This is a reflection on zoning from the ground up meant to provide for a coherent understanding of zoning, what it does and does not, what worthwhile objectives, if any, zoning might have that justify it.
First, what zoning isn't
Zoning's achilles heel: hard to change to fit an evolving cityThe biggest problem with zoning in terms of efficiency is that it doesn't allow for easy tweaking or changing urban fabric. Zoning sets in stone a decision made at one point in time, at that moment, it may have seemed the proper use of the land, and it may well have been. But mankind advances through trial and error (even the so-called "wisdom of the market" is merely trial and error and the application of the simple truth that "what cannot go on forever must eventually come to an end"), so when an error is made, or when context evolves, how easy is it for the mistake to be corrected?
Without zoning, or with lax zoning, it can be corrected very quickly. A promoter may smell an opportunity from an area marred with bankruptcies or low value and sweep in to provide for what he believes is better suited to the needs of the neighborhood, which will yield him a better profit margin. But zoning doesn't allow that, not without first modifying zoning, which is notoriously hard to do for many reasons, and if the zoning was made too recently, it may also run against the ego of the local planner. Many people in authority have trouble ever admitting they were wrong, changing zoning made less than 10 years ago, or even 20 years ago, is like telling the planner or the planning office that they screwed up. It doesn't help that people get ahead thanks to their reputation, publicly admitting they have been wrong, though a sign of humility and competence, may instead taint a professional reputation.
So even zoning that is well-made for economic efficiency faces problems in the future by making it much harder to change course to fit evolving situations. What might have been efficient when the zoning was made may no longer be efficient 20 years afterwards. One example of that is subway stations that were built in built-up areas subjected to zoning. Often, even 20, 30 years after the subway station has come, the area still remains 80-90+% the same as when the station was built, even if the station could support much higher density housing, or large-scale commercial developments or offices.
For instance, here is Station Sauvé, a subway station in Montréal, that opened in 1966, nearly 50 years ago, as seen from the sky:
|Station Sauvé, seen from the sky|
|Rue Berri, right next to the station|
If zoning is maintained, it's clear to me that it needs to be dynamic, to change as the area changes, rather than static and set in stone until efforts are undertaken to change it. I've already written about how this could work in another article.
So, zoning only leads to inefficiency, is it completely useless?
However, there are other things than economic efficiency in life. For one thing, there is the issue of externalities, impacts of an economic transaction or decision that affect people other than those directly involved in it. For instance, building an heavy industry factory near to housing is actually economically efficient for the owners of that factory and for employees as it reduces transport distances and increase the pool of people they can employ, but heavy industry brings along a lot of truck traffic, of noise and air pollution. So it impacts the entire residential area. In this case, what is economically efficient for the economic actors isn't actually what we would consider socially optimal.
We could also point out certain land uses which don't really contribute to economic activities, or at least not so much as to be profitable. For instance, parks, especially neighborhood parks, could rarely be profitable on their own, yet still serve to increase the quality of life of people. Even private parks in the past generally only survived through the support of rich private supporters who would subsidize them in a way, putting money in them with no expectation of direct returns on that money. However, such problems can be solved by governments merely using public money to buy land and run it. You don't need to zone land for parks if you simply allow government to buy land directly and hold it as a park.
So the main justification of zoning is the control of externalities. Some may think that even this is going too far, that the courts could serve to control externalities by allowing individuals to sue others for nuisance caused by their use of their own land. I personally am not convinced, especially as courts are extremely expensive to resort to, so leaving it to the courts would mean the rich could protect their quality of lives easily, the poor... would be forced to take it and stay silent. At least zoning has the advantage of protecting, theoretically, the poor and the rich in equal measure. Working through courts is also a reactive process, nuisance becomes visible in many cases only after it has occurred, forbidding someone from building a factory in a residential neighborhood is one thing, letting someone build that factory then shutting it down for "nuisance" is quite another.
