Among the countless stories being written on the successes and challenges of these 2010 Olympic Winter Games, not surprisingly the most interesting stories to me are those that speak to the challenges of great urbanism. As a host city, Vancouver has become a massive urban laboratory, with so many opportunities to learn, and we’re soaking it all up.
As we are coming to the end of the final week, a few examples of big experiments and learnings come to mind.
A New Global Community-Building Model?
During the first week of the Games, we announced that our Olympic and Para-lympic Athletes Village has been recognized as only the second LEED-ND™ Platinum neighbourhood in the world – and given that the US Green Building Council awarded us the highest number of LEED ND points so far, 83 points, they proclaimed the community "the greenest in North America!" My past post gave many of the details of the planning and design of the Olympic Village. The debate has already started on whether this recognition means the community could be the “greenest in the world”- Given the incredibly impressive green communities in parts of the world that don’t use the LEED system, many of which continue to raise the bar for us in areas where we’re still behind, I think I’ll leave that to the healthy debate of the global green community.
Green is obviously one big definition of success for the Athletes Village, but in a city that takes its livability very seriously (in a bit of great timing, the Economist announced this years rankings on the day of the opening ceremonies, again naming Vancouver the world’s most livable city), the quality-of-life and livability in the Village is a key indicator of success as well. It will be some time before the Village is operating as a "normal" community for such observations, but so far the first residents – the athletes themselves – seem to be giving it high marks. The media has even picked up on the athletes tweeting, commenting about the Village;
"Ohno gushed: 'The Olympic Village here in (Vancouver) is beautiful. Awesome facilities and the hospitality is amazing. Vancity is an incredible place.' Another U.S. speed skater, Chad Hedrick, told his Twitter followers: 'The athlete village here in Vancouver is incredible! I have a two-bedroom condo overlooking the city and water. Good times!'"
Vancouver sees livability and sustainability as fundamentally linked, so we strove to build this new community to be models of both. Although the planning and construction challenges were huge, the global financing challenges even bigger, the resulting community has given a lot of people much to be proud of in the past few weeks. The Olympic Village has fundamentally changed “business-as-usual” for us in Vancouver, and we hope it will be a living laboratory for high-performance communities across the world. If only the public could see it better during the games! Alas though, the Olympics security has meant that only the athletes get that treat for the moment.
North America's Largest "Traffic Trial" Ever?
Cities like Copenhagen, and more recently New York, have embraced the value of traffic trials or pilots, in demonstrating effects of mode changes, dispelling myths, or just learning what really happens to traffic when you make a change, despite what the models say. Vancouver has used many such trials as well, including this summer’s very successful closing of a lane of traffic over our Burrard Bridge (one of three bridges connecting the downtown peninsula to the rest of the city) to give it to cyclists.
But has there ever been as huge an urban traffic trial as this in North America? The transformation of an entire mobility system in a large city and complex downtown? We know that Vancouver is the largest and most urban setting thus far for the Winter Games, and that many Summer Games have been concentrated in one area, often on the outskirts of the built environment. The highly dispersed nature of our Games across municipalities and across highly urban settings, has made this trial rare if not unique. Massive pedestrianization of countless streets, a necessary 30% drop in car trips in a city that has already shifted significant percentages of trips to walking, cycling and transit in the past few decades, the running of a new streetcar pilot, the aspects go on and on.
All of this, we believe, gives us a special snapshot picture of a potential future for our city as we continue to move rapidly to more sustainable modes of travel. As we work toward an updated transportation plan for the downtown and broader city, the massive amounts of data, and the general change in perception and attitudes from this temporary transformation, may end up being the most powerful legacy from these Olympics. I strongly believe nothing will ever be the same in how we perceive traffic and movement in our city after this.
Here are a few of the mobility successes so far:
- Halfway through the 2010 Winter Games, every day Vancouver is continuing to see record numbers of people walking, cycling and taking transit. We are consistently meeting or exceeding our 30% target reduction in car trips.
- More than 20,000 pedestrians a day walked across the Burrard and Cambie Bridges to and from Downtown Vancouver.
- With the good weather in the past few days, cyclist volumes across the Burrard and Cambie Bridges are at high summertime levels with an average of 5,000 cyclists riding to and from Downtown Vancouver every day. The City of Vancouver is providing safe and convenient bike parking spaces near Olympic and Para-lympic venues, LiveCity celebration sites and at the Olympic Village station of the Olympic Line streetcar. Free bike valet services are also available at these locations to encourage cycling.
- The new Canada Line subway line reached a peak of over 250,000 riders on Thursday February 18, far exceeding the expected numbers of around 100,000 and the SeaBus had 50,000 boardings on the same day, well over twice the normal numbers. The system is handling these numbers well.
- The Olympic Line - Vancouver's 2010 Streetcar pilot - reached a milestone a few days ago of 300,000 trips since starting on January 21, 2010, and is now averaging 20,000-25,000 boardings each day, making it busier than Seattle and Portland's streetcar networks, even though it has only two stations.
This media report sums things up nicely:
"It helps, too, that Vancouver's excellent transit system is zipping people so efficiently from place to place. The star of the games is the new $2.1-billion Canada Line, which stretches from the airport through the length of the downtown. With 20 trains running at two to three minute intervals, the Canada Line is carrying 200,000 to 250,000 passengers a day -- more than double its usual ridership. (The two older Skytrain lines, the Expo and Millenium, running every 108 seconds, are together carrying about 320,000 a day, an increase of some 33 per cent, while bus ridership has gone from 750,000 a day to 900,000). Local commuters say they're actually finding it easier and faster to get to work than usual."
This remarkable achievement is a triumph for the Olympic Transportation Plan, and it’s to the huge credit of our very clever transportation planners at the City, working with VANOC (The Vancouver Organizing Committee who work with the International Olympic Committee, the various host cities, etc), who have done a fantastic job!
Urbanism At Its Best - A Transformed Public Realm
Perhaps the best example of great urbanism on display is the way the streets, squares and former parking lots have all been transformed into LiveCity sites, international houses, and constant street celebrations! Everywhere you look the crowds are massive, among street buskers and bands, impromptu street hockey games, in-street network installations (CTV who has Canada’s rights to the Games have been broadcasting since the start from the middle of Robson Street in front of huge crowds), and even foreign invaders set to “defeat the world” (as Stephen Colbert has been proclaiming to the delight of massive crowds during his taping from the middle of Creekside Park, between Sochi House and Canada Hockey Place).
I’ve heard our streets compared with “17 new years eves in a row in New York”, or “the most European-like use of our squares and streets we’ve ever seen – beyond European!”. Canadians and international visitors have come together to create a fantastically friendly and passionate street scene that never seems to stop. Olympic officials are saying that perhaps only the Sydney Summer Olympics is comparable in terms of the energizing of the city’s public, and public realm. It is absolutely thrilling to see and experience and may very well permanently transform our mind-set as a city and citizenry about our streets and public spaces – another huge legacy of these Games. Already it has re-ignited the discussions on pedestrianizing our Granville Street and many others, sparked discussions on a much bigger sidewalk patio culture , and on and on.
Here are some quotes pulled from the media on this phenomenon:
“SHINING CITY IN THE SUN: The glorious warm weather is a curse in some ways, but an even bigger blessing in others. The city itself is bathed in sparkling sunlight, creating spectacular TV images and a sublime street party. Vancouver is the largest and most culturally diverse city ever to hold a Winter Olympics. It's increasingly being hailed as the most beautiful, too.”
“The streets here in Vancouver are teeming with people. Think of what 161st Street and River Avenue looks like before a Yankees playoff game, and you'll have an idea. But it's 24/7. And everywhere. The SkyTrain here is packed like the A train at rush hour all hours of the day.”
