Environment

Time to Rethink This Experiment? Delusion Down Under

Ross Elliott — Fri, 10 Feb 2012 00:38:10 -0500

The famous physicist, Albert Einstein, was noted for his powers of observation and rigorous observance of the scientific method. It was insanity, he once wrote, to repeat the same experiment over and over again, and to expect a different outcome. With that in mind, I wonder what Einstein would make of the last decade and a bit of experimentation in Queensland’s urban planning and development assessment?

Fortunately, we don’t need Einstein’s help on this one because even the most casual of observers would conclude that after more than a decade of ‘reform’ and ‘innovation’ in the fields of town planning and the regulatory assessment of development, it now costs a great deal more and takes a great deal longer to do the same thing for no measureable benefit. As experiments go, this is one we might think about abandoning or at the very least trying something different.

First, let’s quickly review the last decade or so of change in urban planning and development assessment. Up until the late 1990s, development assessment was relatively more straightforward under the Local Government (Planning and Environment) Act of 1990. Land already zoned for industrial use required only building consent to develop an industrial building. Land zoned for housing likewise required compliance with building approvals for housing. These were usually granted within a matter of weeks or (at the outset) months.

There were small head works charges, which essentially related to connection costs of services to the particular development. Town planning departments in local and state governments were fairly small in size and focussed mainly on strategic planning and land use zoning. It was the building departments that did most of the approving. Land not zoned for its intended use was subject to a process of development application (for rezoning), but here again the approach was much less convoluted that today. NIMBY’s and hard left greenies were around back then, but they weren’t in charge. Things happened, and they happened far more quickly, at lower cost to the community, than now.

In the intervening decade and a bit, we’ve seen the delivery and implementation of an avalanche of regulatory and legislative intervention. It started with the Integrated Planning Act (1997), which sought to integrate disparate approval agencies into one ‘fast track’ simplified system. It immediately slowed everything down. It promised greater freedom under an alleged ‘performance based’ assessment system, but in reality provoked local councils to invoke the ‘precautionary principle’ by submitting virtually everything to detailed development assessment. The Integrated Planning Act was followed, with much fanfare, by the Sustainable Planning Act (2009). Cynics, including some in the government at the time, dryly noted that a key performance measure of the Sustainable Planning Act was that it used the word ‘sustainable’ on almost every page.

Overlaying these regulations have been a constant flow of land use regulations in the form of regional plans, environmental plans, acid sulphate soil plans, global warming, sky-is-falling, seas-are-rising plans – plans for just about everything which also affect what can and can’t be done with individual pieces of private property.
But it wasn’t just the steady withdrawal of private property rights as state and local government agencies gradually assumed more control over permissible development on other people’s land. There was also a philosophical change on two essential fronts.

First, there was the notion that we were rapidly running out of land and desperately needed to avoid becoming a 200 kilometre wide city. Fear mongers warned of ‘LA type sprawl’ and argued the need for densification, based largely on innocuous sounding planning notions like ‘Smart Growth’ imported from places like California (population 36 million, more than 1.5 times all of Australia, and Los Angeles, population 10 million, roughly three times the population of south east Queensland). The first ‘South east Queensland Regional Plan 2005-2026’ was born with these philosophical changes in mind, setting an urban growth boundary around the region and mandating a change to higher density living (despite broad community disinterest in density). It was revisited by the South East Queensland Regional Plan 2009-2031 which formally announced that 50% of all new dwellings should be delivered via infill and density models (without much thought, clearly, for how this was to be achieved and whether anyone particularly wanted it). Then there was the South East Queensland Regional Infrastructure Plan 2010-2031 which promised $134 billion in infrastructure spending to make this all possible (without much thought to where the money might come from) and a host of state planning policies to fill in any gaps which particular interest groups or social engineers may have identified as needing to be filled.

The significant philosophical change, enforced by the regional plan, was that land for growth instantly became scarcer because planning permission would be denied in areas outside the artificially imposed land boundary. Scarcity of any product, particularly during a time of rising demand (as it was back then, when south east Queensland had a strong economy to speak of) results in rising prices. That is just what happened to any land capable of gaining development permission within the land boundary: raw land rose in price, much faster than house construction costs or wages.

The other significant philosophical change that took root was the notion of ‘user pays’ – which became a byword for buck passing the infrastructure challenge from the community at large, to new entrants, via developer levies. Local governments state-wide took to the notion of ‘developer levies’ with unseemly greed and haste. ‘Greedy developers’ could afford to pay (they argued) plus the notion of ‘user pays’ gave them some (albeit shaky) grounds for ideological justification. Soon, developers weren’t just being levied for the immediate cost of infrastructure associated with their particular development, but were being charged with the costs of community-wide infrastructure upgrades well beyond the impact of their proposal or its occupants.

Levies rose faster than Poseidon shares in the ‘70s. Soon enough, upfront per lot levies went past the $50,000 per lot mark and although recent moves to cap these per lot levies to $28,000 per dwelling have been introduced, many observers seem to think that councils are now so addicted that they’ll find alternate ways to get around the caps.

So the triple whammy of ‘reform’ in just over a decade was that regulations and complexity exploded, supply became artificially constrained to meet some deterministic view of how and where us mere citizens might be permitted to live, and costs and charges levied on new housing (and new development generally) exploded.

At no point during this period, and this has to be emphasised, can anyone honestly claim that this has achieved anything positive. It has made housing prohibitively expensive, and less responsive to market signals. Simply put, it takes longer, costs more, and is vastly more complicated than it was before, for no measureable gain.

An indication of this was given to me recently in the form of the Sunshine Coast Council’s budget for its development assessment ‘directorate.’ (How apropos is that term? It would be just as much at home in a Soviet planning bureau). Their budget (the documents had to be FOI’d) for 2009-10 financial year included a total employee costs budget of $17.4 million. For the sake of argument, let’s assume the average directorate comrade was paid $80,000 per annum. That would mean something like more than 200 staff in total. Now they might all be very busy, but it surely says something about how complexity and costs have poisoned our assessment system if the Sunshine Coast Council needs to spend over $17 million of its ratepayer’s money just to employ people to assess development applications in a down market.

If there had been any meaningful measures attached to these changes in approach over the last decade, we’d be better placed to assess how they’ve performed. But there weren’t, so let’s instead retrospectively apply some:

Is there now more certainty? No. Ask anyone. Developers are confused. The community is confused. Even regulators are confused and frequently resort to planning lawyers, which often leads to more confusion. The simple question of ‘what can be done on this piece of land’ is now much harder to answer.

Is there more efficiency? No. Any process which now takes so much longer and costs so much more cannot be argued to be efficient.

Is the system more market responsive? No. Indeed the opposite could be argued – that the system is less responsive to market signals or consumer preference. Urban planning and market preference have become gradually divorced to the point that some planners actively view the market preferences of homebuyers with contempt.

Are we getting better quality product? Many developers will argue that even on this criteria, the system has dumbed down innovation such that aesthetic, environmental or design initiatives have to fight so much harder to get through that they’re simply not worth doing.

Is infrastructure delivery more closely aligned with demand? One of the great promises of a decade of ‘reform’ was that infrastructure deficits would be addressed if urban expansion and infrastructure delivery were aligned. Well it’s been done in theory via countless reports and press releases but it’s hardly been delivered in execution. And when the volumes of infrastructure levies collected by various agencies has been examined, it’s often been found that the money’s been hoarded and not even being spent on the very things it was collected for.

Is the community better served? Maybe elements of the green movement would say so, but for young families trying to enter the housing market, the answer is an emphatic (and expensive) no. How can prohibitively expensive new housing costs be good for the community? For communities in established urban areas, there is more confusion about the impact of density planning, which has made NIMBY’s even more hostile than before.

Has it been good for the economy? South east Queensland’s economy was once driven by strong population growth – the very reason all this extra planning was considered necessary. But growth has stalled, arguably due to the very regulatory systems and pricing regimes that were designed around it. We now have some of the slowest rates of population growth in recent history and our interstate competitiveness – in terms of land prices and the costs of development – is at an all time low. That’s hardly what you’d call a positive outcome.

Is the environment better served? If you believe that the only way the environment can be better served is by choking off growth under the weight of regulation and taxation, you might say yes. But then again, studies repeatedly show that the density models proposed under current planning philosophies promote less environmentally efficient forms of housing, and can cause more congestion, than the alternate. So even if the heroic assumptions for the scale of infill and high density development contained in regional plans was actually by some miracle achieved, the environment might be worse off, not better, for it.

All up, it’s a pretty damming assessment of what’s been achieved in just over a decade. Of course the proponents of the current approach might warn that – without all this complexity, cost and frustration – Queensland would be subject to ‘runaway growth’ and a ‘return to the policies of sprawl.’ The answer to that, surely, is that everything prior to the late 1990s was delivered – successfully – without all this baggage. Life was affordable, the economy strong, growth was a positive and things were getting done. Queensland, and south east Queensland in particular, was regarded as a place with a strong future and a magnet for talent and capital. Now, that’s been lost.

