I have a theory that when looking for a place to live, it's always smart to avoid neighborhoods where you hope you'll be the last person to ever move in. First of all, you're bound to be disappointed. If you liked the area, other people will too and make the same choice you did. Secondly, your new neighbors are a good bet to be unhappy about your arrival -- an interloper who is just the most recent symptom of their ever-declining quality of life.
New residents bring all sorts of problems -- things like traffic congestion, increased demands on infrastructure, longer lines at the grocery store, and trouble finding a decent parking space. They bring benefits too -- in the form of economic growth which tends to produce jobs, tax revenue, and higher property values. Unfortunately, the problems get localized in neighborhoods, while the benefits are spread more regionally. People therefore respond as you might expect: by fighting like crazy to keep anyone else from moving into their neighborhood.
This is the familar NIMBY problem and RFF Senior Fellow Virginia McConnell and co-author Matthias Cinyabuguma argue that it is an overlooked contributor to urban sprawl. Traditional economic explanations have focused on things like the trade-off between commuting time and land costs or on specific public policies like property taxes and infrastructure provision.
But if the NIMBY story is true, "sprawl" isn't simply a reflection of people's preferences nor is it just the result of market or regulatory failures. It actually arises from intentional government intervention, usually in the form of local efforts to limit new development through zoning. Jonathan Levine has documented how this plays out in detail in his very interesting RFF book Zoned Out (2005).
So what to do about it? The political economy underpinning of sprawl makes it, if anything, more intractable -- it's can't be remedied with simple tweaks to transportation, tax, and/or infrastructure policies. McConnell and Cinyabuguma recognize the difficulties and offer some tentative ideas. One option might be to pay people to accept new neighbors. They write:
We have shown that either a subsidy or a decreasing tax on existing residents to induce them to accept new residents will result in higher net welfare for all of the neighborhoods, and for the city as a whole. ... Subsidies over and above impact fees for adding new residents may result in improvements of overall welfare in growing cities.
But that is a tricky policy to implement. Another possibility is providing improved information. The costs of new arrivals tend to be in people's faces, while the benefits they bring can be harder to discern.
[Ii]t is possible that the provision of better information about the [beneficial] effects of new development could influence the willingness of neighborhoods to block new development.