“Team Vancouver” includes thousands of residents of this scenic city.
Rarely have I seen a host city so passionate and so ready to embrace the Games.”
“Everywhere I wander in the city, people are in the streets. They're draped in Canadian flags, children have Canadian flag tattoos on their cheeks, people proudly wearing their "Canada" hoodies and their red mittens – the must-have item of 2010 (2.6 million pairs sold to date!) and spontaneous choruses of "O Canada" are breaking out whenever their national heroes win a medal.”
“Most of the partiers don't seem to be foreign tourists, but rather locals who have flooded out of their homes and onto the streets, thousands of Vancouverites -- and suburbanites -- enthusiastically rediscovering their own downtown.”
“The reason that downtown Vancouver has come to such vibrant life isn't because of the Olympics per se. It's because thousands of local residents have reclaimed their city centre as public social space.”
"I walked out on to my friend's balcony in Yaletown Tuesday after Canada [defeated Norway] and yelled out, 'Go, Canada, go!'" said Brian MacNeil, "and the streets just erupted with cheers back. It's so much fun."
“We'll also point out the greatest event of the games might have occurred last Tuesday night when a ball-hockey game broke out on Granville (street) with about a thousand people watching. The video is actually up on Youtube where you can see the game, the fans and, if you look closely, a group of Canadian media types criticizing the line combinations and another fighting over who's going to do the sidebar on the winning goalie.”
“It is, without putting too fine a point on it, freaking insane. It's also unprecedented in Olympic history and the evidence of this feel-good story smacks you in the face virtually every time you turn around.”
When I have more time, I’ll write more about the observations and effects on the urban realm, the way public art and “urban happenings” have been igniting the city, and other big learning – as it stands, I’m still taking it all in, day by day. I’ll also find the time to download the thousands of pictures I’ve been taking and include some of the best in a next post. One item I’ll likely write about are my own observations on the early controversy around VANOC’s decision to put the fence around the Olympic cauldron, and why it particularly felt wrong in a city that takes its public realm design, and public access to public space, so seriously. The design improvements put in place around the cauldron since, though, have gone a long way in turning a negative into a positive.
Not everything has gone perfectly thus far with these Olympics, despite the incredible hard work of the countless organizers and volunteers. We’ve had challenges, and we’ve had tragedy. But I would like to thank and congratulate VANOC for their remarkable work, not because of the absence of problems, but because of how they’ve addressed them. I’d like to thank and congratulate the thousands of blue-coated volunteers who have been the biggest heroes of these Games. And I’d especially like to thank the people who made this the best celebration the City, the Country, and perhaps the Olympic movement has ever seen – if we end up being held up as one of the best Olympic experiences, it will be because of the public who made it so every minute.
From the host city’s perspective though, and from my city-planner’s perspective, we’ve already had remarkable successes and learning’s in city-building. Like Expo 86, the City will never be the same again, because of this amazing laboratory of urbanism. To sum up, I’ll steal some words from the Canadian “slam poet” Shane Koyczan who stole the show at the Opening Ceremonies – “we’re an experiment going right for a change.”


















Vancouver and rents
I did a brief (not too scientific) survey on Craigslist, looking for housing under $500 advertised in past several days. I counted 14 in Vancouver, 5 in Toronto. Here's actual data supporting this:
http://www.canada.com/topics/news/national/story.html?id=a9ffa463-5a15-4...
Maintain Momentum
Please keep the momentum going. The Granville Mall should be kept as a pedestrian-only space. The street car project should be implemented quickly. I love the way the city has transformed over the past 2 weeks - let's keep it going.
Maybe I missed something... but WHAT are you talking about?
Consider this:
AARON MATÉ: It’s just a short walk from the Olympic festivities, but the Downtown Eastside can feel worlds apart. An area of fifteen square blocks, it’s the poorest postal code in Canada. It has the highest HIV infection rate in North America, an outgrowth of rampant drug use and prostitution. But for decades, right through the Olympics, it’s also been a community of resistance.
PROTESTER: What we have in the Downtown Eastside is the most impacted and one of the most devastated communities as a result of the 2010 Olympic Games. People are being pushed out. People are being shoved around. People are being thrown into jails. And yet, we’re standing here, because this community always fights back and always resists with courage and with love. Thank you, everyone, for being here.
AARON MATÉ: The Winter Olympics cost around $6 billion, nearly $1 billion on security alone. That’s seen as an affront in the Downtown Eastside, where residents have fought to preserve the social services that can mean life or death for many vulnerable people. Libby Davies is a member of the Canadian Parliament.
LIBBY DAVIES: In many cities across North America, inner cities have either been demolished, gentrified, wiped out, or people just left in misery. In this neighborhood, there has been a struggle for more than thirty years to fight back and to say, “This is our community. We have a right to be here. We have a right to live in dignity, in good housing, with parks, with a community center.” And so, this struggle goes on.
Is Planetizen part of the neoliberal ignorance of what is happening in urban regions?
Goetz Wolff - UCLA Urban Planning
Clueless at UCLA
You are quoting people with hard-core anti-capitalist if not Marxist agendas. These people have no credibility in the mainstream and are speaking only for their own consituency of self-perpetuating so-called anti-poverty activists. The reality is that nobody in the Downtown Eastside has been displaced by the Olympics, believe me these people would have been screaming blue bloody murder if anyone was being evicted to make room for Olympic visitors. This place was under a microscope prior to and during the Olympics and yet there were no sordid stories to report other than the superficial observations of this reporter. The Downtown Eastside has been a sinkhole for hundreds of millions of dollars in social services funding from various levels of government, with what progress to show as a resultÉ At least the Olympics produced an experience for the City that had tangible economic benefits and obvious community spirit, patriotism and memories that will last a lifetime.
Whenever someone says $6 billion I stop listening because I know immediately what their agenda is. Over half of that number was much-needed infrastructure spending. I have never known the hardcore left to be so vehemently against transit infrastructure, but I guess it suits them in this case.
Planning for everyone
The reality is that we are operating in two worlds within each city. In many ways, much of our planning is only serving higher income people.
People, including planners, are recognizing this is a problem and are trying to change it. We have to plan for communities that serve and include people of all economic backgrounds/walks of life.
Back To Basics
Sorry if this is old news to everyone, but Joel Kotkin did quite a good analysis of this:
"Back To Basics", by Joel Kotkin
http://www.joelkotkin.com/Urban_Affairs/NAF_GrowthStrategy.pdf
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just to add...
I should have definately included TransLink, our regional transportation authority, in the credit for our transportation success - the job they've done is simply tremendous! And to HR, I agree, and I'll speak to the homelessness and affordability issues and legacies, and the much-needed messages given on homelessness during the games from many speakers, in my next post.
Regards,
Brent Toderian
Congratulations!
Thanks for blogging during these busy days and giving the Planetizen readers a glimpse of what your city is like during the Games.
Congratulations to the Vancouver Planning Department and your partners, for both the long transformation over the years and the successful showcase for density, transit, and pedestrianization. Your vivid descriptions reveal one of the true goals of urbanism: creation of an atmosphere and environment that encourages spontaneous civic celebration in a flexible public realm.
Bravo!
Re homelessness etc. in Vancouver
I think our thoughts need to be on resolving problems of homelessness in towns like Vancouver via addressing cost of living and creating new shelters. The fact that there are thousands of homeless people living on the streets and in tents because shelters are at capacity is very urgent-more urgent than design right now.
More urgent than design
You said it, HR Planner.
Not a word so far on here about Vancouver topping the Demographia survey for unaffordability of its housing - median multiplier prices of more than 9 times income.
