Tragedy of the commons in real estateThe idea of the tragedy of the commons is familiar to most. What can we learn by applying this idea to real estate development? Well, first is that is certainly happening. Sprawl, environmental degredation, traffic, smog, ugliness, elimination of open space and agricultural land, gentrification and a loss of affordability are all examples of ways we are destroying our commons.
What is there to do about it? Before I talk about what is being done and could be done, I think it is important to realize what is going on in a tragedy of the commons. When there is no overall coordination, people will continue to move and develop in an area until the marginal benefit gained for the last person is just enough to make it better than their other options (which may be a pretty low bar). But unfortunately by that time, everyone who is already there has a greatly diminished benefit from living there compared with when they first moved in. This cycle creates a race to the bottom. Beautiful, great-to-live places are slowly but surely destroyed and we are left with a lot of places no one really wants to live. And what's worse is that the best places are destroyed first.
To address this problem, states and towns primarily use zoning. But often the zoning becomes part of the zoning. In an effort to protect themselves, existing residents establish zoning that protects their local community or two, but has the side effect of promoting sprawl and the degredation of the broader region. Other tools are state policies and incentives as well as development restrictions (conservation restrictions).
A major problem is that no one really understands how many people is too many. And unfortunately, it's often the people with the lowest standards that get to set the bar. Towns and regions don't currently have the power to prevent people from moving there. But maybe they should! Instead of institution outrageous exclusionary zoning that doesn't really address the issues well (which is what people do now), maybe we should let towns and regions cap their populations. Seems radical, but I like it. The challenge would be objectively determining population caps. Perhaps it could be linked to the environmental footprint of people living there.
To be clear, I am NOT in favor of any sort of discrimination of any kind. In fact, I would like some sort of balancing mechanism that ensures that a region or town does not become too skewed from the state's overall demographics (e.g. no all white or all rich communities). I do think there are overall too many people on the planet, so I am in favor of incentives for having fewer children.
Fundamentally I believe everyone has a right to a beautiful, great place to live. And I believe that achieving this is possible and doesn't have to be more expensive, just smarter. Let's talk about how to do it right. Let's model our proposed policies with some sort of computer simulation and make sure we're not wrong.