Einstein would tell us to stop this experiment and try something else if we aren’t happy with the results. To persist with the current frameworks and philosophies can only mean the advocates of the status quo consider these outcomes to be acceptable. Is anyone prepared to put up their hand and say that they are?

Ross Elliott has more than 20 years experience in property and public policy. His past roles have included stints in urban economics, national and state roles with the Property Council, and in destination marketing. He has written extensively on a range of public policy issues centering around urban issues, and continues to maintain his recreational interest in public policy through ongoing contributions such as this or via his monthly blog The Pulse.

Photo by Flickr user Mansionwb

Who Stands The Most To Win – And Lose – From A Second Obama Term

Joel Kotkin — Thu, 02 Feb 2012 12:45:45 -0500

As the probability of President Barack Obama’s reelection grows, state and local officials across the country are tallying up the potential ramifications of a second term. For the most part, the biggest concerns lie with energy-producing states, which fear stricter environmental regulations, and those places most dependent on military or space spending, which are both likely to decrease under a second Obama administration.

On the other hand, several states, and particularly the District of Columbia, have reasons to look forward to another four years. Under Obama the federal workforce has expanded — even as state and localities have cut their government jobs. The growing concentration of power has also swelled the ranks of Washington‘s parasitical enablers, from high-end lobbyists to expense-account restaurants. While much of urban America is struggling, currently Washington is experiencing something of a golden age.

So what states have the most to lose from a second Obama term? The most obvious is Texas, the fastest-growing of the nation’s big states. Used to owning the inside track in Washington during the long years of Bush family rule, the Lone Star state now has less clout in Congress and the White House than in recent memory. Texans are particularly worried about restrictions on fossil fuel energy development, which is largely responsible for robust growth throughout the state.

“Obama now wants to take credit for the increased production that has happened, but [increased production] has been opposed in every corner by the administration,” says John Hofmeister, founder of the Houston-based Citizens for Affordable Energy and former CEO of Shell USA. Hofmeister fears that in a second term, with no concern for reelection, Obama could exert even greater controls on fossil fuel development. This would have dramatic, negative implications not only for Texas but for the entire national energy grid, which includes North Dakota, Wyoming, Montana, West Virginia, Oklahoma, Alaska and Louisiana. These states fear that the nation’s recent energy boom, which has generated some of the nation’s strongest job and income growth, could implode in Obama’s second term.

Take Louisiana, which is still recovering from Hurricane Katrina in 2005 and the BP oil spill in 2010. The administration’s moratorium on offshore drilling, sparked by the spill, has had a deleterious effect on the state’s energy economy, according to a recent study, with half offshore oil and service companies shifting their operations to other regions and laying off employees.

Once the moratorium was lifted in 2010, companies have faced long delays for new wells, growing from 60-day delays in 2008 to more than 109 last year . “The energy states feel they are being persecuted for their good deeds,” says Eric Smith, director of the Tulane Energy Institute in New Orleans. “There is a sense there are people in the administration who would like this whole industry to go away.”

Many of these same states also worry about the administration’s proposed downsizing of the military. Obama’s move to cut roughly towards $500 billion in defense spending may make sense, but it threatens places with large military presences such as Texas, Florida, Oklahoma, Virginia, Georgia, South Carolina and New Mexico.

The D.C. metro area might also be hit by defense cuts, but overall the it has many reasons to genuflect toward the Obama Administration. Federal wages, salaries and procurement account for 40% of the district’s economic activity, roughly four times the percentage of any state. Expanding regulation on energy, health care and financial services has sparked a steady job boom in lobbying, think tanks and other facets of the persuasion industry — including among Republicans –at a time when employment growth has been sluggish elsewhere.

D.C. partisans hail their city as the leader of a national urban boom. The district clearly benefits from diminished job opportunities in more market-based economies, particularly for educated 20-somethings.

No place has flourished as much as the capital, but a second term would be favorable to states such as Maryland, which depend heavily on research spending directed from Washington and where federal spending accounts for fifteen percent of the local economy, over seven times the national average. Maryland agencies such as the National Institutes for Health will likely expand under an increasingly federalized health care system — particularly if Democrats gain more seats in Congress with an Obama win.

Other big states that may benefit from a second term include New York, California and Illinois. New York benefits largely from the administration’s Wall Street leanings, despite the president’s recent attacks on financial elite. Even for the non-conspiracy theorists, the administration’s ties to Goldman Sachs appear unusually intimate. Powerful allies like Democratic Sen. Charles Schumer, D.C.’s greatest Wall Street booster, suggest big money has little to fear from a second term.

Overall the administration’s basic policy approach has favored the financial giants. Support for bailouts, seemingly permanent low interest rates, few prosecutions for miscreant investment bankers, the institutionalization of “too big to fail” and easy loans for renewable fuel firms all have benefited the big Wall Street players.

Of course, a Republican victory would not be a disaster for these worthies. Companies like Goldman Sachs are hedging their bets by sending loads of cash to the likely Republican choice, former Massachusetts Gov. Mitt Romney.

But other New York interests, such as mass transit funding, would benefit from the current administration’s generally pro-urban, green sensibilities. Tight regulations on carbon emissions — increasing the price of fossil fuels — may help the competitive position of New York City, which has little industry left and relatively low carbon emissions per capita, in part due to a greater reliance on hydroelectric and nuclear power.

California also has reasons to root for an Obama victory. Although among the richest states in fossil fuels, particularly oil, the Golden State has become a bastion of both climate change alarmism and renewable energy subsidization. It adamantly won’t develop traditional its energy resources — which would help boost the state’s still weak economy — and Silicon Valley venture firms have eagerly grabbed subsidies and loans for start-ups from Energy Secretary Steven Chu’s seemingly bottomless cornucopia.

Furthermore, more powerful EPA would make California’s current “go it alone” energy and environmental problems less disadvantageous compared to more fossil-fuel-friendly states, leveling what is now a tortuous economic playing field.

Similarly, attempts to push the state’s troubled high-speed rail line — recently described in Mother Jones as “jaw-droppingly shameless” – will succeed only with strong backing by the federal government. Under a Republican administration and Congress, Brown’s beloved high-speed line would depend entirely on state and private funding, likely terminating the project.

But no state needs an Obama victory more than his adopted home state of Illinois. To be sure, having a native son in the White House has not prevented the Land of Lincoln from suffering one of the weakest economies in the nation. The state has one of the highest rates of out-migration in the country, according to recent United Van Lines data and Census results.

Even worse, the Land of Lincoln faces a fiscal crisis so great that it makes California look well-managed. Without a good friend in the White House, and allies in Congress, Illinois could end up replacing long-struggling, now-improving Michigan as the Great Lakes’ new leading basket case. Count Illinois 20 electoral votes in the Obama column.

This piece originally appeared in Forbes.com.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

Photo from BigStockPhoto.com.

Britain Fears a Developer’s Charter

James Stevens and Ian Abley — Wed, 25 Jan 2012 01:38:42 -0500

The UK Government’s Department for Communities and Local Government (DCLG) announced that there were only 127,780 new housing completions last year in Britain. British house building activity is down to levels of after the First World War, when reliable industrial records began, and still falling. In 1921 the British population was nearly back up to 43 million following the slaughter of the First World War. In 2011 the population of England, Wales, and Scotland is approaching 61 million people. By 2031 the British population is expected to be closer to 70 million. With such existing unmet and growing demand for new housing the DCLG, the Government department that runs the Planning System should be busy finding ways to allow developers to build.

Many feared that the National Planning Policy Framework (NPPF), prepared by the DCLG for an expected release in January 2012 would be a developer’s charter. We wish it was a developer’s charter! The NPPF continues planning policies, supported by all Parliamentary political parties, which continue to frustrate volume housebuilding. Developers have to prove that their proposals for house building are not merely about building useful homes at a profit, but are “sustainable development” when measured against disputable social and environmental criteria. No developer is free to build on their own land without first having to obtain planning approval from an array of third party interests all insisting on their interpretation of the moral idealism of sustainability.

This makes the NPPF an anti-development charter for all those who oppose house building and population growth. Anyone can claim that more house building and more households are unsustainable in their area, in the effort to stop a project which they don’t approve of.

The NPPF will do nothing to challenge the power of contemporary anti-development campaigners, who are well known. Anne Power, Lord Richard Rogers and other members of New Labour’s Urban Task Force (UTF) have correctly identified themselves as allied to the “Hands off Our Land” campaign run by The Daily Telegraph, the Conservative supporting newspaper. The UTF favors a continuing commitment to ‘… reclaiming brownfield sites and re-densifying cities.’ To build only on previously developed land is the green ideal of the UTF and the “Hands off Our Land” campaign.