I was not aware before now of the tent city phenomenon in Vancouver, but it figures. The other most unaffordable areas identified by Demographia in earlier surveys, centered in California, have had a tent city phenomenon for a while too.
Hugh Pavletich of "Performance Urban Planning" has just done a very illuminating analysis of the difference between California and Texas. It is unfortunately not on line yet, but sites like Planetizen need to get links to it as soon as it is.
California is "short" of approximately 1 million homes by per capita comparison with Texas. But the difference in terms of underwater mortgages is immense. The whole financial crisis literally would not have happened without California's housing development constraints.
The "AudaCity" organisation in Britain is now openly attempting to start a movement to establish "illegal settlements" on legally purchased farmland, to highlight the consequences of stringent town planning. As a house "lot" on farmland would cost each buyer around 20 thousand pounds rather than half a million pounds (which is the planning-enabled racket price), it is easy to see where the unaffordability problem stems from. A particular irony is that the advocated settlements will be "sustainable" by necessity.
Apparently the British now have edged out the Japanese at the bottom of the scale for home space per person, and the average age of a first home buyer in Britain is now 38 years. I expect to get 2 types of argument in response to this: those who deny that planning has anything to do with land prices; and those who candidly admit that this is just another useful means of constraining human reproduction. I forget who described unaffordable house prices and huge mortgages as "the new contraceptive"; but I stand by the truth of that observation.
Homelessness in Vancouver and the cost of housing
I contend that the homelessness issue in Vancouver has very little if anything to do with the high cost of home ownership.
Unlike in the US, we in Vancouver do not have a phenomenon of people being foreclosed upon and winding up on the street. It just has not happened here. My point being that very few of the homeless on the streets of Vancouver were former Vancouver homeowners that could no longer afford their mortgages. Likewise, I doubt that the cost of a monthly mortgage payment is the main impediment keeping the homeless from entering the homeownership market. Saving up for a down payment and going in to a bank to get approved for a mortgage is probably not on most homeless peoples radar screen.
Again my point is that the cost of homeownership is not linked to the homeless issue. It is instead the rental market that the homeless would be looking to participate in. And Vancouvers rents are really not all that high. They are certainly lower than in Toronto and Seattle, far lower than in LA or San Francisco, and only moderately higher than in Edmonton and Calgary. I would contend that they are more or less in line with local incomes. So while it is a tight market, it is not fundamentally an affordability problem in my opinion. The rental market is self-correcting in real time. Most recently the rental market in Vancouver is quite soft. And despite the official stats placing rental vacancies below 2%, that reflects purpose-built rental buildings only (of which there have been very few built in the past 20 years). The vast majority of current rental supply year to year is provided by condominium investors, who ensure a well-supplied marketplace. Indeed, it is the large number of condominium completions over the past 12 months that has resulted in the softness that landlords are currently experiencing. But this hasnt translated to fewer homeless in the Downtown-Eastside.
There are a number of factors contributing to the homelessness problem in Vancouver, but I dont believe that economics is one of them. These include first and foremost that Vancouver is the only city in Canada with an agreeable enough climate to permit living outside in the wintertime, but also a lack of proper mental health institutions and a self-perpetuating ghetto of social services in the Downtown Eastside. There are plenty of more affordable areas in the Greater Vancouver region where one could find rental housing than a semi-waterfront district a stones throw from the CBD, so why is it all ghettoized thereÉ The only answer I can come up with is, because thats where it always has been.
Richard Wittstock
True, but your turn is coming
Good points, Richard.
Rents do tend to stay low in a housing bubble because so many "investors" are buying properties with the capital gains in mind. Then there is an "oversupply" of investment properties for rent.
But given the size of Vancouver's housing bubble, identified in the last Demographia survey, your turn will come for the tent cities of recently foreclosed residents.
foreclosures not that closely linked to home prices
Foreclosures are concentrated in four states - Arizona, Neveda,Florida and California.
http://mjperry.blogspot.com/2009/03/foreclosures-concentrated-in-four.ht...
California is of course quite expensive- but the other states far less so.
Even according to Wendell Cox, Las Vegas and Phoenix are highly affordable markets, with housing prices less than three times median income.
http://www.demographia.com/dhi-rankings.pdf
In Florida, Miami has affordability issues, but every other region in the state is pretty close to the magic 3-1 mark.
Meanwhile, notice what ISN'T on the four state list- every other expensive state besides California!
Demographia's affordability ratings
Michael, you need to look at previous Demographia reports, and also Randal O'Toole's recent paper (I wish he would not select such provocative titles for his papers). There is a connection between foreclosure rates, and price rise-and-fall, not between foreclosure rates and prices as they are now.
California still looks unaffordable now while the others look affordable, because California has crashed from absurdly high median multipliers like 7, 8, and 9; down to 4 - 5; while the other markets you mention have gone down to 3 from levels like 5 and 6, which were cause for concern in their time.
Hugh Pavletich of "Performance Urban Planning" has just done the most thorough analysis I have yet seen, of the sums of money involved in mortgage finance related losses, in California compared to Texas. This should be widely read:
http://www.scoop.co.nz/stories/WO1003/S00019.htm
The planning profession and the economics profession also need to be alerted to Randal O'Toole's analysis of previous urban market bubble volatility. It appears that urban markets around the USA have gradually been joining the ranks of the "volatile" markets as they institute urban limit policies; each bubble has been bigger in terms of the whole of the USA as more and more markets have become bigger and bigger participants in each bubble. If he is right, next time will be bigger than this time - God forbid.........Or perhaps a long, slow stagnation like Japan? Who knows?
Interesting statistics
The link between market volatility (as opposed to high housing prices) and foreclosures is certainly there, somewhat to my surprise. Looking at the NAHB statistics (which show changes over time) really bring the point home. (http://www.nahb.com/reference_list.aspx?sectionID=135 , then find the "Complete History by Metro Area" spreadsheet).
The larger metro areas in the "Four Horsemen" (Fla, Az, Cal, Nv) states show price drops as high as 50 percent. By contrast, super-expensive metro areas in the Northeast show 15-25 percent drops.
Not sure how this supports the alleged link between regulation and foreclosures. If you assume (as many commentators seem to) that any home prices above the 3-1 income/price level are the result of land use regulation, then the superexpensive housing markets would have the highest levels of land use regulation. Yet they seem to have avoided foreclosures, volatility etc. to a much greater extent than only moderately expensive markets. What's up with that?
Michael, one thought
you might distinguish between house prices and mortgage amounts in your evaluation or thinking on this. We must all remember that there are at least a fair number of homeowners living in $500-$750,000 homes with mortgages that may be less than $150,000 or none at all. I joked many times while living in California that if people had to buy their homes at "today's" value, they would really be hurting. That was more true 3 years ago, but still is somewhat true today. You can probably see how that can affect a conclusion about foreclosures and housing prices. I find the higher growth states (in the 2000s) have had problems because of the larger LTVs relative to today's or even 2006 values. I think the rub about any significant land use restriction as it relates to housing is this: it certainly could have benefitted those who already owned homes effectively lowering their LTV and reducing their foreclosure risk while increasing prices for those looking to buy and pushing to "drive till they qualified" and putting them at greater risk of foreclosure. The regulation=foreclosure is a big leap, but it's probably an argument you can reasonable make as long as you consider that there are many other reasons for foreclosure and that is just one small one.
Another thought for you and Michael
This is a most rewarding discission, thank you Michael, and thank you, ContrarianPlanner.
