Could Economics 101 and smart-growth principles be the same thing?
About six years ago, the Center for Transportation Studies at the University of Minnesota persuaded the state’s transportation department to invest what came close to a million dollars on 16 major research projects analyzing transportation and regional growth issues.
Last fall I got the big digestive assignment — to cruise the entire collection and write a synthesis. After wading through the two-feet high stack of reports, I found a remarkable pattern. Of course I started out suspicious that I’d be surveying an army of statistics supporting arguments for growth boundaries, rising residential densities and transit at any price. But the themes I found more nearly resemble a lesson in markets. For example:
Traffic is as terrible as people say, but traffic is only a symptom of a system of a now-boiling stew of state and regional policies in which land use and transportation decisions are made as though there were no relationship between them. It’s a system that still puts employment centers and shopping and homes in different zones and makes automobiles necessary to get from one place to another. The market for other forms of development runs into hostile codes and reluctant bankers.
Over the past decade, like many other regions, the Twin Cities spilled way out into the countryside, with urbanization scattered over at least 19 counties. State and local governments chased (sometimes induced) development with new roads and schools. Retail and businesses followed. People, as it’s said, “drove until they qualified” for the house of their dreams, believing their property values would rise faster and their taxes would be lower. On average they were right. People drove farther, but faster, to work.
Today, even though the region is tied with Atlanta for the fast rate of congestion growth, most people still manage to navigate around it. In fact, while planners wring their hands over the soaring number of vehicle miles traveled each year, the average commute time’s gone up only 3 minutes in 20 years. And, with fuel still relatively cheap, it’s time that matters to motorists, not miles. Only when the commute gets longer than their “time budget,” will people consider changing where they live or work.
But this system is bumping into its own limits. Public costs are beyond revenues. The average commute remains manageable but the number of people faced with really long commutes is going up fast. The air grows fouler every year. There’s even concern over automobile pollution effects on water, and water’s as close to a sacred natural resource as you will find in Minnesota.
So what does all this suggest to policymakers? Raise taxes? Ramp up a new set of regulations? No. Research suggests the best move is to retool the system so that people have more choices than they do today — and pay honest prices for their decisions. What — this, from a covey of professors in a supposedly liberal-leaning environment?
That’s right. This research suggests the most effective means of producing choices would be land use policies that encourage the development of activity-rich destinations. Contradicting one smart-growth belief, forcing densities higher in residential areas turns out to have little or no beneficial effects on congestion. Besides, land prices are already shrinking lot sizes. The big potential lies in commercial zones. Where employment centers are mixed with retail shops, and restaurants, entertainment and education, clinics and civic spaces, more people, whether they live near or far away, will use transit to get there and walk from place to place. Evidence shows housing markets follow.
This research reminds us that real markets require honest prices. 70 percent of the publicly paid costs (road safety, law enforcement, local roads maintenance) of the automobile system are tucked away, hidden from view in a complex system of property taxes and state aids. In an era of unlikely increases in taxes, policymakers should find a way to make these costs more transparent and hand them directly to users.
Using direct pricing for transportation may be a ripening idea. Note the Reason Foundation’s Robert Poole, teamed with national analyst Ken Orski in a new report calling for selling the capacity of new lanes to paying drivers, using transponder technology to track the charges. The Twin Cities twice turned thumbs down on this notion in the 1990s, but times are changing.
Research suggested a similar dose of market reality for new housing and commercial development, where hidden subsidies (new roads, sewer pipes) often mask real marginal costs of development. Honest prices would restore real market effects. When developer sees a commuting-cost premium hit a $5000 per unit threshold at the region’s edges, the market cools off considerably.
Minnesota’s new Republican governor, Tim Pawlenty, has just appointed new members to the Metropolitan Council. It’s a council more likely to rely on investment than regulation. In the long-running debate over policy direction that’s often been rhetoric-rich and research-poor, there are now more facts to face.
To see the summary report, go to: www.cts.umn.edu/trg.