We all know where these policies lead. Not to a golden age of regeneration for all, but to lucrative property investment for those with access to sufficient capital and the right connections to steer themselves through the planning system to obtain approvals. The volume of Greenfield land developed declined dramatically under New Labour. The present Conservative led Coalition Government continues the practice of obstructing development on Greenfield land.

Between 2000 and 2006 the total area of land built on for new housing fell by 23%, with a 42% fall in the annual amount of Greenfield land used. In 2010 76% of all housing was built on previously developed Brownfield land, a slight decrease from the 80% in 2009. Only 2% of housing was built on the Green Belts around major cities and towns. The Green Belt in England covers 13% of the land, or twice the area already developed for housing. Small wonder that the price of the shrinking supply of land with a prospect of being approved for sustainable development remains inflated.

House building was only increased from the low point of 2001 by increasing the density of development in the cities. Average densities rose from 25 dwellings per hectare (dph) in 2000, to 43 dph by 2010. In London the average density for new housing is much higher, at 115 dph in 2010.

Densification policies considered sustainable have meant that the majority of the working British public can no longer buy a new house with a garden, in ways that previous generations may have taken for granted. Instead the plan has been to squeeze more new households into less space. UTF supporters and the DCLG imagined they were regenerating cities and saving the planet for all of society. Like traditional Conservatives they mean to keep developers and the population off Britain’s ample supply of otherwise redundant farmland.

The Daily Telegraph’s campaign, best articulated by the conservative anti-growth philosopher Roger Scruton, is clearly the flip side of the UTF’s densification argument. He is happy as long as the population is kept away from the countryside he loves. ‘Thank God for obstacles to economic growth,’ says Scruton.

Scruton speaks for the comfortable who already enjoy plenty of space. The Daily Telegraph’s campaign is ultimately concerned that existing housing markets are protected, sustained through the division between Town and Country, and moralised as a concern for environment and heritage. New Labour supporters are more likely to read The Guardian, but its more middle-class readership finds nothing to object to in The Daily Telegraph’s campaign, in order to restrict the “sprawl” of suburbia and halt the imagined damage this will do to the environment and urban communities. The Guardian’s readership formed the bed-rock of New Labour’s support, and back Next Labour. The working class may have deserted Labour, but is depoliticized and passive. The Guardian and The Daily Telegraph – still supposed by many to be at opposite ends of the old-fashioned and defunct ideological spectrum of Left and Right – prove closer than either cares to think.

Labour Members of Parliament have traditionally feared the “flight to the suburbs” lest they lose voters and the associated tax revenue. The planning system has proved very effective in maintaining the political geography of Britain. Labour politicians negotiate their political dependency on urban containment with a Red-Green stance in urban areas, without threatening the Blue-Green interests of those who want to keep development out of the countryside. All depend on the denial of development rights that date from the 1947 Town and Country Planning Act, and which the NPPF reinforces.

Meanwhile working class families are squeezed into what little Twentieth Century suburbia is still affordable, competing unsuccessfully with the more affluent for ownership of this increasingly scarce and valued commodity. What new housing is built is at higher density, usually on the least attractive sites. That is land previously occupied by factories, old infrastructure, and utilities, or by council housing estates re-developed at higher densities. Yet even these unpopular sites enter the inflated British housing market, sustained through a chronic lack of house building.

The working class is caught in a political crusher made manifest through the planning system. The Red-Greens, who may imagine themselves on a new Left, gentrify towns and cities with “sustainable redevelopment”, and the Blue-Greens, who persist with being on the Right, protect their landscape for their exclusive enjoyment. Meanwhile the majority of home owners have come to depend on the inflated and unaffordable housing market. New Labour needed this house price inflation to allow the owner occupying majority to supplement inadequate wages by withdrawing equity from their homes. So does the Coalition. Deliberate or not, The Daily Telegraph’s commitment to building fewer new homes will stabilise what we have called the Housing Trilemma.

Our current predicament may be thought of as a Trilemma, in which house price inflation supports burdensome mortgage lending and private debt, while households in the owner occupied sector accept low quality housing conditions. High rents shadow private sector housing costs, and private rental housing quality is often of the lowest quality. Many in Britain, including the majority of the home owning middle class, are dependent on the Housing Trilemma remaining stable.

The planning system serves well in protecting the interests of existing home owners. Behind the NPPF’s moral idealism of sustainability, the immediate instrumental objective is to restrict new housing supply to avoid destabilising housing markets. Appearing as a moral mission to save the planet from developers, the NPPF and the denial of development rights sustains the Housing Trilemma. Debt is secured, but housing remains unaffordable, quality low, and house building activity is at an all time industrial low. This is not a conspiracy. It is a predicament.

When Britain’s elites talk about wanting to revive economic growth, they don’t mean a massive surge in new house building or an expansion of infrastructure. What they have in mind is a revival of financial services in The City, subject to uncertainties in the fragmenting Euro Zone, and the maintenance of high housing prices in the hope of more inflation to come. Meanwhile the countryside is kept pristine for the few who can afford access to it as a weekend retreat for the wealthy, including the pro-urban intelligentsia, in all their Red-Green-Blue moral plumage.

The Coalition could have challenged the Housing Trilemma. Instead they have reinforced it.

The result is predictable. Planning applications are falling in number and ambition. Only 25,000 new homes were approved in the second quarter of 2011 compared to 32,000 in the second quarter of 2010. This will be read by The Daily Telegraph campaign members as “proof” that there is no demand for development, inverting the causality. Money is being made out of an environmentally sanctioned scarcity rather than through increased productivity and innovation in a sector like house building and the wider construction industry. Britain’s already backward construction industry is further retarded, and it is becoming commonplace for social elites, and not only crazed nationalists, to blame immigration for housing shortages.

Britain’s economy needs growth, but is unlikely to get it from the house building sector. Britain too needs a dose of political reality while the pro-urban intelligentsia preen their green morality.

The Coalition cannot afford to confront the political problem of the Housing Trilemma if it is to sustain its fragile political base. Increasingly, only the elderly bother to vote and this equity rich group will be mostly satisfied with modest house price inflation as a hedge against general inflation, while savings in banks attract little return. Meanwhile an influential propertied elite still enjoys sustained house price inflation at the top of the market. They are anxious that environmental and heritage designations operate to enhance the exclusivity and enjoyment of their investments. The unelected charities, agencies and Non-Governmental Organisations that were aligned against the draft of the NPPF in July 2011 represent these elite interests. They may now back the redrafted 2012 NPPF with all its demands for sustainability. Their “Hands off Our Land” campaign has worked for them.

The NPPF means that house builders face a future in which building on Greenfield land is effectively considered an eco-crime. Only those who can develop Town Centre sites, perhaps as rental housing, or as luxury homes for the equity rich will thrive. Basically Britain is no longer building homes with gardens for sale to young working families on modest incomes.

If you are in a young working family, or hope to start one, the question is: What are you going to do about the housing predicament you and your friends face?

We have to face a stark reality. Sadly, there is no contemporary habit of young working families organising to demand housing collectively. Meanwhile the 2011 to 2012 production figures look set to be lower again, and the developmental uncertainties about to be articulated in a redraft of the NPPF in pursuit of sustainable development will further the decline in production.

Anticipating this feature of Britain’s ratcheting austerity does not make for a Happy New Year. Much depends on what the people of Britain, and particularly the young, do to demand that family houses are built at modest prices in places they want to live together. At present Britain fears a developer’s charter, even though the National Planning Policy Framework is nothing of the sort. Parliament might yet instead be in fear of people demanding cheap land on which to build a better place to live.

James Stevens is Strategic Planner at the Home Builders Federation, www.hbf.co.uk. Email him at james.stevens@hbf.co.uk. The views expressed are his own and not those of Home Builders Federation. Ian Abley is a site architect and runs the pro-development website audacity, www.audacity.org. Email him at abley@audacity.org. Together they organise the 250 New Towns Club, www.audacity.org/250-New-Towns-index.htm.

Urban Development: Playing Twister With The California Environmental Quality Act

Rick Cole — Wed, 11 Jan 2012 00:38:38 -0500

When it comes to environmental issues, emotions often trump reasoned argument or sensible reform, especially in California. In Sacramento at our state capitol, real world impacts are abstracted into barbed soundbites. It’s the dialogue of the deaf as environmental advocates rally around our landmark California Environmental Quality Act (CEQA) -- and economic interests decry it as “a job killer.” Perhaps the polarization can be put aside to ask about a specific example in the real world. Why does an old K-Mart sit vacant on Ventura’s busiest boulevard despite initial City approval for a Walmart store? All the thunder and lightning surrounding whether a Walmart belongs in Ventura is behind us. A vigorous and contentious debate (and a failed citizen initiative) have rendered the verdict that filling an empty discount retail space with a different discount retailer is a function of the market, not government regulation.