That explanation is very good, ContrarianPlanner. There is also the factor to consider, that it is a common practice for existing owners of homes to use their homes as collateral for borrowing; for new cars, for holiday cruises, for business investment, for home improvements, for education of them or their children, for unexpected medical expenses, and (this is important) as collateral for purchase of another one or more properties as investments. It might be very revealing to analyse the number of properties thus purchased in the bubble period. When you have low interest rates and rapidly appreciating property prices, the temptation is great.
But clearly incumbent owners in areas like California, while enjoying appreciation from the low value at which they bought their home years ago, to some absurdly high figure; frequently may not have the income to support loans taken out against the increased value; and they may also simply be too wise for that.
You are certainly right, ContrarianPlanner, about the new entrants to those markets being the biggest problem.
I should also clarify my claim about the connection between price volatility and foreclosures. I think this is self-evident, yet Michael is right that some less-inflatory markets have had high rates of foreclosure. I believe this is the result of regulatory lending mandates regarding the disadvantaged (some people call this "predatory lending"; it is a question who are the predators; the lending institutions or the politicians who forced such lending practices on them).
In high-inflating markets, there was no way even under the most relaxed "sub-prime" terms, that the unemployed, beneficiaries, checkout operators, cleaners, etc, were ever going to qualify for loans. But in markets like Atlanta, because of the existence of cheap land and even cheaper down-market area homes, it was possible for these people to become home owners with mortgages of $60,000 and even less. As soon as a downturn hits, (and California started this, not Georgia) of course many such people will become defaulters. The numbers of foreclosures will be high and yet the total sums of money lost by the finance sector will be low.
I have already posted on this thread, the analysis by Hugh Pavletich of the difference in sums of money lost, between California and Texas. This is deeply illuminating on the point I am making here.
Latest report
This gets more and more complex and difficult to understand by the day. I just read THIS:
http://www.businessweek.com/magazine/content/10_11/b4170020655634.htm
How can anyone safely forecast anything about housing markets with this sort of thing going on?
".....The number of lots owned or controlled by a dozen of the biggest builders rose slightly in the second half of 2009 after years of decline as renewed buying offset heavy tax-related selling of unwanted parcels, according to a Bloomberg analysis of company reports. In crash-prone markets such as Southern California and Florida, prices of some construction-ready lots are up 50% or more from their 2009 lows. "There is definitely a shortage of land, and you cannot turn the switch on overnight," says Douglas C. Yearley Jr., executive-vice president of luxury builder Toll Brothers......
"......It's tough to say how much land prices have risen because each market is different......"
They said it. But they missed the crucial word "zoned" out of that sentence: there is definitely a shortage of.......zoned........land. The difference between the various markets is affected to a large measure by this factor, too.
Foreclosures resulting from predatory lending
Foreclosures in lower income neighborhoods can result from predatory lending. People were sold loans they could not pay back according the terms of the loan. Some, now, just will never be able to afford the homes they were sold.
Lax to non-existent government regulation over lending institutions is in part responsible for this problem.
Predatory Lending
"Lax to non-existent government regulation over lending institutions is in part responsible for this problem".
Actually, consumer lending is heavily-regulated. A lot of those "predatory loans" were made using US Government-approved underwriting as they were made specifically to be purchased by Freddie Mac/Fannie Mae (no use trying to argue that Freddie Mac/Fannie Mae is not explicitly part of the USG) in an effort to "encourage homeonwership". There was greed all around, and everybody made a ton of money (see "Barney Frank" and check out the bonuses given to Freddie Mac/Fannie Mae executives got during the bubble... conveinent that some of that dough made its way into campaign donations) except the vast majority of taxpayers and the people who are stuck in their homes now.
HRP, please do not take my comments to mean that I don't think many people were taken advantage of and are now in a bad situation, I just don't think that the root cause of the problem is lax regulation...
Foreclosures
Why do you blame "predatory lending" and LACK of government regulation for this problem? I thought the lending institutions had in fact been forced by regulatory mandates, to lend to people of high risk of default, so as to not deprive disadvantaged people of the "right" to home ownership. I don't think this is controversial or in dispute; do I have to link to articles about it?
Financing Low Income Communites Text
Financing Low Income Communities by Julia Sass Rubin Chapter 8 covers predatory lending
Report today: In the Shadow of the Olympic Flame
Here is today's Democracy Now program from the poor section of Vancouver:
In The Shadow of the Olympic Flame: A Report From the Downtown Eastside of Vancouver, the Poorest Neighborhood in Canada
http://www.democracynow.org/2010/3/2/in_the_shadow_of_the_olympic
Not quite so simple
Wodehouse seems to be arguing: (1) California has foreclosures; (2) California is expensive; therefore (3) expensive land causes foreclosures.
But didn't the foreclosure crisis happen in some other places too?
And isn't it true that WITHIN California, the expensive core areas have lower foreclosure rates than the drive-to-qualify exurbs?
Context
Perhaps Paul Krugman can help:
http://www.pkarchive.org/column/080805.html
Within CA, those we would consider middle-class cannot even begin to think about buying a home in the expensive core areas... so they drive to qualify. The only people that buy in core areas are on the upper end of the income scale (who tend to be more immune from economic downturns, which lead to less foreclsoures). So once a recession/credit-bubble pop happens, those lower down on the income scale are hit harder, which equals more foreclosures in the hinterlands. It's still part of the same problem, it just manifests itself differently in different areas.
Rubber stamp: tardy.
Small l standard template argumentation using PK's 'Zoned zone' out of context to prop up their worldview: check. The average time it takes to trot this out got a little longer, though. One wonders why it took so long to cough it up this time...
Best,
D
California is very important
That is probably sufficient explanation, thanks Ricardo. Many people explain the difference between California and Texas etc, as purely a question of attractiveness of climate, landscape, etc. Yet over the ranges from the Pacific is not an attractive place to live, and it is testimony to the power of urban limits to drive up prices, that desert-edge lots went to $300,000 and more. Had they stayed at $30,000 as in Texas - and there is no economic reason why they should not have - prices in the rest of California could have been kept down, California would not have lost so many people, and there would have been next to no financial crisis.
The Hugh Pavletich article I recommended above has been posted by Scoop NZ. Hopefully it will be posted by others too, but meantime, it is essential reading on the subject of mortage based losses in California versus other States.
http://www.scoop.co.nz/stories/WO1003/S00019.htm
Of course other areas had price bubbles too, but there is an undeniable correlation between urban limit constraints and these bubbles. Check out Randal O'Toole's recent provocative paper.
Solutions?
Ricardo, what do you see as solutions to the high cost of housing?
A Couple...
Well, ideally, I'd toss out all land use regulations but building codes. Use/nuisnance problems could be settled via the courts (I'm a very big on property rights, which include the right to not have your property harmed by others...).
However, this solution would only really deal with "micro-issues"... there are other macro issues that, when acting through any particular market framework, also affect housing affordability. In, CA, one large one is Proposition 13, which limits property tax increases. It needs to go, as it artificially increases the cost of housing (low property taxes increase the ability of purchasers to borrow, and since credit is money, the more credit, the more one can pay, thus driving up housing costs...). Same with the GSE's (Fannie, Freddie) and the mortgage interest tax deduction on the national scale (all of which favor the wealthy and are paid for by everybody). Limiting sprawl can be done by stopping the subsidization of our highway system.
The other larger overriding issue is US monetary policy, which has been debt driven and inflation-based since the 70s. I won't go too much into this now, other than to point out that I am currently struggling in my thoughts as to what really has a greater effect on housing prices/unaffordability - overall US monetary policy or the local housing/land market regulations. My struggle with this stems from Japan, which went (and is still going) through the popping of a credit bubble and asset deflation (and I believe we are currently beginning the same thing now). Property prices in Tokyo have fallen something along the lines of 60% since the late 80s. I don't know the true extent of Tokyo's land use regualtions, but I'm sure they're strict, and yet property prices keep falling... very interesting stuff in my opinion to see how everything interelates and how hard it is to just identify one variable when it comes to housing prices.
