Tuesday, June 16, 2009
Ask an economist what happens if you regulate by law the supply of a good, and the economist will tell you that, not only will the price of that good rise, but that people will seek out alternatives that are not so regulated. Thus the economic concern about metro areas that seek to combat sprawl by limiting the provision of governmental services is that the regulation may push development even further out. While anti-sprawl regulations may indeed hamper sprawl at the edges, the metro area’s jurisdiction probably extends only so far. Once we get beyond the jurisdiction of the governmental authority, rural land may seem more attractive. Thus, efforts to combat traditional sprawl may engender extreme sprawl.
Does this theoretical effect really happen in practice? A designer and author in Minnesota asserts that it did happen in southern Minnesota in the recent go-go housing boom. Writing in New Geography last week, Rick Harrison tells of an extraordinary boom in the price of rural land outside the Twin Cities’ Metropolitan Council’s jurisdiction. Although the famously integrated Metropolitan Council has planning control over seven counties, one can avoid it by driving 40 miles out of downtown Minneapolis. With good highways, moderate gas prices, and jobs in the suburbs, many developers and homebuyers were lured to these rural locations, resulting in a remarkable “bidding war” over developable land, according to Harrison.
While the housing bust has slowed this extreme sprawl, the economic lesson is clear: When you regulate something, you encourage people to avoid the restriction, with a result that the purposes of the regulation may be frustrated. This is not to say that anti-sprawl policies are always bad (indeed, some may say that the story should encourage planning control at an even wider geographic level). But policymakers in land use law should be prepared for the flies that appear, with the regularity of science, in their ointments …
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