Nor can we directly blame the stalemate directly on the California Environmental Quality Act (CEQA). What keeps the store empty is not the controversial law itself, but the way it has been twisted like a pretzel into a tool to stop urban developments opposed by well-funded interests. Recently, the Los Angeles Times exposed the ironic way it has even been adapted by developers and big corporations to fend off their competition.

The California Environmental Quality Act is the toughest state environmental protection statute in the nation. Passed more than 40 years ago in the wake of the first Earth Day (and signed by Governor Ronald Reagan), CEQA has spawned an industry of specialist consultants, attorneys and planners. Its original laudable goals for managing natural resources have been obscured by the hard ball tactics of litigators in our state.

The vast majority of Californians support sensible environmental protections and are suspicious when business interests lobby to weaken them. They remember oil spills and toxic dumps and slash and burn hillside developments. Yet the case law that has grown up around CEQA is so burdensome that virtually any public or private project can be slowed or killed on bogus grounds that really have nothing whatever to do with protecting our natural environment.

Yes, the law has protected stands of redwood trees from clear-cutting and sensitive habitat from suburban sprawl. And there are David and Goliath stories: a little band of neighbors stop a mega-developer from flooding their neighborhood with traffic (although this is a long stretch from protecting “natural resources”.) But it is now routine for special interests to hire high-powered law firms to exploit the law for their own economic interests.

Here in Ventura, lawyers for construction unions combed over the Environmental Impact Report done for the new Community Memorial Hospital project with the goal of seizing on any technical errors or ambiguities. They fired off a thirty page “comment letter” which lays the groundwork for a lawsuit. The goal was certainly not “protecting the environment” — it was to pressure the hospital to use union labor for the construction. They were successful.

The proposed Walmart at the old K-Mart site is stalled after initial city approval because the company knows that even something as simple as changing the facade on the building could trigger a lawsuit alleging inadequate “environmental review.” So the project sits in limbo while Walmart analyzes its legal options. What Walmart fears is exactly what happened to WinnCo grocery, which did see its proposed new signage and facade challenged by a CEQA lawsuit.

There are lots of things not to like about development in a city. But that’s why we have planning commissions, public hearings and appeals to elected City Councils, along with detailed rules that must meet stringent legal guidelines for adoption and enforcement. But why have an elaborate land use entitlement and permit review process if it can be superseded by anyone with the resources to file a CEQA lawsuit? Democratic due process goes out the window, replaced by months or years of costly legal maneuvering.

No sensible person advocates repealing CEQA. But after forty years, it is past time to return to its original, laudable purpose and intent: to protect our natural environment and sustainably manage our natural resources.

Understandably, environmental advocates are skittish about tinkering with the law. There is precedent, however, for consensus reform. When the League of Conservation Voters pushed a bill to curb greenhouse gas emissions and promote sustainable regional planning, they won the support of both the League of California Cities and the Building Industry Association by incorporating a modest relaxation of onerous CEQA burdens on “infill development.” There’s lots more room for common sense consensus to separate environmental protection from a racket for special interest litigation.

One of the worst ways to proceed is to pick out individual projects for favorable CEQA treatment. That’s what’s happened on a couple of controversial stadium projects that won legislative relief from the typical CEQA procedural hurdles. Having to lobby Sacramento to pass a special law is a brutally stark example of special interest litigation. Football stadiums are not the only or even the most important projects held hostage by CEQA abuse. Comprehensive reform is long overdue.

In these economic times, the jobs lost to CEQA abuse aren’t offset by the ones created for CEQA experts and CEQA attorneys. California led the nation in protecting our state’s environment. If we can look past the symbolism that CEQA has assumed to both advocates and detractors, we’ll see that it’s urgent to restore the law’s original purpose and keep it from being hijacked for other agendas. That may be unlikely in today’s polarized political climate. That’s why it is crucial to bypass the soundbites and the symbolic posturing, and remember the real world fallout of failing to reform the way CEQA is administered in the Golden State.

Rick Cole is city manager of Ventura, California, and recipient of the Municipal Management Association of Southern California's Excellence in Government Award. He can be reached at RCole@ci.ventura.ca.us

Photo: The vacant K-Mart in Ventura, California

Central Florida: On the Cusp of Recovery?

Richard Reep — Fri, 30 Dec 2011 00:38:02 -0500

Central Florida is poised at the cusp of a major turnaround, and its response to this condition will either propel the region forward, or drag it backward. This cusp condition is brought about by a train and a road; neither of which have begun yet but both of which appear imminent. Sunrail uses existing 19th century railroad tracks as a commuter spine through Orlando’s disperse, multipolar city. The Wekiva Parkway completes a beltway around Orlando, placing it with Washington DC, Houston and other ringed cities. Before either gets built, the region deserves some analysis on their combined effect, and how they can be nudged onto a pathway to make the region better.

Sunrail brings with it mythology about how trains affect cities. In what has now become the standard, tired kabuki dance between developer interests and municipal ones.

Not surprisingly, heavy regulation has entered the scene, with the avowed goal of creating dense urban pockets along even largely rural train stops. This has sparked rising property values which may end up frustrating the dream of transit-oriented development (TOD). Affordable dwellings and meaningful employment within a half-mile of a train stop must be created in order to make this development work, but unless Central Florida can spark this, the new train will likely suffer from the same fate as the vast majority of its sunbelt counterparts: low ridership and increasing tax subsidies.

Inserting TOD into 17 locations in Central Florida is a bold experiment. In order for it to work, the rising costs of housing will need to be addressed, and Central Florida can take advantage of this ambition to succeed. Orlando home sales are coming back, thanks to the mild climate and desirable lifestyle. That is very different, however, from guaranteeing that the economics of the rail commuter will make it worth discarding the single-family detached American Dream in favor of a relatively new model that has an unproven track record.

Orlando also seems to be blithely going about the business of creating another ring of traffic around itself, descending into the same level where Atlanta’s Perimeter, the DC Beltway, and other like-kind roads live. The Wekiva Parkway, long considered unneeded, is now being designed to complete the ring around Orlando, and will cross 25 miles of pristine wetlands that is a vestige of once-vast water resources of the region.

The Expressway Authority proposes this ring as an alternative to existing roads to serve the “growth needs of this area,” it conceded recently that this road segment made little economic sense except as a toll road accessing a new suburban single-family home development carved out of the swamps by one of the Governor’s chief fundraisers . The asset value of this ring road may be more private than in the public interest.

Traditionally agricultural land interlaced with wetlands, The Wekiva area to the northwest of Orlando has avoided large-scale Florida style bulldozing. All this will change if the Governor is successful in eliminating water management regulations , freeing up much of Florida, including this corner of Orlando, for speculation.

The local press, quick to criticize Alaska’s Bridge to Nowhere and always ready to jump on environmental issues, meekly ponders the need for this $2 billion highway. Maybe the elevated design, intended to be more ecologically friendly, makes it OK, despite the safety problems and high maintenance associated with this design. Florida’s history is littered with the drawings of many other elevated highways eventually built on grade to save cost. Once approved, the Wekiva Parkway may quickly be brought down to earth as well, displacing wetlands and agricultural land.

The Wekiva Parkway will open up land supply which indeed will allow for more growth. Done right, the asphalt will make land available that could be useful to the area’s economy. It will bring traffic to historic, but presently lonely Sanford, potentially infusing the economy of this once-vibrant rail town. Using principles of scarcity, land values could reflect people’s high desire to live in rural areas with all the services and guarantees that 21st century suburban life offers: fire and police protection, state-of-the-art infrastructure, and free pizza delivery. It could invigorate neighboring towns that are currently struggling for survival.

The risk is that such a road will simply allow more investment into Florida real estate without giving Florida much back in exchange. Florida, already strained to meet its current population needs, should not simply trade another commercial strip for water resources that benefit many species and contribute to the region’s resilience. Rather, development models should emulate the best of America’s conservation development happening in states where water rights are scarce. Connecting local employers with residential areas will enhance the value of both, and strategically keeping rural agricultural areas intact will preserve the region’s present land use diversity.

Well managed development that conserves resources and balances broader needs with private interests will elevate the state’s prospects at this critical juncture. One more bit of the original subtropical wilderness represents an asset for both present and future generations. With the right approach, the Wekiva Parkway can provide an enlightened model of low-density development that respects the value of open space.

In town, Sunrail presents denser development as an alternative. The normal pathway, however, seems to pit the profit-seeking real estate developer against ever higher regulatory burdens, which eventually make his product unaffordable to those coming here to escape high costs and regulations in other cities. Keeping both employment and housing affordable are critical to achieving success with any of these projects.

Moving product down the value chaindoes not do well current system, which leaves out the very people who Sunrail supposedly will benefit. Density is one of those characteristics that seems to be about good timing: if you have it today, like San Francisco or New York, this is largely the result of history; if you do not have it today, like Orlando, it is risky and probably a dubious proposition.

