The economic impacts of sustainable development and multi-modal transportation are widely debated. However, there is a consistently growing body of evidence demonstrating that the following economic effects can derive from well-constructed sustainability policies and programs: Sustainable, integrated planning for transportation and land use not only produces benefits to climate change and energy consumption, but a wide variety of additional environmental, economic and social co-benefits, including:
- Reduced costs of land, infrastructure and energy
- Leveraging public investment
- Real estate market relevance and value
- Responsiveness to shifting demographic trends and consumer preferences
- Reduced emissions, environmental impacts and related mitigation costs
- Reduced household expenditures
- Reduced municipal services and fiscal costs
- Jobs creation
- Compliance with social equity objectives
For example, State mandated “sustainable community strategies” (SCS) will help California’s urban regions become more economically sound, according to a report by the Urban Land Institute. California’s SB 375 requires that regional governments develop (SCS) that coordinate location-efficient development patterns with their regional transportation plans (RTP). In 2010, ULI consulted an interdisciplinary panel of real estate leaders, including developers, land use attorneys, academics and public officials on the likely impacts of the planning law.
According to the resulting SB 375 Impact Analysis Report, “If implemented well, SB 375 would help California accommodate growth in ways that are economically sound, environmentally responsible, and socially beneficial. As such, SB 375 … can address a number of problems long associated with sprawl, including traffic congestion, the cost burden of housing, declining air quality, increases in greenhouse gas emissions, and the geographical imbalance between jobs and housing.”
Public/ Private Efficiency and Certainty
From the perspective to the developer and investment communities, a principle advantage of SB375 is its ability to add consistency, coordination, and clarity to the development entitlement process, through:
- Rational alignment of regional planning, transportation, and environmental policy and funding
- Improved jobs-housing balance;
- More certainty for developers on the desired direction for development;
- Initiating reform for the California Environmental Quality Act (CEQA);
- Flexibility for regional and local solutions; and
- Improved efficiency and effectiveness for transit systems.
Improved Agility and Cost Effectiveness
The report also cites the following benefits of the law to the economy as a whole:
- Create a wider range of housing choices and a balance between infill and greenfield development;
- Accommodate a growing share of housing demand for first-time buyers, renters and empty nesters;
- Improve the allocation of transportation funds based on density and need;
- Position state and regional governments to be more competitive for federal resources,
- Promote healthier living environments through reduced emissions and healthier lifestyles
- Provide for more efficient municipal services and infrastructure.
It concludes that “Economically, SB 375 will help the state, communities, and developers meet the shifting market demand for housing, diversify the housing offerings on the market, allocate public resources more efficiently, and ensure a better of quality of life”.
The 2011 report Emerging Trends in Real Estate by Price Waterhouse surveyed real estate investors, developers, planners throughout the US and concludes the following locations and types of development will be most successful in the near and mid-range future.
Jobs Creation
A study by the Center for Labor Research and Education at UC Berkeley found that implementation of California’s climate solutions strategy law AB 32 could create a net increase of 208,000 jobs. The biggest gains (over 9000 jobs per sector) would occur in: residential and non-residential construction, semiconductors, wholesale trade, ground transportation and delivery, general retail services, information and communication services, business services, educational services, recreation and cultural activity, and other professional services. Not all employment sectors would benefit. The following would each lose at least 1000 jobs by 2020: oil and gas extraction and refineries, chemicals, metal manufacture & fabrication, agriculture, fisheries, non-cattle livestock, food processing, financial services and medical services. (Source: http://laborcenter.berkeley.edu/greenjobs/AB32_background_paper08.pdf)
A recent report on the 2009 American Recovery and Reinvestment Act found that investment in transit created almost twice as many jobs as the same investment in highway projects.
(Source: http://www.smartgrowthamerica.org/documents/010510_whatwelearned_stimulus.pdf)
Increased Property Values
Several recent studies have determined that the walkability and access to meaningful destinations within a community add measurably to property values. Cortright found that, in 13 of 15 housing markets throughout the United States, a one percent improvement in neighborhood Walk Score, was associated with increase in home values of between a $700 and $3,000. A study of by Pivo and Fischer of investment returns of more than 4,200 US office, apartment, retail and industrial properties found that a ten percent increase in Walk Score increased property values by 1 to 9 percent.
(Sources: www.walkscore.com/ ; www.ceosforcities.org/files/WalkingTheWalk_CEOsforCities1.pdf; www.u.arizona.edu/~gpivo/Walkability%20Paper%208_4%20draft.pdf)
In Denver, the value of homes within a half-mile of stations along the Southeast light rail line increased by 17.6% between 2006 and 2008, while the average value of homes throughout Denver declined. (http://www.denverpost.com/breakingnews/ci_10850014)
Recessionary impacts on homes located near the Boston CBD produced less then half the reductions in real estate values as homes located further from the regional center. (http://www2.standardandpoors.com/spf/pdf/index/052708_Housing_bubbles_collapse.pdf )
Gross Domestic Product
According to the U.S. Chamber of Commerce, US GDP began increasing at a greater rate than US vehicle miles traveled (VMT) for the first time in the late 1990’s. GDP per VMT increased by almost 20% between 1995 and 2010, and is projected to increase at a similar rate for the next 20 years. (http://www.energyxxi.org/reports/Datatables.pdf )