Nevertheless, I think there are several examples in the US currently that point to what a city/region/state can do in spite of the larger macro issues. Houston (and Texas in general) is a good example of the type of land use regulations that can create affordability in an economically thriving city. The "land use market" is not perfectly free there, and you can see the effects of highway subsidization in how much it sprawls, yet the City is economically vibrant, diverse, and one of the last really large "cities" in Amercia that is truly affordable to the middle class.
Monetary policy
You are right onto it, Ricardo.
Loose monetary policy used to have a "boom" effect on housing; there was demand and then oversupply which led to a bust. But prices used to cycle up to a median multiple of 3.5 maximum because there was so much low cost land available. Property cycles went between 2.5 and 3.5.
The total sums of money wiped out in those busts was inconsequential compared to the supply-restricted bubbles of today, where the peak of the bubble might be median multiples of 7, 8, and 9. That is the difference between a "boom" and a "bubble", which surprisingly few experts have clear even yet. A "boom" is a boom in supply. A "bubble" involves "something for nothing" price increases.
Property Taxes
I agree re not subsidizing the highway system.
Re property taxes, don't you think they need to be controlled?
In rural areas and rural suburbia outside of major cities here, high property taxes are one of the major drivers of farm owners and other long time residents in selling their land- they claim they are becoming too burdensome, sell their house and/ or house/farm, and move somewhere with lower property taxes, like rural North Carolina.
There are state officials proposing to eliminate property taxes.
There's also the split rate tax if anyone has heard of it.
Property Tax Thoughts
In my ideal world, no , property taxes would not need to be controlled... (yes, I know my ideal will likely never exist, but I can hope/work for good enough). However, again, nothing exists in a vacuum, and right now we live in an inflationary world that purposely hurts those without, or with few, assets. Compounding issues here, is that CA's state government is especially predatory in its ever-incrweasing costs and handing out tax dollars anything "big" that will help get someone elected (even while in purposely gerrymandered districts). Additionally, with property prices reaching stratospheric heights (even after the crash things are still expensive) partially based on land use regualtions that drive up the cost of property, one could argue that the government is just trying to give itself a windfall with by continually forcing ever increasing property tax valuations (a stretch yes).
For me, it's actually pretty hard to advocate lifting property tax caps in isolation in CA. However, again ideally, if improvements actually create true economic value, then property taxes should rise to encourage the highest and best use of the property...
Farming and Land Use
Question:
What is the point in treating farming favourably for land tax and exclusive zoning, when 1) Its return in income and jobs created per hectare is far lower than its use in urbanisation 2) We have sizable surpluses of produce and are mostly "price takers" on world markets
3)Farming is a more environmentally damaging activity than most other potential uses of land.
If there is any activity that we should be pleased to "let go" to third world countries, it is farming, not our industries. We have this exactly back to front. It makes no sense to make industry and its workers pay prices of 20 to 30 times as much for their land, because of zoning, as farmers have to. Land tax has minor impacts compared to this.
The USA would be losing even more industry if it wasn't for the fact that some of it moves from California to Texas rather than from California to Asia.
Monetary Policy and solutions
I stayed away from this one as it opens up a whole other debate which we have discussed before. But, I agree with you. The Fed and central banking in general is far too expansionary which leads to inflation of all goods. The Fed really expands the "demand" side of the equation. But, it doesn't really explain why some areas with growing populations experience smaller house price gains than other areas with similar or even slower growth. That's where the supply limitations really come into play. Artifically-created demand with lack of supply and a psychology that a house is an investment was a recipe for disaster.
As for what to do about it: why not let prices fall to their market levels instead of trying to subsidze loan mods or give people money to buy homes via the tax credit. Also, get rid of the GSEs. Perhaps we could also minimize impact fees when its clear that buyers of new homes are subsidizing infrastructure for existing homeowners. And, should a small subset of the population really be subsidizing home ownership for some people via "affordable housing" laws? If we are trying to help people, why not expand the EITC?
May I take a stab at that question?
I don't think housing costs in the US right now, as a whole, are high relative to income. I think there are select places in the US that are "unaffordable" relative to income and there are numerous reasons for that. I do think in many places it is land use regulation that contributes to unaffordability (defined as house prices totally out of whack with regional incomes). Natural barriers and supply limitations are also a function. Perhaps the better question is that why don't wages rise in lockstep with prices in some of these areas. My personal belief is that it is a) poor pricing policies which subsidize "excess commuting" and b) personal preference (people would be priced out of the housing market based on their income generating ability but choose to stay and live smaller).
Thanks, Wodehouse
Planetizen ran an article about Vancouver's tent city. You can search on it.
NYC's rents are pretty outrageous also. Check out Craig's list- it can be pretty humorous to look at the various rates for nightly, weekly and monthly rents.
I think the large corporate builders bear a lot of responsibility for escalting housing costs. The proliferation of high end housing drives up the cost of housing around it.
Corporate Builders are not to blame
HRPlanner, I think you have missed the point that urban limits affect land prices.
Raw fringe land used to bear a direct relationship to the price of farmland, and still does in "free" jurisdictions. Tighter urban limits, under modern planning fashion, however, have resulted in RAW fringe land prices being ten, twenty, or thirty times that of the farmland. This has altered the relationship between land and dwelling values; fringe house prices now consist of 60% land value and 40% house value instead of 10% / 90%.
The price of land closer to the urban centers, being ten times that of the urban fringe land, becomes unaffordable for virtually ANY use other than for luxury condos for the wealthy. Consider some figures: $30,000 fringe lots = $300,000 lots closer to the urban center; a developer can still do something practical with this. But when you have $300,000 fringe lots and $3,000,000 lots closer to the urban center?
The irony is, and I believe that this would stand scrutiny under study; is that in freedom-lovin' Texas, you get the students and artists and strugglers living at quite high density closer to the urban centers, (because they can afford it) and thus "proving" the thesis about superior sustainability. The planning ideologues are looking in the wrong place for the results they want. They will not find it in places where they have driven the proletariat out with high land prices, and where the only people living in the inner city are wealthy people with a big carbon footprint. (And the only "affordable" option anywhere in the whole urban area is a tent).
I believe time will tell, if we have the honesty to admit it, (and not for the first time in human history, either), that planning often has the opposite effect to what is intended. World Bank economist Alain Bertaud seems to me to be the lonely giant of urban economics today, I haven't yet found anyone else identifying these effects like he is. But it is visible to me in every city I visit.
"Planetizen" should be among the first discussion forums where this is realised.
Removing Limits On Development
Are you generally in favor of removing limits on development - density limits as well as urban limit lines?
Both of those drive up average housing prices in a region. In my opinion, height limits, lot-size limits, and other density limits have done much more to restrict the housing supply than urban limit lines.
A consistent market-based approach would eliminate both density limits and urban limit lines. (Note: this is not my approach, but I think there are consistent free-market advocates on the list who would agree.)
Charles Siegel
Agree completely about anti-density regs
Yes, I would definitely advocate the elimination of anti-density regulations. I will say more about this in my reply to the next comment.
What I wish, is that the planning profession would start talking about the way to counter the effect of urban limits on the prices of all land, instead of looking for other things to shift the blame onto. I take it we are agreed about the relationship between the prices of farmland, fringe land and inner suburb land? How do you propose to restore fringe land prices that actually relate to its value for agricultural uses; and/or restore inner suburb land prices that allows redevelopment for lower income groups to live at higher density? Can you do the one without the other? You can't have urban fringe lots of $300,000 and expect land owners closer to the urban center to sell for no more than that.
