these market distortions arise from government decisions, citizens and elected officials have it within their power to correct such distortions. And as Blais says, “[g]etting the prices right, and getting an unbiased market operating, would go a long way towards curbing sprawl…more accurate price signals will prompt new kinds of decisions, choices, and market responses, shifting demand and supply towards more efficient development patterns.”
I would note that this has already started happening over the past decade – albeit not because of government action, but where a noticeable shift toward more fuel-efficient cars and a growth in town center living has been sparked by such factors as rising and volatile gasoline prices, and overall economic woes.
Stronger local government regulations requiring smart growth, compact development, and prohibitions against sprawl have been tried for several decades throughout North America, yet have been almost a complete failure. “This failure is a very expensive proposition, given the considerable resources devoted to this effort compared to tangible results…one could say that we have the dubious honour of being blessed with both the costs of planning and the costs of sprawl.”
According to Blais, this is largely because “sprawl has been viewed narrowly within the planning paradigm – as a planning problem that calls for a ‘planning’ solution. The focus has been on solving sprawl with regulatory and design approaches. While these approaches are without question a critical part of the solution to sprawl, the problem is that they have not addressed, nor are they capable of addressing, other critical causes of sprawl, in particular, the mis-pricing issues [this book describes]. Unless these causes are addressed directly, sprawl will remain an elusive and intractable problem.”