It’s been a long time since land development in California was governed solely by market forces. For decades, and especially in the last 10-15 years, myriad regulations and agencies have had a hand in land use decisions. To some extent, of course, this is appropriate. There are legitimate reasons why we empower our government to limit land development that could constitute a genuine threat to endangered species or watershed health, for example. And the goals of farmland preservation and protection of open space are well-intentioned and worthy values. As we discuss in “California’s Land Use Choices,” however, we think these regulations have gotten out of hand. Every development in California seems to be a threat to farmland, open space, watersheds, wildlife; in our opinion, balance is gone. And as a result, homes cost $500,000 and sit in yards so small you have to decide between the trampoline and the wading pool. And the anti “sprawl” forces were just getting warmed up.
In late 2006 California passed the much vaunted “Global Warming Act,” and shortly thereafter it became clear that land developers would have to include an assessment of the “global warming impact” in their environmental impact statements. This decision sits well with the “smart growth” crowd – that is, the people who believe we need to “grow up, not out.” The conventional wisdom goes as follows: If people live “close to the jobs” via infill, instead of in outlying suburbs, then they won’t need to commute as far each day. This in turn will reduce the amount of CO2 emissions from their vehicles.
So how much CO2 are we talking about, anyway? In the online interactive spreadsheet “CO2 Emissions from Suburban Sprawl,” we analyse this quantitatively. In the default example, we consider a development of 10,000 homes, and assume, on average, that there are 1.75 commuters per household, traveling on average an extra 25 miles each way to their jobs, in cars that average 25 miles to the gallon.
Based on these assumptions, this outlying suburb with 10,000 homes – based on the EPA’s estimate of 8.8 kilograms of CO2 per gallon of gasoline – will cause an extra 77,000 tons of CO2 to be emitted each year because of longer commutes. And at $35 per ton to purchase CO2 offsets, which is today’s price based on quotes on the European Climate Exchange, in our example, households will pay an extra $270 per year for the privilege of living in an outlying suburb. Put another way, they would pay an additional 31 cents for a gallon of gas.
There is much to wonder about here. Is $35 per ton of CO2 emissions a good number to use? On the voluntary Chicago Climate Exchange, CO2 offsets are currently trading for only $2.15 per ton. And if mandatory CO2 caps were tightened up, which is not yet the case even in Europe, market prices for CO2 offsets could soar, to $200 per ton or more.
The difficulty in estimating what CO2 offsets might cost is not only a function of how much we may determine we need to move away from fossil fuel, but also very much linked to whether or not there are abundant and economically feasible CO2 offset projects. Here is where the Europeans have gotten many things mixed up – only now are they revisiting their criteria for biofuel certification, for example, to make sure it doesn’t conflict with preservation of rainforest. The more you dig into “carbon accounting,” the more you realize it’s riven with subjectivity. One way to further the policy decision to become more independent of fossil fuel would be to simply increase the gas tax.
None of this should matter with respect to land use decisions, however. If we have determined we need to add 31 cents to the price of gas, based on 8.8 kilograms of CO2 per gallon of gasoline, and $35 per ton of CO2 emissions, then make everyone pay the higher price. Forcing developers to assess – and mitigate – yet another environmental regulation will only drive home ownership further out of the hands of ordinary people. Anti-development activists can parse this any way they like, but for those of us who still respect the wishes of ordinary families who want to have a house with a yard and a dog (and a trampoline and a wading pool), this is all the wrong approach. There’s plenty of land, and there always will be.