I cannot see that there is any solution that would not have further, undesirable effects. What level of capital gains tax, for example, would hold land prices down regardless of the urban limit constraint on supply? The Japanese found that they needed to go to 100% or greater, before their land bubble of the 1980's was halted; but all sorts of other things happened, not the least of which was a 20 year recession.
What about actual price controls on urban fringe land? Doubtless there are economists who could write studies on the distortions this would introduce.
The result of urban limits for developers, is that even though the amount of land within the urban limit might be "several years supply" for the loccal market, developers all need to secure their "share" of it "now" if they wish to remain in business; obviously their competitors might buy it all. You still have just as much of a classic case of a scarcity-induced bidding war, as if the supply was restricted to 6 months worth at a time. At least when the supply is restricted to next to nothing, the successful buyer of the land knows he can proceed immediately with development and sale of it. But where there is several years worth, the owners of the land know they cannot all develop and sell it at once; there needs to be gentlemens agreements and that kind of thing to avoid oversupply and bankruptcies. Therefore, they are obliged to finance quite substantial land holdings until development becomes rational.
There is obviously high risk involved, and this is borne out in real life, with many developers and land investors going broke. Those who remain standing obviously command a premium for their successful risk taking. Meanwhile, the existence of the urban limit prevents the values of the land from really collapsing, and banks and finance institutions who have taken the land as security from those who have gone bankrupt, will simply "hold" it until prices "stabilise".
In "free" jurisdictions, developers simply have to predict demand and watch for potential development sites, that they then buy at farmland prices. There is every incentive to proceed immediately with development, as there is plenty more land at similar low prices, that their competitors can develop.
Baptists, Bootleggers, and Externalities
You seem to take a consistent free-market position, opposing limits on density as well as urban limit lines. You might consider making this clearer in your posts, which only talk about eliminating restrictions on suburban development, not on higher density development.
Now, the next question is whether you consider an obvious failure of the market: it does not take external costs into account. In the market, many people will choose automobile-dependent development because it gives them the best house for the price, but they are only considering the costs and benefits to themselves, not the environmental costs.
Do you think there should be any mechanism for dealing with those external costs? It seems to me that the real-estate crash we just had will look insignificant compared with the environmental crash that we will have soon if we keep consuming ever-more energy. Do you think these environmental issues are just a hoax, or do you have some way of dealing with them?
The analogy of Baptists and bootleggers is a good one. The baptists are sincerely dedicated to stopping what they consider a destructive habit, and the bootleggers take advantage of their idealism to make lots of money.
Likewise, many environmentalists are sincerely dedicated to controlling our destructive habit of burning fossil fuels and emitting CO2, and developers can sometimes take advantage of their idealism to make lots of money.
But the difference is that the overwhelming scientific consensus agrees that environmentalists are right to think we must control CO2 emissions to avoid environmental crisis.
What do you propose to do about that? Are you going to dismiss all the world's climate scientists and say they are just as misguided as the Baptists who supported prohibition? Or do you have some way of dealing with the environmental costs that all the scientists have identified?
I use global warming as just one prominent example of external costs. There are many others, including loss of farmland, loss of endangered species, depletion of non-renewable energy resources, and many others that are very well known.
One other externality that is relevant here is the effect of dense development on the character of suburban neighborhoods. If a developer buys a dozen suburban lots and builds a highrise there, that changes the character of the neighborhood. Generally, suburban neighborhoods have zoning to prevent that. As a consistent opponent of land-use regulations that drive up housing prices, you should oppose that suburban zoning and want the developer to build the highrise. Is that right, or do you want to deal with this external cost in some way?
Charles Siegel
Environmental externalities
I got called away from my computer before I had finished replying to your questions here, Charles.
Your example of a highrise in a neighbourhood is a very good one, one that I would have picked myself in what I am about to say.
I stated before, a principle that was illuminated to me by Colin Clark; negative externalities are almost always outweighed by positive externalities. This actually helps to explain the extraordinary success of free market economies in the face of many of the quite valid criticisms that are made of it. I take it there is no controversy on this site, about environmental "Kuznets curves"? That is, that even environmental indicators (an oft-used example of negative externals) have mostly steadily improved after a certain level of economic advancement is surpassed in a nation?
I believe that this is an example of an unaccounted-for positive externality. You might ask, "of what" is it a positive externality? I agree completely with the comment by someone above, that these things are all actually far too complicated for anyone to analyse exhaustively. But as a broad principle, I would say that most of the times someone has bought a new car; or a factory has installed new machinery; or anyone has moved to more modern, efficient use of resources through later technology, powerful "positive externalities" have been generated.
Every time someone has got a better job, or got a job at all, thanks to the mobility of a vehicle, positive externalities are generated. Parents spending more time with their children, taking them on outings, children growing up in a grassy backyard instead of in concrete gloom, children growing up in healthy suburbs far away from polluting industry; positive externalities everywhere you look.
I do not dismiss the role of regulation in achieving much of this, but the fact is that a society that is more worried about getting its next meal and surviving the next 24 hours, does not worry about getting environmental regulations in place.
But now we come to the question of global warming, which is probably the first ever hypothesis of a global negative externality that is argued to trump all other considerations. Even then, note that developing countries still rate development as their greatest priority. I do not wish to turn this discussion into one on all the pros and cons of global warming let's just say there are questions over the whole issue, and move on.
What I want to move on to, is the effectiveness of many of the measures we are discussing here, in addressing the claimed objectives of reducing resource consumption and reducing carbon emissions. The very point I am trying to make, is that there are unintended effects of much of the actions we are taking, that mean that we are not actually reducing emissions at all in spite of imposing considerable costs on society.
If we are already able to enact quite costly measures within the democratic context, presumably some quite low-cost and much more effective measures would not present any political problem. That brings me to the high-rise in the suburbs. Why not? I am talking here about an office block, not flats. Blocks of flats in the suburbs would be wrong from every point of view assuming that the jobs for the inhabitants remain distantly located. I am talking about allowing sources of employment to disperse to where the workforces actually are. Why is this not "measure number one" for combating global warming?
I believe that to a large extent, free urban economies would have developed much more decentralized sources of employment. Planning mostly developed initially to take society away from the Victorian squalor where people lived in soot and coal smoke and filth right amid the dirty industries of the time. Urban planning gradually brought about separation between these unhealthy areas and where people lived and raised children.
But now we have the consequences of this urban development taken to extreme for the sake of sheer "quality of life" on the part of extremely well-off populations. Questions of resource conservation did not come into it until too late, and even now the connection seems to have been largely missed, between this zoning and long commuting distances. Office blocks, which are comparatively "clean" operations, are much more numerous today and industries operate much more cleanly; therefore, there would be much lower social cost in allowing decentralisation of these things with the explicit aim of reducing commuting distances.
"Multi-nodal" development would be obviously the next best thing in the event that society simply does not accept mixed uses of land.
The next question I raise in tackling global warming cheaply and with clear efficiency gains; is the question of the efficiency with which "public transport" operates. Mostly, these are monopolies, subsidised, with entrenched workforce conditions and practices, and many of their services for much of the day, actually consume more resources and emit more carbon than private motor vehicles for the same number of people carried.
There are actually several times as many empty seats in private motor vehicles than there are available on public transit and buses, that would generate enormous positive externalities if they could be simply utilised to some extent. Exciting new technologies are already available to this end. Regulations regarding the carriage of paying passengers simply do not permit these extremely cheap and effective solutions. Why should such solutions be ignored if there is a crisis of the proportions that global warming is claimed to be?