The road and the train open up land that must be carefully stewarded to create opportunities for meaningful employment and affordable housing, both of which are presently scarce commodities. The concept of transit-oriented development needs a success story, and Sunrail provides 17 opportunities to find one; meanwhile, the road presents a danger as well as an opportunity for Florida’s wetlands. As the region slowly recovers from the recession, the two projects together should be carefully considered by the region’s citizens and leadership to truly redefine Central Florida’s identity for the 21st century.

Richard Reep is an Architect and artist living in Winter Park, Florida. His practice has centered around hospitality-driven mixed use, and has contributed in various capacities to urban mixed-use projects, both nationally and internationally, for the last 25 years.

Photo courtesy of BigStockPhoto.com.

Durban, Reducing Emissions and the Dimensions of Sustainability

Wendell Cox — Mon, 12 Dec 2011 00:02:31 -0500

The Durban climate change conference has come to an end, with the nations of the world approving the "Durban Platform," (Note 1) an agreement to agree later on binding greenhouse gas (GHG) reduction targets by 2020. The New York Times reported: "Observers and delegates said that the actions taken at the meeting, while sufficient to keep the negotiating process alive, would not have a significant impact on climate change."

Not surprisingly, not all are pleased by the largely toothless agreement. Nnimmo Bassey, chair of Friends of the Earth international, told The Guardian:"Delaying real action till 2020 is a crime of global proportions." Todd Stern, the United States representative, signed on to the deal but noted that "there is plenty the US is not thrilled about."

There is general agreement that any program to reduce GHG emissions must do so in the most efficient (least expensive) manner. The United Nations Intergovernmental Panel on Climate Change (IPCC) has concluded that sufficient emissions reductions can be achieved for between $20 and $50 per ton. Any cost above that must be considered wasteful and likely to reduce economic growth, while increasing poverty.

Yet, researchers often leap from identifying a strategy to reduce GHG emissions to recommending its implementation, without ever examining the cost.

Often missed for instance, is that reductions in some sectors may prove less expensive than in others. The European Conference of Ministers of Transport has noted that "It is important to achieve the required emissions reductions at the lowest overall cost to avoid damaging welfare and economic growth." Across-the-board targets would misallocate resources, unnecessarily reducing economic growth and increasing poverty. This is particularly important in transport, because IPCC data indicates the potential for cost effectively reducing GHG emissions from this sector is considerably less than its contribution to emissions.

GHG Emissions from Automobiles: In the United States and other high income nations, however, mandates are being pursued that would impose far higher costs. Our new report, published by the Reason Foundation, Reducing Greenhouse Gas Emissions from Automobiles reviews two general approaches. The first is behavioral approaches, the favorite of policymakers, that would force people to leave the suburbs to live in higher densities ("compact city" or "smart growth" policies) and discourage personal mobility. The second is facilitative approaches, which would reduce GHG emissions through technological advances, minimizing the necessity for command and control mandates over people's lives.

Behavioral Approaches: In what passes for the conventional wisdom, current thinking would require densification for virtually all new development, while trying to force people out of cars to travel by transit, bicycle or walking, all characterized as "sustainable" transport modes. Further, these strategies would seriously impede personal mobility by increasing travel times and reducing access to employment. This reduction in accessibility to jobs would be a backward step for any nation interesting in longer term economic growth (Note 2).

The behavioral strategies are described in two principal US reports: Driving and the Built Environment which was produced by the National Research Council and Moving Cooler, by a consortium of organizations led by the Urban Land Institute and Cambridge Systematics. Each of these reports provides detailed estimates of the GHG emission reductions to be expected from land-use and mass transit strategies by 2050 in the United States.

The reductions are relatively modest, averaging less than 5% from the early 2000s to 2050 . Driving and the Built Environment indicates that the drafters did not agree its most aggressive scenario was achievable. Moving Cooler was soundly criticized by the American Association of State Highway and Transportation Officials and on these pages by leading transport consultant Alan E. Pisarski (see: ULI Moving Cooler Report: Greenhouse Gases, Exaggerations and Misdirections).

These proscriptive policies focus on housing and land use even thought nearly all of the improvement in GHG emissions would result from automobile fuel economy improvements, not compact city policies. Depending upon the scenario, between 89% and 99% of the reduction in GHG emissions from cars by 2050 (Figure 1) would be the result of fuel economy improvements, rather than from compact city policies (based on comparison base year, early 2000s, fuel economy).

Moreover, even the modest 1% to 11% reduction (5% average) in GHG emissions due to compact city policies are likely high because of greater traffic congestion, which neither report considers. Higher density urban areas, such as compact city policies would require, would spark greater traffic congestion. This means that cars travel slower and in more erratic traffic conditions. This, ironically, increases fuel consumption and GHG emissions per mile or kilometer. Thus, as noted here before, under these policies, GHG emissions from cars could actually increase.

Neither Driving and the Built Environment nor Moving Cooler report considers the economic impact of compact city land rationing, which drives up housing prices and could thus be expected to impose higher costs on households. The economic literature is virtually unanimous in associating higher land and thus house prices with smart growth type land rationing policies. The increased costs could be many times the IPCC $20 to $50 per ton of GHG emissions removed.

Even the popular assumption that suburban housing produces materially greater GHG emissions is questionable. Most US research fails to capture the common GHG emissions from elevators, heating, air conditioning, lighting, etc. in larger multi-unit housing, which are costs attributed to the building itself (landlord or condominium building) as opposed to household energy bills (simply because there are no data). Yet, research in Australia indicates that common GHG emissions render higher density multifamily housing more GHG intensive than either townhouses or detached housing. Also escaping many researchers is the fact that carbon neutral housing is being developed, which could remove any GHG emissions differences between housing types.

Compact city or smart growth policies have little potential to reduce GHG emissions and would do so at exorbitant costs that are well beyond those identified by the IPCC. This is not surprising, since compact city and smart growth policies have been widely touted long before the general concern over climate change. Denser cities have been pushed as a means to improve “community,” spur economic efficiency, reduce air pollution and deal with such ephemeral – given recent massive energy finds – notions of “peak oil”.

Facilitative Approaches: Any achievable program to reduce GHG emissions must be multi-dimensional and focus primarily on achieving that goal in the most economically and socially beneficial manner and not be based upon tired policies designed long ago to serve other agendas. There is no need for expensive and draconian compact city approaches. A report by McKinsey and the Conference Board concluded that substantial and cost effective GHG emission reductions were possible, “while maintaining comparable levels of consumer utility,” which was defined as “no change in thermostat settings or appliance use, no downsizing of vehicles, home or commercial space and traveling the same mileage.” In other words, there is no need to interfere with people's lives or preferences (Note 3).

The most promising approaches involve improvements in fuel economy. For example, Volkswagen has developed a two-seater car that achieves 235 miles per gallon (US) of gasoline or petrol (1 liter per 100 kilometers). With current fuel economy averaging little over 20 miles per gallon (12 liters per 100 kilometers) in the United States, the frontiers of fuel economy improvement have barely been approached.

Moreover, substantial GHG emissions reductions can be achieved at levels far below 235 miles per gallon. The United States Department of Energy, Energy Information Administration (EIA) forecasts that even if driving increases 29% from 2005 to 2025, GHG emissions from cars would be reduced by 7% (Note 4). If, as is demonstrably possible, the EIA forecast fuel efficiency improvements were to continue to 2050, the reduction would be 19%, despite an increase in driving of more than 60%. At a slower driving growth rate more consistent with more recent trends, the reduction could be 33% (Figure 2).

Further, if the US light vehicle fleet (cars and sport utility vehicles) were to achieve the current fuel economy performance of the best hybrid vehicles, the reduction in GHG emissions would be between 55% and 64% by 2050. Matching European performance forecasts would reduce GHG emissions even more.

A substantial increase in the fastest growing sector of commuting, working at home (often telecommuting), could also help. Nothing can cut emissions more thoroughly than working at home, which produces zero GHG emissions. Yet, this innovation – which already surpasses transit use in most American metropolitan areas – inexplicably receives little or no attention from planners intent on herding people into higher densities and travel modes that take longer.

The great advantage of facilitative approaches is that, as the McKinsey-Conference Board report indicates, people are permitted to live their lives as they prefer even as emissions are reduced.

The Dimensions of Sustainability: Perhaps the greatest problem with behavioral approaches is that they may not be sustainable at all. Sustainability is multi-dimensional. Compact city and smart growth policies lack financial sustainability because they spend far too much per ton of GHG emissions. They lack economic sustainability because they would impose substantially higher costs, especially on housing prices. Ultimately, unless humans radically change their demonstrated preferences, compact city and smart growth policies may not be politically sustainable because people are likely to resist them either at the ballot box, or by moving – as demonstrated in the latest census – even further out from the urban core or to smaller, less regulated and less dense regions. All three dimensions of sustainability, financial, economic and political, must be prerequisites to material GHG emissions reductions.

Notes:

(1) Reuters provides an early summary of the Durban Platform.

