Evaluating Smart Growth Benefits and Costs

Todd Litman's picture

This is the third in a series of columns that respond to recent claims by the National Association of Home Builders (NAHB) that smart growth policies are ineffective and harmful. The first was, An Inaccurate Attack On Smart Growth, followed by Land Use Impacts On Travel: Current State of Knowledge. This examines smart growth benefits and costs.

First, let's clearly define the term. Smart growth refers to various land use polices that result in more compact and accessible land development, which includes increased land use density and mix (including commercial services in residential neighborhoods, and diverse housing types), increased regional accessibility and centricity, increased road and path network connectivity, increased transport system diversity, reduced and more efficiently managed parking supply. It is not simply increased density, nor simply urban growth boundaries, nor does it require eliminating single-family housing, nor is it a "war on cars."

Smart growth tends to increase resource efficiency in several ways:

  • It reduces per capita land consumption and impervious surface area.
  • It improves accessibility and transport diversity, which reduces per capita motor vehicle motor vehicle travel and associated costs (the costs of vehicles and fuel, roads, parking, accidents, pollution, etc.).
  • It increases the efficiencies of providing utilities and public services (shorter per capita utility line and road lengths, faster emergency response, less travel required to deliver mail and pizzas, etc.).

These efficiencies provide various economic, social and environmental savings and benefits. Smart growth can also increase some costs:

  • By concentrating activities and limiting urban expansion, it tends to increase land costs.
  • It can increase some development costs, such as sidewalks and curbs.
  • It tends to reduce privacy, increase noise and parking conflicts, and increase local traffic congestion (although total regional congestion delay tends to decline due to fewer and shorter automobile trips).

The table below summarizes these benefits and costs, categorized according to whether they are internal (impacts on the individuals who choose more compact locations) or external (impacts on other people).

Smart Growth Benefits and Costs (Burchell, et al. 2002; Litman 2010)

Smart Growth Benefits and Costs

This table lists smart growth benefits and costs.


Critics argue that smart growth increases consumer costs, but this is not necessarily true. Some strategies (particularly urban growth boundaries) tend to increase land unit costs (dollars per acre), but other strategies reduce housing costs, by increasing development densities (less land per housing unit), reducing parking requirements, and reducing development and utility fees in more accessible areas to reflect the lower costs of providing public services in such locations. In addition, smart growth can provide substantial transport cost savings. This is why the portion of household budgets devoted to combined housing and transport costs tend to be lower in compact, multi-modal neighborhoods than in more sprawled locations. People who are truly concerned about household affordability should therefore support smart growth, particularly strategies that provide housing and transport savings.

Critics sometimes claim that smart growth costs consumers their freedom, but this is not necessarily true. Some smart growth strategies may reduce the freedom to build new, large-lot housing in sprawled, automobile-oriented locations, but North America has an abundant supply of such housing. On the other hand, smart growth policies in many ways increase consumers' freedom, including their ability to purchase more affordable, compact housing types in accessible locations, and their ability to use alternative modes. Current demographic and economic trends (aging populations, riding fuel prices, increasing health and environmental concerns, changing consumer preferences, etc.) are increasing demand for compact housing and alternative modes, so the freedoms provided by smart growth are becoming increasingly important.   

Described differently, current housing and transport markets are distorted in many ways that encourage sprawl and automobile-dependency. Smart growth corrects these distortions, allowing more diverse housing types and transport options that better respond to future consumer demands.

It is important to consider all these impacts (benefits and costs) when evaluating smart growth. Current debates are often incomplete and simplistic, focusing on just a few impacts but overlooking some of the most important. For example, smart growth is generally justified primarily as a way to reduce infrastructure and environmental costs, while safety and health benefits, consumer transport cost savings, the value of improved accessibility for non-drivers, and the value of increased community cohesion (opportunities for positive interactions among people in a community) are often overlooked, although they may be of comparable value. The NAHB's publications are a good example of incomplete and biased analysis that exaggarates smart growth costs and ignores or undervalues many of its benefits.