But What Are Your Proposed Policies About Externalities?
This response doesn't make it clear what policies you propose to deal with externalities. For example, ContrarianPlanner says clearly that he wants to tax behavior that creates negative externalities; I think that is only a partial answer, but it is a real, concrete policy to deal with the issue. What are your concrete policies?
I can't accept your claim that negative externalities are almost always overwhelmed by positive externalities. As one example of positive externalities, you list: "children growing up in a grassy backyard instead of in concrete gloom." But what if a developer builds a highrise that blocks all the sunshine in their yard? Or what if a developer builds a factory that not only blocks their sunshine but also pollutes their air? Restrictive zoning is currently the policy that deals with these possible externalities, and because you are against restrictive zoning, I want to know what policy you recommend as a substitute.
(Incidentally, many believe that the environmental Kuznets curve applies only to local sources of pollution, such as urban air pollution, and does not necessarily apply to global issues, such as CO2 emissions. The environmental Kuznets curve says that wealthier nations have cleaner environments, but this is precisely because thee wealthier nations have stricter environmental regulations, so it cannot be used as an argument against stricter environmental regulations.)
(Incidentally, also, I have to object to your statement "I do not wish to turn this discussion into one on all the pros and cons of global warming let's just say there are questions over the whole issue." There are many questions from ideologues and politicians, but there is no question among climate scientists that global warming is happening, is human caused, and will have immensely harmful effects if not checked. There have been other very severe global economic threats, such as acid rain and depletion of the ozone layer. But we are not discussing these individual threats here; they are just more examples showing that you must have concrete policies to deal with negative externalities. You can't dismiss them by saying that there are also positive externalities.)
Charles Siegel
Positive Externalities do wonders
I still maintain that new office blocks in the suburbs, and new factories in the suburbs, would generate far greater positive externalities in enabling people living nearby to obtain employment that they can walk or cycle to (or yes, drive their car a much shorter distance) than the negative externalities they would generate in shade and pollution in the immediate neighbourhood. But I do agree that this is unreasonable to the smaller number of people negatively affected. This is why I say that multi-nodal development is probably the next best thing after outright mixed land use.
I also repeat that most modern industry and other sources of employment are not the threat to health and their immediate environment that they were decades ago. Intelligent siting of such development (planning, not "zoning") could also minimise the local impact. Each existing urban situation is different.
But I do ask again, why, if people accept that to save the planet, they will need to pay larger sums of money to use their cars and heat and cool their homes, and travel in less convenient and more time consuming ways, and pay more tax to subsidize all this; why would they not be prepared to sacrifice some local quality of life if it is indeed because the future of the whole planet is at stake (not to mention the gains to greater numbers of others in the local community thanks to nearby employment coming into existence)? Saving the planet and serving the greater good cannot be done without inconvenience to anybody. Compensation schemes might help, such schemes have been used for decades already, always attended by a lot of controversy.
The Kuznets curve thing can be a chicken or egg argument; it is certainly necessary to get the economic growth in the first place before there is any sort of social consensus about environmental regulations. One of the beauties of environmental Kuznets curves is that developing countries can rise up them a whole lot faster because the technology already exists.
BUT we get the possibility that environmental regulations introduced prematurely or inappropriately can actually delay or prevent the beneficial point of the Kuznets curve being reached. For example, the "de-carbonisation" of the global economy (ie unit of carbon emission per unit of economic production) has actually reversed in recent years after decades of clear positive trend, and it has been convincingly argued that the Kyoto Protocol is a factor in this by providing incentives for dirtier industries to relocate to developing countries, and thus delaying the rate at which the developing countries decarbonise their economies.
(Extreme statements on global warming, such as "there is no question among climate scientists", actually induces cynicism and fatigue on the subject among the general population you are trying to convince. This is not a totalitarian society, people can find things out for themselves. For example, some of the IPCC's own reviewers are sceptics who have made dissenting comments, sometimes quite extensively, on every report so far.)
The World Without Controls On Externalities
Imagine what the world would be like if everyone accepted your claim that we can do without any controls on negative externalities because "positive externalities do wonders."
For example, almost all electricity would be generated in plants that use coal and have no emission controls. That would mean high ghg emissions, it would mean such high levels of mercury emissions that it would be dangerous to eat fish, and it would mean killer smogs like London's smog of 1952 that killed 12,000 people and made 100,000 ill, and it would be easy to cite other environmental costs.
Maybe economic growth would let us deal with these problems by by building processing plants to remove the mercury from the fish, by living in air-purified homes, driving around in air-purified cars, and never going out into the open air, and so on. The best we can say about this vision of the future is that it is not economically efficient: it would be much cheaper to build clean power plants. The worst we can say is that it turns the world into something like what Dante wrote about in the Inferno.
If you want to have any credibility at all, you have to come up with some policy to deal with negative externalities. It is not at all plausible to say that we should simply ignore all negative externalities because they are outweighed by positive externalities.
Charles Siegel
PS: This is not a totalitarian society, and people can find things out by themselves - which is why I have a right to state what I have found out about global warming. It is very odd for you to brand my freedom of speech as a form of totalitarianism. I am stating a fact about the scientific consensus, and I hope that in a democratic society, the majority will make decisions that do not simply ignore science.
I quote Joe Romm, who wrote today:
Let me end by quoting the Summary of the November statement by the Met Office (the UK’s National Weather Service [i.e. meteorological office], within the Ministry of Defence), the Natural Environment Research Council, and the UK’s Royal Society (the UK’s national academy of science, “the world’s oldest scientific academy in continuous existence,” founded in 1660):
The 2007 IPCC Assessment, the most comprehensive and respected analysis of climate change to date, states clearly that without substantial global reductions of greenhouse gas emissions we can likely expect a world of increasing droughts, floods and species loss, of rising seas and displaced human populations. However even since the 2007 IPCC Assessment the evidence for dangerous, long-term and potentially irreversible climate change has strengthened. The scientific evidence which underpins calls for action at Copenhagen is very strong. Without co-ordinated international action on greenhouse gas emissions, the impacts on climate and civilisation could be severe.
http://www.climateprogress.com/
Please don't misunderstand me
Charles, I still believe we do not have to disgree so abruptly. The case you give, of coal smoke and soot and the famous London smogs, is an abundantly obvious case where negative externalities are so great as to justify regulation, once there is a socio-political consensus about it. People emerging from rural subsistence living do not have quite so much concern about coal smoke, after having been accustomed to lifelong peat and dung smoke in their hovels. (How did any humans anywhere ever heat or cook without smoke? "Back to nature" advocates kind of miss the ugly reality). Having any income at all is their first priority. This is why it took decades before action was taken, and even then it is a question whether regulations were as significant a point as technological advance. Of course the car was regarded as a health benefit after a century or two of urban streets covered in horse dung, which formed a slurry in wet weather and all-pervading dust in dry.
If you do not have technological options, then regulations will involve by necessity, a reduction in economic activity and quite possibly the ill effects of this will be greater than the effects of the externality being regulated.
You do not seem to realise the historical significance surrounding coal fired electricity generation and the London smogs of the 1950's and prior, and indeed every such "developing nation" urban area smog. These smogs are caused by local burning of coal, not by coal fired electricity generation. The British used to promote electricity as "Coal-By-Wire". The more people who used electricity for heating and cooking and lighting, and the more industries that used electricity to run their machinery and their furnaces, the cleaner the air got, especially locally but certainly in total.
Coal fired electricity generation even in the 1950's, represented a huge net reduction in pollution, as it is so much more efficient than multitudes of stand-alone fireplaces and steam engines, even given transmission line losses. Coal fired electricity generation has become so efficient since then, that even now, if it was not for the CO2 question, there would be no grounds for complaints about it.