The issue of "externalities" can also be quite large. The issue of air pollution, noise and smells is a very easy one, the nuisance is quite evident. But what about the person arguing that a taller building is blocking his access to the sun?
|Equitable building in New York, the height of it and lack of setback prompted the city to adopt regulations to limit building height to protect access to the sun, source of the image|
|A "pop-out" townhouse some wish to ban in Washington DC|
|The so-called "ugliest house in Queens" has many neighbors seething with rage|
Where do we draw the line? It's clear that more than just direct nuisance, zoning may be a way to tackle certain issues to preserve certain social objectives deemed worthy by the local community, even mere aesthetic objectives.
So, to sum up, zoning exists mainly to sacrifice economic efficiency for the sake of reducing externalities and to preserve certain social objectives seen as desirable by planning authorities and the public at large. Which places us in an ambiguous position, how much economic efficiency are you willing to sacrifice for social goals? Is it okay to limit height for instance in order to keep an uniform street front, with buildings all of the same height? Is it okay to keep buildings far from the streets to preserve an uniform building line?
Many of these objectives are also often locally desired, but not desired by society at large. For example, much of America's zoning in suburbs and small towns was designed with the goal of "keeping the ni**ers away". Much of residential zoning in North America is even now based on the goal of socio-economic segregation, to keep poor with poor, middle-class with middle-class, rich with rich, by keeping the housing types each group desires (or can afford) separated in their own neighborhoods.
The current status quo is often an extremist approach which throws economic efficiency out of the window and gives priority to local social objectives of maintaining "harmony", uniformity and socio-economic segregation, keeping neighborhoods "as is" and preventing change. It's clear that it doesn't work. If there is a proper balance between economic efficiency and externalities/social objectives, that balance can vary from person to person. One interesting approach is a mainly form-based zoning code, which doesn't control uses much but mandates certain building forms like height controls, setbacks and the like to preserve uniformity and avoid neighbors clashing over "ugly houses". This keeps some flexibility with regards to land use to be more economically efficient, an objective that is often ignored by traditional euclidean zoning.
Limiting land value: could it be worthwhile?One of the impacts of zoning that restricts density and uses is to limit land value, at least until an area gets built out and a land shortage occurs. For instance, to return to the example of the condos versus the single-family house, if condo-builders might accept a 200 000 $ lot but the house-builder only tolerates a 100 000$ lot, if you can build both on every lot, the result may be that all lot owners will demand 200 000$ for their lots as it's what they see others like them get for their lots. The impact would be to price out houses from the area if lot owners are willing to sit on their property long enough to get it, or at least houses would have to be smaller on smaller lots or be more expensive. But if zoning intervened and banned condos, then as the amount of money people are willing to pay for lots come down, the land value would also fall.
So land value, absent shortage, is often dependent on how much profit can be expected from the development of it. The result is that on land where high-density development is allowed and viable, land value is likely to be very high as lot owners would price their land for this kind of development. It may actually cause problems when developing certain TODs. I've heard that this has been hurting Houston in its quest to build TOD around LRT stations, lot owners price their lots for high-rises, but much of the areas around LRT stations are currently parking wastelands with little to no urban fabric.
|Bell station in Houston, 1 kilometer from downtown, surrounded by a wasteland of asphalt and parking|
One alternative to that is the land value tax proposal, where property taxes are reduced while the tax rate on land value is significantly increased, making speculation on land much more expensive and prodding land owners to sell their land much faster.
ConclusionThough zoning has its uses to deal with externalities and to preserve certain social objectives, it is crucial to understand that, by definition, zoning hurts the efficiency of urban areas, notably by increasing distances to travel and making car use necessary rather than optional. Indeed, zoning can only effectively ban efficient uses of land, inefficient uses of land tend to be weeded out naturally because they don't tolerate high land value. So even if we accept some zoning, we have to be mindful of this effect and to consider whether the trade off is worth it.
Currently, we are going much too far with zoning, to avoid any friction, we gladly sacrifice economic efficiency totally and preserve areas in formaldehyde. We need to understand the costs of the way we are doing things and to revisit the way we regulate our cities from the ground up if we want to build better, more sustainable and economically dynamic cities.