This is an important and timely issue for planners, so it is important that we be comprehensive in our analysis. Are there any other smart growth impacts that I've overlooked?


For More Information

Pamela Blais (2010) Perverse Cities: Hidden Subsidies, Wonky Policy, and Urban Sprawl, UBC Press (http://perversecities.ca).

Robert Burchell, et al. (2002), The Costs of Sprawl 2000, TCRP Report 39, Transportation Research Board (http://onlinepubs.trb.org/onlinepubs/tcrp/tcrp_rpt_74-a.pdf)

CARB (2010), Research on Impacts of Transportation and Land Use-Related Policies, California Air Resources Board (http://arb.ca.gov/cc/sb375/policies/policies.htm).

Jonathan Ford (2009), Smart Growth & Conventional Suburban Development: Which Costs More? U.S. Environmental Protection Agency (www.epa.gov/smartgrowth/sg_business.htm); at www.morrisbeacon.com/images/documents/MBD%20EPA%20infrastructure.pdf.

Jonathan Levine, et al. (2005), "A Choice-Based Rationale for Land Use and Transportation Alternatives," Journal of Planning Education and Research, Vol. 24, No. 3, pp. 317-330 (http://jpe.sagepub.com/cgi/content/abstract/24/3/317).

Todd Litman (2008), Understanding Smart Growth Savings: What We Know About Public Infrastructure and Service Cost Savings, And How They are Misrepresented By Critics, Victoria Transport Policy Institute (www.vtpi.org/sg_save.pdf).

Todd Litman (2009), Where We Want To Be: Home Location Preferences And Their Implications For Smart Growth, Victoria Transport Policy Institute (www.vtpi.org/sgcp.pdf).

Todd Litman (2010), Evaluating Transportation Land Use Impacts, Victoria Transport Policy Institute (www.vtpi.org/landuse.pdf).

Todd Litman (2011), "Why and How to Reduce the Amount of Land Paved for Roads and Parking Facilities," Environmental Practice, Vol. 13, No. 1, March, pp. 38-46 (http://journals.cambridge.org/action/displayJournal?jid=ENP).

Todd Litman (2011), Affordable-Accessible Housing Photo Essay, Victoria Transport Policy Institute (www.vtpi.org/aff_acc_photo.pdf).

Ray Tomalty and Murtaza Haider (2008), Housing Affordability and Smart Growth in Calgary, Plan-It Calgary, City of Calgary (www.calgary.ca/docgallery/BU/planning/pdf/plan_it/housing_afford_and_smarth_growth_report.pdf).

Todd Litman is the executive director of the Victoria Transport Policy Institute.



Smart Growth

Todd, this up to your usual high standard thank you. One thought I have is that we spend a great deal of time talking about transportation links to smart growth but we have not thought too much about energy consumption. Both the pattern of energy consumption and energy generation will need to change in the future and the more we develop one type of infrastructure today, the more difficult it will be to take advantage of new kinds of energy generation in the future.

Todd Litman's picture

Smart Growth Energy Savings

Thanks Rob. Yes, energy conservation is one of the many resource savings and benefits that smart growth can provide. The largest category usually consists of transport fuel savings, but more compact buildings can reduce building energy use and allow options such as district energy (use of larger and therefore more efficient building heating and cooling systems).

For information see:

Reid Ewing, Keith Bartholomew, Steve Winkelman, Jerry Walters and Don Chen (2007), "Growing Cooler: The Evidence on Urban Development and Climate Change," Urban Land Institute and Smart Growth America (www.smartgrowthamerica.org/gcindex.html).

JRC (2009), "BTU Charts and Slides," Jonathan Rose Companies (www.rose-network.com): at www.rose-network.com/resources/charts-and-slides.