The Chinese understand fully that coal fired electricity generation is the quick and cheap solution to their present day smog problem, the plume from which reaches halfway accross the Pacific Ocean at times. That is why they are building coal fired power stations at the rate of one per week. There is a considerable difference between CO2 and actual particulates of carbon; the former is only a recent concern, the latter always was understood to have significant negative effects on human health and still is a more significant issue than CO2.
What I am saying about negative externalities, is that we need to reintroduce into the legal framework, a recognition of positive externalities and that these need to be weighed into the equation. I believe that had olden-times governments legislated against negative externalities as soon as they started to occur, without taking positive externalities into account, they would have driven their whole economy back to rural subsistence living. They did not think in complicated terms of positive and negative externalities back then, but the simple broad consensus was that progress was beneficial, and local detriments were just "life", and still beat growing your own tunips to eat on an acre of land, and starving to death in the first severe winter. This consensus certainly lasted at least until the 1960's.
One of the problems with externalities, is the numbers of people affected on the "positive" and "negative" sides, and the extent to which each person is affected.
It is widely grasped that the immediate parties to a transaction gain a quantifiable benefit, and negative externalities of some unquantifiable amount, are imposed on some class of people who might not be compensated. We all understand about the new factory's neighbors. But what has been omitted from our reckoning, is the positive externalities that apply; the people who will be employed, the incomes they will earn and spend, the responsible lives they will lead, the provision they will make for their children, the export incomes earned, the industry not lost to Asia, and so on. Then there is the Kuznets curve issue, that prosperity itself will allow for further improvements in environmental indicators for all.
I think we are incurring serious losses of cumulative positive externalities in our economies today because identifiable negative externalities have been accorded sufficient legal status to allow those suffering them to prevent them occurring in the first place. The loss is a much wider one than the immediate loss of a new project and the jobs associated with it. The positive externalities lost are miniscule in their application to each person affected (throughout society as a whole, in fact), but apply to so many people that their loss is significant. It is like the straws being added one at a time to the camel's back.
It is the same old story, that a few people who have more to gain or lose, will always make a much more politically significant fight than the greater number of people who stand to gain or lose in much smaller quantities, even though the cumulative value of the gain or loss to the greater number is the much larger in total. In fact, most of the greater number remain completely unaware of the issues affecting them in this way.
The externalities you and I are discussing, such as shading a backyard, are trifles in comparison with those faced by our Victorian ancestors, or by the Chinese today. But I have already implied that the benefits I am advocating for can be attained in significant proportion without requiring such detriments, I just used the office block in the suburbs as an illustration of externalities that could be weighed against each other. But a zone of office blocks immediately adjacent to a suburb would achieve the desired objective of providing short commuting distances; and zones of office blocks and industries interspersed evenly among suburban zones is such a self-evident benefit to average commuting distances that I cannot understand why it is not top of the planning agenda.
Moving on to further assessment, market values of land always seem to result in development "from" industrial "to" residential, not the other way around. The question then is, why is it not a foregone conclusion that industry will locate predominantly at the urban fringes, and then in the fulness of time, relocate again to the new urban fringe while the land they had occupied is redeveloped for residential? And why wouldn't development along these lines, also result in shorter average commuting distances?
Office blocks have an advantage over industry in their ability to compete for space, in that their footprint is small compared to their rentable floor space. Even so, I suggest that government departments are major factors in sustaining "office block" zones that could well be more dispersed if driven by cost considerations. Increased costs in this situation are just passed on to the taxpayer year after year. California and New York especially should look carefully at the potential gains in taxpayer-funded rental costs and in reduced average commuting distances, were they to relocate their bureaucracies. This would also free up a lot of inner city space and reduce rental values enabling more people to be able to afford to live closer to their employment.
I do believe that relatively lightly regulated cities display in large measure, these beneficial features, without them having been planned for. But I agree with Colin Clark, in "Population Growth and Land Use", that this does not mean there is no role for the planner; rather, the planner should understand these naturally occurring beneficial developments and expedite them rather than oppose them in attempts to gain some ideal or other that has been granted primacy, and that ultimately is not realised anyway once the results of the planning experiment are "in".
(I will stay off the subject of the IPCC and the existence of contrarian reviewers in its own ranks, although I am grieved to think that simply mentioning such a reality by way of demurral over an unreasonable assertion, could be so taken offence against, even in this forum).
Negatives and Positives
I am focusing on the urban limits because I think the limits on density are already well understood in their effects, and it is well understood just what are the vested interests behind them.
But I believe that the land price issue is far more significant; I have ceased to believe that developers would be so set on high-end redevelopment in the inner areas, if the land was not so expensive. I believe that this phenomenon deserves study, with comparisons made between "freer" jurisdications and low land prices; and restricted ones with high land prices; and the rate at which densification occurs. Alain Bertaud's studies have touched on this and suggested that densification starts to occur in the wrong places, closer to the urban limits, when the land prices are forced up. This is because of all the pent up demand from lower income people who simply cannot afford any home other than a small one on the lowest possible cost, smallest possible lot; this happens to be further away from the urban center.
There was a significant book in 1967, "Population Growth and Land Use" by Colin Clark. He analyses the growth of urban regions and concludes that densification proceeds in tandem with sprawl. He does not discuss or predict the phenomena we are discussing now; but had he been alive today I think he would have seen clearly what is happening.
On externalities, Colin Clark states that there are almost always positive externalities that more than compensate for negative ones. Effective transport connections and mobility are such a vital contributor to economic and social progress that the question has to be asked what are the negative externalities of reducing this mobility.
Julian Simon ranked effective transport connections as second only to "culture" among the factors leading to economic growth and prosperity.
Transportation And Externalities
"Julian Simon ranked effective transport connections as second only to "culture" among the factors leading to economic growth and prosperity."
Effective transportation connections are obviously very important, but like any other economic good, they are subject to the law of diminishing marginal utility.
In the developed nations, we already consume huge amounts of transportation, and there is little or no marginal benefit to traveling more miles. Americans drive twice as much as in the 1960s, but I do not think that we are any better off as a result.
As I remember, Todd Litman has found that we in the developed nations have reached a point where traveling longer distances no longer has any positive externalities - though it clearly has very large negative externalities.
Charles Siegel
Transportation And Externalities
"Julian Simon ranked effective transport connections as second only to "culture" among the factors leading to economic growth and prosperity."
Effective transportation connections are obviously very important, but like any other economic good, they are subject to the law of diminishing marginal utility.
In the developed nations, we already consume huge amounts of transportation, and there is little or no marginal benefit to traveling more miles. Americans drive twice as much as in the 1960s, but I do not think that we are any better off as a result.
As I remember, Todd Litman has found that we in the developed nations have reached a point where traveling longer distances no longer has any positive externalities - though it clearly has very large negative externalities.
Charles Siegel
Marginal Utility
Actually, Julian Simon and Donald Glover (1977, 1982) found a very high and elastic correlation between population density and the amount of roading. I doubt that it is possible to have the one without the other. The relationship is like one between exponential population amount and linear road amount, but it is there. William Eager showed that although car use falls with increased population density, it does not fall by much and roads are still so essential to such a proportion of people even in the highest densities, that they remain a precondition of densification.
Randal Pozdena has recently done a study directly contradicting the Litman one you refer to. I actually think that they are both right, under differing structures of urban development. I think the planned, urban-limited region causes distortions that change previously applicable market "laws" regarding cost and benefit. I strongly believe that Litman is right when the longer travel distances are the result of planning against the market, and that Pozdena is still right in freer jurisdictions.