(2) The strong connection between economic growth and minimizing urban travel times is identified in research such as by Prud'homme and Lee at the University of Paris and Hartgen and Fields at the University of North Carolina, Charlotte.

(3) The McKinsey-Conference Board report was co-sponsored by Shell, National Grid, DTE Energy and Honeywell, as well as environmental advocacy organizations, the Environmental Defense Fund, the Natural Resources Defense Council (NRDC),

(4) Proponents of compact city policies sometimes claim that fuel efficiency improvements cannot reduce GHG emissions because the increase in driving neutralizes their impact. EIA projections indicate otherwise, as is shown here.

Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life”

Photograph from BigStockPhoto.com

The Secret of Where Good Energy Comes From

Michael Shellenberger and Ted Nordhaus — Tue, 15 Nov 2011 01:03:33 -0500

In the wake of Solyndra's failure, pundits have latched on to a simple, compelling narrative: government can't do energy right.

From synfuels to solar panels to "clean coal" (written, inevitably, with knowing quotation marks), demonstration projects funded by the Department of Energy are described as one failed white elephant after another. Today the DOE is the agency everyone loves to hate (and, at least in Texas Gov. Rick Perry's case, the agency to forget).

What gets left out (and forgotten) is that virtually every one of today's major energy technologies exists thanks to sustained US government investments in research, development, and demonstration. Consider:

Hydro-electric power like the Hoover Dam could not have been built without public funding.

Nuclear power -- including promising small modular reactors, used for 50 years on U.S. submarines -- required intensive government development and investment.

Today's wind turbines were pioneered by the United States in the seventies and deployed off-shore thanks to help from the Danish government two decades ago.

Solar panels were pioneered by NASA, and have seen massive price declines thanks to government research, development, and deployment. Industry leader First Solar is a direct descendant of DOE research as are Nanosolar and GE's thin film solar division.

And today's ultra-efficient natural gas turbines derive from DoD investments in better jet engines and from a DOE program in the 1990s.

To be sure, not every DOE investment has succeeded. But even the projects frequently named as failures were often secret successes.

Take synfuels. After the oil shocks of the 1970s, the US government created the synthetic fuels program. The program worked to produce fuel competitive with oil at $60 a barrel -- the program's objective. But when the price of oil dropped to $10 a barrel in the early 1980s, Congress sensibly abandoned the program. The total amount spent by Congress on SynFuels ended up being just $2 billion -- cheap insurance against future oil embargoes and price shocks, which had sent the United States into a costly recession.

Most people are surprised to learn that the SynFuels program was a success in another way: it led to the development of the technologies today used for coal gasification and carbon capture and storage, which captures coal plant emissions.

Clean coal is ridiculed by greens and libertarians alike as pie-in-the-sky. In fact, carbon capture and storage has been demonstrated around the world. One descendent of SynFuels, Dakota Gasification, is to this day still producing gas and sequestering several million tons of CO2 each year at Weyburn in Canada.

Or consider the case of an abandoned next generation nuclear plant on the Clinch River. The Washington Post singled it out to make a sweeping case against all public investments in advanced energy. What the Post didn't mention is that, since 1949, the U.S. government has successfully demonstrated and tested more than 50 experimental reactor designs at the National Reactor Testing Station (now Idaho National Labs). One of them -- the EBR-II -- ran for 30 years at the testing station and was the technological predecessor to the integral fast reactor (IFR), which is increasingly viewed by experts as promising since it is so efficient, burning conventional nuclear reactor waste as fuel.

Sometimes pundits point to natural gas drawn from shale as an example of how the private sector does the job better. They claim fracking and horizontal drilling were developed by a solitary entrepreneur named George Mitchell in the 1980s. In fact, the key breakthroughs in the development of shale gas technologies occurred thanks to intensive DOE demonstration efforts pursued by President Jimmy Carter, the frequent butt of energy-related jokes, in response to the 1970s oil embargoes.

Look at what industry and independent experts say. "The Department of Energy was there with research funding when no one else was interested," said the head of Julander Energy, a member of the National Petroleum Council, "and today we are all reaping the benefits." A Senior Director at Halliburton said, "In the early 1980s, the industry as a whole did not have a clear vision for producing gas from shales, and benefited from DOE involvement and funding of [electro-magnetic telemetry] EMT technology... there is a clear line of sight between the initial research project and the commercial EMT service available today." Dr. Terry Engelder of Penn State calls the DOE's Eastern Gas Shales Research Program "one of the great examples of value-added work led by the DOE."

In the case of the "shale gas revolution," as in so many examples of breakthrough American innovations, it is this key interplay between public sector research, demonstration, and testing and private sector ingenuity and entrepreneurship that drives major advances in technology.

To be sure, US investments in energy must be reformed. We should stop bluntly subsidizing the deployment of more of the same energy technologies -- whether current-generation wind, solar, biofuels, or nuclear -- and retool energy incentives to demand steady and continual innovation and cost improvements. Firms that out-innovate their competitors with next-generation clean energy improvements should be rewarded, and clean tech industries should put themselves on a clear path to subsidy independence over time. The big story about energy innovation remains unwritten. For most insta-experts on energy, it's easier to just recycle the old one.

Shellenberger and Nordhaus are co-founders of the Breakthrough Institute, a leading environmental think tank in the United States. They are authors of Break Through: From the Death of Environmentalism to the Politics of Possibility.

Image from BigStockPhoto.com

Does a Big Country Need to do Big Things? Yes. Do We Need a Big Government to do them? No.

Roger Selbert — Wed, 09 Nov 2011 23:58:59 -0500

TV network MSNBC's left-leaning commentator Rachel Maddow has opened herself up to ridicule by the conservative blogsophere over her advert featuring the Hoover Dam. The thrust of the spot is that “we don’t do big things anymore” but that we should. But critics say the dam couldn’t be built today due to environmental opposition to exactly these kinds of projects. Indeed many in the Administration and their green allies are more likely to crusade for the destruction of current dams than for the building of new ones.

Both sides have their points.

Building the Hoover Dam was not uncontroversial, to say the least. But it has proven to be beneficial to millions of Americans (flood control, hydroelectric power, recreation, and water for homes, farms and factories). Truly, it has allowed the desert to bloom.

Public goods like dams are not excludable (their use is not limited to paying customers), so only government can provide them, right? Well, as economist Jodi Beggs points out, there is certainly a case to be made for private ownership of seemingly public goods. The questions to be asked are:

Do the benefits to society of these projects outweigh the costs?
Could private enterprise provide this good or service if the government did not undertake the project itself?
Is there a compelling reason to ensure that everyone have access to this good or service?
If so, is there a way to ensure access without wholly providing the good or service?

In support of the case for private ownership Beggs cites Dingmans Bridge, which provides a crossing of the Delaware River between Pennsylvania and New Jersey, one of the last private toll bridges in America. Ironic she should mention it, because for the past 40 years Dingmans Bridge was supposed to be deep under the water behind the Tocks Island Dam.

The Big Dam that Never Got Built

Although Tocks Island Dam was never built, 72,000 acres of land were acquired by the U.S. government, often by condemnation, including farms, homes, and businesses. Whole towns disappeared when people had to move away, including many historic roads and structures that featured prominently in the Revolutionary War. This land now constitutes the Delaware Water Gap Recreation Area, which I visited last August on my summer vacation. It was eerie, haunting, beautiful and amazingly empty on a warm summer’s day within a 90-minute drive from Manhattan (okay, maybe two hours).

Many of the condemned homes, farms and buildings still exist, abandoned. As I drove through the area I could not help but think something has gone terribly wrong here, but what? Is it a story of government incompetence or good intentions gone bad? Or perhaps a story of NIMBYism run amok to throttle progress, development and future opportunity for future generations?

The Tocks Island Dam Project had been under consideration even before the 1955 flood, which caused several deaths and immeasurable damage to the Delaware River basin. In 1965 a proposal was made to Congress for the construction of the dam. The Tocks Island National Recreation Area was to be established around the lake, which would offer recreation activities such as hunting, hiking, fishing, and boating. In addition to flood control and recreation, the dam would be used to generate hydroelectric power and to supply water to the cities of New York and Philadelphia.

There was much local opposition to the project. My sister and brother-in-law have been locals for over 40 years and I can tell you, it’s still a touchy subject. The dam was disapproved by a majority vote of the Delaware River Basin Commission in 1975. With the United States still funding the Vietnam War, financial considerations came to the fore. Also, the geology was questionable for what would have been the largest dam project east of the Mississippi River.

In 1992, the project was reviewed again and rejected with the provision that it would be revisited ten years later. In 2002, after extensive research, the Tocks Island Dam Project was officially de-authorized. But the heartache of dislocation remains.

What are the lessons of the Tocks Island Dam?

