As urban centers start making better sense for a digital economy, NIMBY policies might be worth re-examining. In addition to driving up the cost of housing, they may compound inefficiencies and slow down the economy.
An article from the Economist dives into the study released in March estimating the cost of sprawl to the U.S. economy at $1 trillion a year. In fact, according to the article, "[l]ifting all the barriers to urban growth in America could raise the country’s GDP by between 6.5% and 13.5%, or by about $1 trillion-2 trillion. It is difficult to think of many other policies that would yield anything like that."
An upswing in the fortunes of American cities has been widely noted, along with exploding land values in economic centers. As the article notes, "In the 20th century, tumbling transport costs weakened the gravitational pull of the city; in the 21st, the digital revolution has restored it. Knowledge-intensive industries such as technology and finance thrive on the clustering of workers who share ideas and expertise."
In spite of this, new construction is comparatively scarce. A cocktail of outdated zoning and NIMBYish objections, according to the article, is to blame for blockages in urban land maximization. While acknowledging the political difficulty involved, the article points to a two-pronged solution:
- City planning decisions should be made at the city level, from top down, to minimize objections from specific localities.
- Governments should levy higher land taxes, creating an incentive to put land to better (economic) use.
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