JRC (2011), "Location Efficiency and Housing Type—Boiling it Down to BTUs," Jonathan Rose Companies for the U.S. Environmental Protection Agency (www.epa.gov); at www.epa.gov/smartgrowth/pdf/location_efficiency_BTU.pdf.

Todd Litman (2007), "Recommendations for Improving LEED Transportation and Parking Credits," Victoria Transport Policy Institute (www.vtpi.org); at www.vtpi.org/leed_rec.pdf .

Alex Wilson (2007), “Driving to Green Buildings: The Transportation Energy Intensity of Building,” Environmental Building News (www.buildinggreen.com), Vol. 16, No. 9, Sept. 2007; at www.buildinggreen.com/auth/article.cfm?fileName=160901a.xml.

Todd Alexander Litman
Victoria Transport Policy Institute
"Efficiency - Equity - Clarity"

Some criticisms

".....Some strategies (particularly urban growth boundaries) tend to increase land unit costs (dollars per acre), but other strategies reduce housing costs, by increasing development densities (less land per housing unit), reducing parking requirements, and reducing development and utility fees in more accessible areas to reflect the lower costs of providing public services in such locations......"

The fact remains that 1 tenth of an acre now costs a household in a British city, MORE than 1 acre does in many US cities. In fact, things are almost as bad as this in Australia and NZ, even though they are as under populated as the USA. The urban growth boundary is almost solely responsible for this. Remove your continued advocacy for the UGB from the above article, and I would almost endorse everything else you say.

The outcomes for congestion are debatable to say the least:


It is necessary to find the link to the Excel Spreadsheet for the INRIX data, half way down the French language web page.
I do not know of any research as yet that teases out the right data to show a clear correlation between density, urban footprint, urban shape, road lane miles, job dispersion, etc, and congestion/travel times. Even the efficiency of "connections" - bridges, tunnels, intersections and interchanges - might be a "most" significant factor.

Lastly, this claim is not the entire story:

"......the portion of household budgets devoted to combined housing and transport costs tend to be lower in compact, multi-modal neighborhoods than in more sprawled locations. People who are truly concerned about household affordability should therefore support smart growth...."

It is INCUMBENT households in favourable locations whose budgets for "housing plus transport costs" are lower on average than those in unfavourable locations. This is simply because a high proportion of the incumbents in the favourable locations, are people who bought their first homes years ago and are comparatively debt free in comparison to the typical households at unfavourable locations, who tend to have bought more recently.

The truth is that any FAMILY currently having to choose a location, will save more on housing costs by living "further away" and "travelling further". Even the incumbents mentioned above, could bank their current property value, move further away, and make it pay handsomely.

I have referred you before to the work of Anthony Downs on this subject, and also the relevant section in the "Costs of Sprawl 2000" Report, of which Downs was a co-author.

(Of course a young single person might accept very limited space for their "housing" and trade this off to keep their "transport plus housing" costs low.)

The longer that urban growth boundaries have been in force and the higher urban land prices have trended, the worse this effect gets. As the above example about Britain illustrates, there comes a time when space can no longer BE "traded off", and one's housing costs are already severely unaffordable.

Dispersion of jobs ameliorates the negative effect on location decisions. More and more academics are now noting the remarkable stability of travel times in US cities in the face of very high growth levels, both in population and in urban size.

Lastly, as Downs (and the Costs of Sprawl paper) pointed out, if a city has very LOW urban land prices, it no longer becomes more expensive to "buy closer and travel shorter distances". Therefore, policies that LOWER rather than inflate the cost of urban land, should be supported by people who wish for the best of all worlds - housing affordability AND efficient location choices by households. This effect applies to the location of businesses as well.

Hello Todd, I am curious,

Hello Todd,

I am curious, has anyone studied the issues that are faced by local governments, and planners/politicans, when they try to introduce smart growth policy into practice? How they compromise the issues that arise because of the different political views. That sort of thing.

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