Well, if we apply Beggs’ qualifications, we find that the project’s benefits did not outweigh its social, political and economic costs. It would have been nice to know this before all that land was acquired, causing those homes, farms and businesses to be condemned and abandoned by force. Would the dam have prevented the recent damaging floods in New Jersey and Pennsylvania? No, the recent floods were off the Passaic River, not the Delaware. Have New York and Philadelphia experienced major water and/or electricity shortages in the past 40 years that the dam would have ameliorated? Not apparently.

So we are left with this: even with highest purposes, best intentions and smartest people, government tends to get things wrong. It is not just the law of unintended consequences, but the law of government efforts having the opposite effect of those intended.

What ever happened to Reinventing Government?

In 1992 the concerns over government debt, deficits and unfunded liabilities were national issues (sad, ironic and maddening, isn’t it?). So strong were these concerns that they drove a Presidential candidate, Ross Perot, to the largest vote ever received (nominally and percentage-wise) by a national third-party candidate since the Bull Moose Party of Teddy Roosevelt. After Bill Clinton won that election – largely because of the votes Perot took away from George Bush – the newly-elected President would famously say, “The era of big government is over.” Oh, would that it were so.

That same year saw the publication of a book by David Osborne and Ted Gabler, Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector. Oh, would that it were so. The most compelling concepts in that book (to me) were the privatization and contracting-out of government services – the transformation of government from the entity that provides services to the entity that makes sure needed services are provided.

What happened? The concept of reinventing government is still alive, at least on the local and state levels; David Osborne is still fighting the good fight with the Public Strategies Group, but as he writes, “Reinventing public institutions is Herculean work.” And at the federal level we have had orgies of spending, debt and deficits.

Of course, we still need to do big things: Keystone pipeline, anyone? How ironic the opposition to building big things comes from the political left, the greens. In contrast, big Labor generally supports infrastructure projects, but not universally and often with prohibitively expensive terms. One big advantage that FDR enjoyed – something rarely cited by progressives – was the lack of public employee unions.

Meanwhile, a whole generation of underemployed blue collar youth is coming up, with few prospects and little of the can-do ethic that once propelled us to do big things. The President recently bemoaned this too – citing the Hoover Dam and Golden Gate Bridge. What he does not realize is that, more times than not, big government is now more of a hindrance to, than an agent of, needed and desired change.

Dr. Roger Selbert is a trend analyst, researcher, writer and speaker. Growth Strategies is his newsletter on economic, social and demographic trends. Roger is economic analyst, North American representative and Principal for the US Consumer Demand Index, a monthly survey of American households’ buying intentions.

Dingmans Bridge photo by Charlie Anzman via Flickr.

Gas Against Wind

Matt Ridley — Thu, 03 Nov 2011 01:38:46 -0400

Which would you rather have in the view from your house? A thing about the size of a domestic garage, or eight towers twice the height of Nelson’s column with blades noisily thrumming the air. The energy they can produce over ten years is similar: eight wind turbines of 2.5-megawatts (working at roughly 25% capacity) roughly equal the output of an average Pennsylvania shale gas well (converted to electricity at 50% efficiency) in its first ten years.

Difficult choice? Let’s make it easier. The gas well can be hidden in a hollow, behind a hedge. The eight wind turbines must be on top of hills, because that is where the wind blows, visible for up to 40 miles. And they require the construction of new pylons marching to the towns; the gas well is connected by an underground pipe.

Unpersuaded? Wind turbines slice thousands of birds of prey in half every year, including white-tailed eagles in Norway, golden eagles in California, wedge-tailed eagles in Tasmania. There’s a video on YouTube of one winging a griffon vulture in Crete. According to a study in Pennsylvania, a wind farm with eight turbines would kill about a 200 bats a year. The pressure wave from the passing blade just implodes the little creatures’ lungs. You and I can go to jail for harming bats or eagles; wind companies are immune.

Still can’t make up your mind? The wind farm requires eight tonnes of an element called neodymium, which is produced only in Inner Mongolia, by boiling ores in acid leaving lakes of radioactive tailings so toxic no creature goes near them.

Not convinced? The gas well requires no subsidy – in fact it pays a hefty tax to the government – whereas the wind turbines each cost you a substantial add-on to your electricity bill, part of which goes to the rich landowner whose land they stand on. Wind power costs three times as much as gas-fired power. Make that nine times if the wind farm is offshore. And that’s assuming the cost of decommissioning the wind farm is left to your children – few will last 25 years.

Decided yet? I forgot to mention something. If you choose the gas well, that’s it, you can have it. If you choose the wind farm, you are going to need the gas well too. That’s because when the wind does not blow you will need a back-up power station running on something more reliable. But the bloke who builds gas turbines is not happy to build one that only operates when the wind drops, so he’s now demanding a subsidy, too.

What’s that you say? Gas is running out? Have you not heard the news? It’s not. Till five years ago gas was the fuel everybody thought would run out first, before oil and coal. America was getting so worried even Alan Greenspan told it to start building gas import terminals, which it did. They are now being mothballed, or turned into export terminals.

A chap called George Mitchell turned the gas industry on its head. Using just the right combination of horizontal drilling and hydraulic fracturing (fracking) – both well established technologies -- he worked out how to get gas out of shale where most of it is, rather than just out of (conventional) porous rocks, where it sometimes pools. The Barnett shale in Texas, where Mitchell worked, turned into one of the biggest gas reserves in America. Then the Haynesville shale in Louisiana dwarfed it. The Marcellus shale mainly in Pennsylvania then trumped that with a barely believable 500 trillion cubic feet of gas, as big as any oil field ever found, on the doorstep of the biggest market in the world.

The impact of shale gas in America is already huge. Gas prices have decoupled from oil prices and are half what they are in Europe. Chemical companies, which use gas as a feedstock, are rushing back from the Persian Gulf to the Gulf of Mexico. Cities are converting their bus fleets to gas. Coal projects are being shelved; nuclear ones abandoned.

Rural Pennsylvania is being transformed by the royalties that shale gas pays (Lancashire take note). Drive around the hills near Pittsburgh and you see new fences, repainted barns and – in the local towns – thriving car dealerships and upmarket shops. The one thing you barely see is gas rigs. The one I visited was hidden in a hollow in the woods, invisible till I came round the last corner where a flock of wild turkeys was crossing the road. Drilling rigs are on site for about five weeks, fracking trucks a few weeks after that, and when they are gone all that is left is a “Christmas tree” wellhead and a few small storage tanks.

The International Energy Agency reckons there is quarter of a millennium’s worth of cheap shale gas in the world. A company called Cuadrilla drilled a hole in Blackpool, hoping to find a few trillion cubic feet of gas. Last month it announced 200 trillion cubic feet, nearly half the size of the giant Marcellus field. That’s enough to keep the entire British economy going for many decades. And it’s just the first field to have been drilled.

Jesse Ausubel is a soft-spoken academic ecologist at Rockefeller University in New York, not given to hyperbole. So when I asked him about the future of gas, I was surprised by the strength of his reply. “It’s unstoppable,” he says simply. Gas, he says, will be the world’s dominant fuel for most of the next century. Coal and renewables will have to give way, while oil is used mainly for transport. Even nuclear may have to wait in the wings.

And he is not even talking mainly about shale gas. He reckons a still bigger story is waiting to be told about offshore gas from the so-called cold seeps around the continental margins. Israel has made a huge find and is planning a pipeline to Greece, to the irritation of the Turks. The Brazilians are striking rich. The Gulf of Guinea is hot. Even our own Rockall Bank looks promising. Ausubel thinks that much of this gas is not even “fossil” fuel, but ancient methane from the universe that was trapped deep in the earth’s rocks – like the methane that forms lakes on Titan, one of Saturn’s moons.

The best thing about cheap gas is whom it annoys. The Russians and the Iranians hate it because they thought they were going to corner the gas market in the coming decades. The greens hate it because it destroys their argument that fossil fuels are going to get more and more costly till even wind and solar power are competitive. The nuclear industry ditto. The coal industry will be a big loser (incidentally, as somebody who gets some income from coal, I declare that writing this article is against my vested interest).

Little wonder a furious attempt to blacken shale gas’s reputation is under way, driven by an unlikely alliance of big green, big coal, big nuclear and conventional gas producers. The environmental objections to shale gas are almost comically fabricated or exaggerated. Hydraulic fracturing or fracking uses 99.86% water and sand, the rest being a dilute solution of a few chemicals of the kind you find beneath your kitchen sink.

State regulators in Alaska, Colorado, Indiana, Louisiana, Michigan, Oklahoma, Pennsylvania, South Dakota, Texas and Wyoming have all asserted in writing that there have been no verified or documented cases of groundwater contamination as a result of hydraulic fracking. Those flaming taps in the film “Gasland” were literally nothing to do with shale gas drilling and the film maker knew it before he wrote the script. The claim that gas production generates more greenhouse gases than coal is based on mistaken assumptions about gas leakage rates and cherry-picked time horizons for computing greenhouse impact.

