Building and Un-building

It is a well known fact: Globally, cities are growing, and they will keep growing in the decades to come. The other – less known fact is, that growth of cities is focussed on international, national or regional centres. Many cities that fall outside this category are either stagnant or shrinking. The same goes for villages that find themselves in prospering or struggling regions.

Urban growth often happens at the edge of cities in the green, draining more and more of our natural assets and resources. In consequence, one could assume that urban shrinking releases land and reduces the pressure on resources. But that is usually not what happens. Either the shrinking places turn into weekend destinations where wealthy urbanites have their holiday home. Or they slowly but steadily fall into decay and owners lose interest?in their property. The result of urban growth in one place therefore does not result in de-growth elsewhere.?The result is an ever-increasing amount of building stock, sealed surfaces, polluted soil and compromised ecosystems.

Sprawling City in the Netherlands. Image: rawpixel

But that does not have to be an inevitable fate – one might think, since governments are incentivizing development in areas outside growth zones. They invest huge sums of taxpayer’s money into reviving these places, or at least maintaining the status quo – often resulting in more buildings, more compromised ecosystems and more destruction of natural habitat. Next to the physical effects, this approach also has a psychological one. Governments want to give people hope that there is a prosperous future just around the corner. Often the money invested end up not delivering on the promise, leaving even more ruins and buildings without a use.

I believe a profound shift is imminent and there are possibilities to achieve that: Property in de-growth regions has little to no value because nobody wants to use it. What if a system of building rights is introduced that limits the number of buildings. Independent of whether a building has a use or not, it retains a certain value because of the building right that is associated to it. In this system, if someone wants to build something new, he has to acquire building rights from an owner of them who himself can only give it up when he removed the building entirely. If a developer wants to build a multi flat complex in a bigger city that is growing, he has to get a building right from a building owner – most likely in a shrinking region. These rights could be traded at an exchange like carbon pollution rights. With that mechanism, we can limit the amount of land that is used for buildings and end the ever expanding urbanized area we occupy. If course there could be even more sophistication in the system that includes other factors in the equation such as population growth, biodiversity values or the types of use buildings have. Such a system could work on national levels but also EU wide or even covering the entire planet.

Densification in Latin America Image: wikimedia

Critics may say that this will only increase the cost of construction and make building in cities even more expensive and living in them even less affordable. To a certain extent that is true. On the other hand, the buildings in cities most likely will be bigger and house more people so that costs are divided amongst more people. Studies also show that living in urban growth centres and higher densities of people in a place lead to more innovation, better jobs and higher incomes so that costs can more easily be carried than in the countryside. Living in the city comes with less cost for transport since distances are much shorter and public transport provides real alternatives. It also allows saving on heating and cooling since buildings tend to be more compact than outside the city and there is an overall efficiency gain that centralized utilities have over decentralized ones. Add to that that tax incentives could support this system, and everything is not so ‘impossible’ any more. For governments, supporting densification in this way would even make economic sense: High density development makes better use of public infrastructure. Fewer meters of street per inhabitant are needed, fewer kilometres of utilities and fewer schools and kindergartens, since due to the higher density of people they can operate on a bigger scale and with more synergetic potential.

But a system of limited numbers of building rights would also make sense within existing cities. They come at a cost that needs to be earned back when taking down a building and replacing it with another ones. Most likely this would push density higher or lead to attempts to reuse buildings and repurpose them. In the former case land would be used even more efficiently and in the latter significant savings in carbon emissions could be realized compared to building from scratch.

With all these benefits, one wonders why this system does not exist yet. There is no simple answer to that, but there are aspects that definitely play a significant role: It is politically painful to have to tell to people that the place they were born and grew up will be deconstructed. Parties that want to increase their profit invest in rural areas and then lobby to turn it into construction land with huge profits through land use changes. Development in low density rural areas is easy and cheap and houses can be delivered in less time at less cost, ultimately maximizing profit while often socializing the investments needed to create the infrastructure necessary. Make no mistake – these are all credible motives for any developing party. It is their business model to go for the highest return on investment. The question has to go to policymakers and ultimately all of us: do we want this to continue by buying the property offered, or do we want to change?