Opponent or Ally?Prices, Policy and a Healthy Urban Form

Built Environment ForumLister Hall, University of Alberta

David ThompsonDirector, Sustainable Communities

Sustainable Prosperitywww.sustainableprosperity.ca

January 18, 2011

Making markets work for the environment

Overview

• Impacts of sprawl

• Traditional policy tools for addressing sprawl

• Successful?

• Why?

• Transforming an opponent to an ally

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Making markets work for the environment

Health-related impacts of sprawl

• Sprawl associated with at >4 categories of population health risks (AHS, 2009):

• Physical inactivity, reduced air quality, increased vehicle collisions, mental health issues

• Example outcomes (Johnson and Marko, 2007):• Heart disease, diabetes, colon cancer, osteoporosis,

respiratory disorders, heart disease, cancers, fatal injuries, other injuries, mental health issues

• More impacts: Bray, Vakil and Elliott, 2005

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Making markets work for the environment

Other impacts of sprawl

• Eats up farmland

• Hollows out established neighbourhoods

• Locks in automobile dependency

• Makes transit less feasible

• End of cheap oil = homeowner financial risks

• Legacy costs: infrastructure maintenance, policing, EMS, repair and replacement

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Making markets work for the environment

Traditional policy tools

• Land use planning

• Transportation priorities – active > transit > car

• Bylaw changes – allow mixed use

• Popular education

• Etc

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Making markets work for the environment

Successful?

• Known about the problems for decades

• Had the tools for even longer

• Yet what is our current development pattern?– E.g. Edmonton MDP – 75% sprawl

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Making markets work for the environment

What are the actual causes?

• Consider “Home X”– 3 BR, 2 bath, 1600 sq. ft., finished bsmt

• Two location options:– Established neighbourhood near centre of town

– Edge of town

• Neighbourhoods are different– amenities, community, schools, access to town,

etc.

• Another difference?

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Making markets work for the environment

The elephant in the room: prices

• Price is a major influence on decisions

• For individuals & firms, homebuyers & developers

• Can “urge” infill, provide public education, create targets for downtown development

• But if sprawl cheaper, what will happen?

• Organic produce vs. regular produce?

• Bullfrog electricity vs. regular electricity?

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Making markets work for the environment

Environmental Pricing Reform (EPR)

• A response to environmental problems– Nobody wants problems; no ‘bad guys’

– Current set of incentives creates problems

• Response: change the incentives– Align financial incentives with environmental goals

– “Tax bads, not goods”

– We do it already: RRSPs, tobacco taxes…

• Outcomes– environment, economy, jobs, revenue diversification, etc.

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Making markets work for the environment

Adjusting which prices?

• Many possible candidates relevant to sprawl

• Three examples:– Development cost charges

– Property taxes

– Transportation costs

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Making markets work for the environment

Development cost charges

• Development entails costs for a city– E.g. roads, facilities, policing, libraries, etc.

– Costs vary depending on location

• DCCs: charges on development to help pay costs

• Edmonton DCCs: many are flat– Per square foot / per dwelling / per-hectare / etc.

• Can be done differently– Make charges vary by location, as costs do

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Making markets work for the environment

DCCs to encourage infill, density

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Making markets work for the environment

Property Taxes

• Central vs. suburban– Edmonton: property taxes based on total property

value

– Land cheaper at fringes, so taxes are lower

– Change: reduce taxes at center, raise at fringe

• Density– Edmonton: multi-family tax rate 15% higher than

single fam.

– Change: give denser properties tax advantage

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Making markets work for the environment

Transportation pricing

• Road pricing– Remove road subsidy, examples worldwide

• Parking pricing– Parking stall fee: level playing field - centre & fringe

• Vehicle registration– Feebates, PAYD

• Free transit downtown– E.g. Calgary

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Making markets work for the environment

Politics

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Making markets work for the environment

Conclusions

• General principle: get root causes of problems– Or else they will persist

• Often root cause is pricing incentives

• Get prices on-side, not against our goals

• Do we want to achieve sustainability goals?– Prices can be powerful ally

– Prices can be powerful opponent

– Which do we want?

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Making markets work for the environment

References• Alberta Health Services, “Urban Sprawl and Health” (April 2009)

http://www.albertahealthservices.ca/poph/hi-poph-hpp-info-urban-sprawl.pdf

• Johnson and Marko, “Designing healthy places: Land use planning and public health” (Capital Health, 2007) http://www.capitalhealth.ca/NR/rdonlyres/eh4qelt76mejjmxogexsmbh5qrs32flyyiknqr3z6jn6xcfgyjqbeqpip3xrsztvr27joqqj2bd2pyr7myh74cnflib/DesigningHealthyPlaceslandusePublication.pdf.

• More: Bray, Vakil, Elliott, “Report on Public Health and Urban Sprawl in Ontario – a Review of the Pertinant Literature” (Ont College of Family Physicians, Jan 2005) http://www.ocfp.on.ca/local/files/Communications/Current%20Issues/Urban%20Sprawl-Jan-05.pdf

• Thompson and Bevan, “Smart Budget Toolkit: Environmental Pricing Reform for Municipalities” (Sustainable Prosperity, 2010) http://www.sustainableprosperity.ca/article172.

• Thompson, “The Power of Prices and the Failure of Markets: Addressing Edmonton’s Environmental and Fiscal Challenges” (City of Edmonton, June 2010). http://www.edmonton.ca/city_government/documents/Discussion_Paper_17_Power_of_Prices_and_Failure_of_Markets.pdf

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David ThompsonDirector, Sustainable CommunitiesSustainable Prosperitydthompson@plrc.cawww.sustainableprosperity.ca