Like Japanese soldiers hiding in the jungle decades after the war was over, our political masters have apparently not heard the news. David Cameron and Chris Huhne are still insisting that the future belongs to renewables. They are still signing contracts on your behalf guaranteeing huge incomes to landowners and power companies, and guaranteeing thereby the destruction of landscapes and jobs. The government’s “green” subsidies are costing the average small business £250,000 a year. That’s ten jobs per firm. Making energy cheap is – as the industrial revolution proved – the quickest way to create jobs; making it expensive is the quickest way to lose them.

Not only are renewables far more expensive, intermittent and resource-depleting (their demand for steel and concrete is gigantic) than gas; they are also hugely more damaging to the environment, because they are so land-hungry. Wind kills birds and spoils landscapes; solar paves deserts; tidal wipes out the ecosystems of migratory birds; biofuel starves the poor and devastates the rain forest; hydro interrupts fish migration. Next time you hear somebody call these “clean” energy, don’t let him get away with it.

Wind cannot even help cut carbon emissions, because it needs carbon back-up, which is wastefully inefficient when powering up or down (nuclear cannot be turned on and off so fast). Even Germany and Denmark have failed to cut their carbon emissions by installing vast quantities of wind.

Yet switching to gas would hasten decarbonisation. In a combined cycle turbine gas converts to electricity with higher efficiency than other fossil fuels. And when you burn gas, you oxidise four hydrogen atoms for every carbon atom. That’s a better ratio than oil, much better than coal and much, much better than wood. Ausubel calculates that, thanks to gas, we will accelerate a relentless shift from carbon to hydrogen as the source of our energy without touching renewables.

To persist with a policy of pursuing subsidized renewable energy in the midst of a terrible recession, at a time when vast reserves of cheap low-carbon gas have suddenly become available is so perverse it borders on the insane. Nothing but bureaucratic inertia and vested interest can explain it.

Matt Ridley’s is a journalist and author. His books have sold over 850,000 copies, been translated into 30 languages, been short-listed for seven literary prizes and won three. His latest book "The Rational Optimist: How Prosperity Evolves" argues that human beings are not only wealthier, but healthier, happier, cleaner, cleverer, kinder, freer, more peaceful and more equal than they have ever been.

Photo "Natural Gas Well at Sunset" by Rich Anderson

HELP WANTED: The North Dakota Boom

Debora Dragseth — Wed, 26 Oct 2011 01:38:35 -0400

The nation’s unemployment rate has been hovering at nearly nine percent since 2009. But not every state is suffering an employment crisis. In the remote, windswept state of North Dakota, job fairs often bustle with more recruiters than potential workers. The North Dakota unemployment rate hasn’t risen above five percent since 1987. In the state's oil country, unemployment hovers at around two percent, and pretty much everyone who wants a job—as long as they are old enough and not incarcerated—is employed. North Dakota has either tied for or had the lowest unemployment in the country since 2008.

The job base of the state (population 672,500) has grown five percent in the past two years. Even more astonishing, there are over 16,000 unfilled jobs, and projections indicate that 45,000 more workers will be needed in the next two years. Of those jobs, one out of three will be in oil and gas.

The Booming West

If you are willing to endure the blazing hot summers and bitterly cold winters, come to western North Dakota, young (or not) man (or woman) and you can get a job. Michael Ziesch has worked with Job Service of North Dakota for the past 15 years and is currently a manager in the Labor Market Information Center. “The average wage in oil and gas is $80,000 plus overtime, and there will likely be plenty of that,” said Ziesch. Development of the massive Bakken oil field in the western part of the state has tapped out the local workforce.

If you are not interested in an energy job, consider retail. Employers are paying $15 an hour for convenience store employees and fast food workers. Drive through any community in the area and you will be hard pressed to find a store front devoid of a sign shouting “Help Wanted, Now!” It seems that everything in the state these days ends with an exclamation mark, and for a state filled with unassuming, hardworking, family-centered kind of folks, it’s a little disconcerting.

New North Dakotans

Job seekers from outside the state are flocking to Williston, the unofficial capital of the oil boom, located in the remote northwestern corner of North Dakota. The population here has grown from 12,500 to an estimated 22,000 in the past five years.

Williston is home to 350 oil service companies. Willistonlife.com, an employment and informational website built with the objective of attracting workers to the area, boasts that at any given time, over 1,200 job openings are available in the Williston area alone. On its home page, the website beckons to the nation’s unemployed in large white letters brightly juxtaposed against a black background, “Make Your Move!”

The wildcat oil culture that the newly arrived encounter, though, is distinctly different than the risk-averse culture of the state. One “New North Dakotan” noted that although long-time residents of the state are pleasant (we smile a lot), helpful (there’s no better place to have a flat tire), kind (we’ll bring you a hot dish if you are sick), and polite (we almost always hold the door open for the person behind us), we are not quite “friendly.” We are a little guarded with folks we didn’t grow up with. Ethnic to us means Norwegian or German. We’re not used to accents other than our own. (And, no, we don’t talk like the actors in the movie Fargo.) One more thing — and this is important — we talk about the weather a lot.

What should you know before you throw your last $100 in your gas tank and head up to Williston to make cold calls for jobs? Don’t come without a housing plan, or you may find yourself among the hundreds of parking lot denizens, living out of your car.

New North Dakotans need places to live, creating an enormous construction boom. Williston formerly saw about five new homes a year. So far this year, 2,000 new homes have sprouted up. In 2012, the expectation is for 4,000 more along with apartments, hotels and, outside of town, dormitory-style housing facilities known as 'man camps'. According to the Williston Herald, since the boom began, the market price of rental housing in Williston has jumped from $300 to $2,000 per month for a modest apartment. Hotels are full and booked for months, charging $170 to $200 a night.

Service is hard to come by. Waits of 45 minutes or more are not uncommon at fast-food restaurants. The Dairy Queen closes at 5:00 pm because they can’t retain enough staff to stay open any later, and many small businesses have simply closed their doors for lack of employees. The town’s Wal-Mart doesn’t have enough employees to stock the shelves, so boxes are simply laid open in the middle of the aisles for customers to grab what they need. Locals have discovered a “secret route” into the store to avoid the worst of the incoming traffic, and even the local Luddites have managed to learn how to use the self-checkout lanes as a matter of self-preservation. A professor at Williston State College complained recently that she had to text her husband with a request to pick up clothes hangers while he was out of town visiting relatives because local stores were completely sold out. It’s not only hangers; long lines and low inventory have made running everyday errands a vexing challenge. “It sounds crazy,” this same professor says, “but I order laundry detergent online and have it delivered by UPS to my front door.”

At Williston State College, faculty often take out their own garbage to help out the strapped maintenance staff. The school is seeing lower enrollments as students are drawn away from post-secondary education by the lure of instant cash.

The law of supply and demand has kicked in across all sectors of the community. A severe shortage of contractors, plumbers and electricians means that homeowners wait weeks or even months for simple home projects. The local community college is putting out a second bid for a parking lot because, the first time, they didn’t get any bids at all.

Even more disturbing in Williston are rumors of impending electricity shortages. Worried about brownouts and blackouts during the long North Dakota winter, many townspeople have picked up generators in Fargo, where they sell for $700, compared to the “sale” price of $1300 in Williston.

Officials are quick to point out that the state’s larger cities, Bismarck and Fargo, are also thriving. In the Governor’s most recent State of the State address, he posited his explanation of 'The North Dakota Miracle': “It is about an educated workforce, low taxation, a friendly regulatory climate.” And if your state happens to be sitting atop 400 billion barrels of oil … hey, it can’t hurt.

Energy Economics: Boom and Bust

Oilmen have known for fifty years that beneath North Dakota's surface lay billions of barrels of oil, perhaps as much as 4 million barrels per square mile.

In 1952, The Wall Street Journal reported that Williston was receiving a “cornucopia of riches.” Banks were setting new deposit records weekly, and the population had jumped from 7,500 to 10,000. In the early 1980s, oil prices skyrocketed and the region again became an exploration target as its vast deposits became economically feasible to drill. When prices began to slip, hitting a low of $9 a barrel by 1986, the boom faltered and, even more quickly than it began, it was over. The state spent the later part of the 1990s trying to recover from a brutal bust.

Today, a perfect storm of two 21st century technologies, hydraulic fracturing and horizontal drilling, along with high prices and unprecedented demand, have come together to make drilling profitable, triggering a new boom that some experts say will be the biggest and longest lasting in the cycle of boom and bust. Conventional wisdom is that this time around the oil boom will be steadier and longer, because oil prices are no longer being defined by the cartels that once controlled the world’s oil prices and, therefore, the economics of energy. In the meantime, the oil pump jacks that dot the skyline are nodding their heads in greeting. Welcome to North Dakota.

Debora Dragseth, Ph.D. is professor of business at Dickinson State University in Dickinson, North Dakota.

Photo of Williston, ND traffic jam courtesy of Williston Department of Economic Development.