Time to ramp up urban density?

Is it time Britain’s towns and cities re-drew their boundaries? Rupert Greenhalgh looks at how cities abroad have reined themselves in to maximise the benefits of economic growth

Portland in Oregon has used an urban growth boundary to combat sprawl

Interest in densification has received a lot of attention from policymakers and academics alike over the last decade.

Agglomeration economies have been highlighted as the raison d’être of cities and the ‘secret of their success’. There is increasingly convincing evidence of the importance of agglomeration economies in terms of economic development: denser places share critical infrastructure; match business supply chains and sources of labour; and support innovation by creating the environment for shared learning and the exchange of ideas.

Estimates suggest a growth in urban density, for example by doubling the size of a city, could result in up to a 10% increase in productivity. This doesn’t seem particularly significant in itself, but applied to scale economies such as London, or the combined economies of cities across the north, could result in significant returns to investment.

Policies aimed at densification therefore seem to have appeal. Environmental improvements to remote sites no longer needed by the market (e.g. grassing over swathes of old industrial property) have also been used as a progressive policy tool in parts of Europe, such as Leipzig, to make areas more attractive for residents, reduce the negative visual impacts and to preserve for landscape amenity and biodiversity value.

THE CASE FOR URBAN GROWTH BOUNDARIES
An urban growth boundary (UGB) is a zoning tool that slows urban growth by banning development in designated areas on the urban fringe.

In effect, it involves drawing a circle around a city and prohibiting development outside the circle. Could this be a viable policy to concentrate growth within town and city centres, amplifying the benefits of urban density, while at the same time allowing places to concentrate their regeneration efforts, rather than spreading investment too thinly?

UGBs have been used in a number of cities and regions, such as Queensland Australia; and Portland Oregon, as a tool to address ‘market failures’ related to the excessive spatial growth of cities.

Such failures include the lack of account taken of the social value of open space when land is converted to urban use; the failure of individual commuters to recognise the full costs of road congestion; and the failure of property developers to take into account all the public infrastructure costs generated by projects (e.g. road and site access, utilities and surface water management, broadband installation and ICT infrastructure).

The edge of Portland’s urban growth boundary

Equally, there are well-documented examples that have managed growth pressures with car-dependent developments to encourage high-density housing and accessible employment centres. Could UGBs also be used as a tool to support the ‘re-densification’ of development, especially within hollowed out towns and city centres where demand for land has stalled?

IMPLEMENTATION
If administered properly UGBs do appear to reduce sprawl and achieve smart ‘localised’ growth benefits, but they are also frequently criticised as being a blunt planning instrument indifferent to fundamental market forces and which reduce the standard of living for urban populations.

In reality, almost any system of land use planning is likely to have some restricting effect on supply. But to what extent is supply actually restricted, and does this cause significant price distortions or welfare effects? There is a danger that a UGB may be much too stringent, needlessly restricting the size of the city, leading to distortions in land markets and escalating housing costs.

The best known example of an urban growth boundary is from Portland, Oregon. Although some commentators claim Portland’s UGB is responsible for excessive house price escalation, others argue the boundary is so loose that its price effects are negligible.

This controversy illustrates an important point, namely that there is no way to tell whether a UGB is set properly without focusing on the underlying market failures that lead to urban sprawl; and assessing the costs versus the benefits of restricting growth to specific locations within a city-region.

The best way to avoid such errors is to attack urban sprawl at its source, by developing incentives that support growth within urban centres, including adequate public and private transport infrastructure, investment in public realm and services, and access to affordable housing.

Other mechanisms include developing congestion charges to cover the full economic costs of travelling to out-of-town retail centres; and imposing impact fees such as a development tax designed to preserve open space, provided that a proper measure of open-space benefits can be calculated.

However, because UGBs simply require an extension of existing zoning powers, local policymakers may find them more convenient to use than taxes or congestion charges. UGBs could end up as the instrument of choice for assisting our failing town and city centres, and equally attacking the negative environmental impacts of continued urban sprawl.

Implementation must be carefully managed to avoid perverse outcomes, such as hikes in land prices, and be developed as part of wider pan-regional strategies for land use and transport.

• Read our in depth look at shrinking towns and cities here