Fixing Urban Planning with Ostrom
Abstract: Urban planning reform proposals have generally failed to provide bottom-up rules that, given local geography and politics, can overcome political opposition to change and allow Coasean bargaining while sufficiently capturing externalities. I suggest four strategies to fill that gap in the literature. Recent research on the commons has rarely addressed deficiencies in regulation of new urban construction, and yet multiple studies estimate that such deficiencies cause large impairments of productivity and welfare. Many places face transitional gains traps where homeowners and others block any move to a more efficient system. I argue that allowing bottom-up approval of better uses of land may reverse the current Olsonian problems by allowing the formation of groups with strong incentives and the means to lobby for such changes. It can be seen as a tactic from Riker’s heresthetic: splitting the blocking homeowner-voter majority by allowing former objectors to defect from the regulatory cartel and benefit from more intensive land use. One example is the recent law in New Zealand, allowing a landowner to waive the protective setback rule binding a specific adjoining property. In England, a recent change now permits a parish to approve development on its own green belt, albeit subject to tight constraints. Ellickson’s suggestion of allowing a vote by individuals on a single stretch of street (‘face block’) to upzone that stretch is a third approach that has not yet been tried in practice. Analogously, a fourth rule could allow upzoning by vote of the residents of a city block, subject to restrictions on altering external façades of the block and to angled maximum height planes to preserve light to other blocks.
