Saturday, December 17, 2005

California's Central Valley Makes Developers Pay for Pollution

An article in today's New York Times discusses the recent decision by Fresno County to require commercial and residential developers to pay fees for air pollution generated by new development.

According to the article, the fees may be minimized through compliance with new regulations that promote design which reduces air pollution.

This is an interesting "indirect" approach at dealing with the Valley's poor air quality and the type of growth that facilitates it. The main sources of air pollution in the Valley are automobile emissions and agricultural production. However, development trends are showing that agriculture in many parts of the Valley is being supplanted by exurban development. By targeting developers, the fees will ideally influence the type of developments they build, encouraging more environmentally-friendly behaviors.

Of course, representatives of the building industry are against the regulations, arguing that they will boost costs. This is perhaps true, however the health affects of poor air quality are immense and the fees are minimal (averaging $780 per home with no mitigation as opposed to $480 with full compliance to the air quality regulations).

This modified market-based approach towards dealing with the pressing issue of air pollution in an indirect fashion is relatively unique to the United States and it is unclear whether it will be effective in reducing air pollution. I am generally skeptical of leaving public health issues up to the market since, in this case, developers can just continue building developments that require pollutive activity and pass the modest price of the fees on to consumers.

Furthermore, individualizing the fees is not a substitute for responsble regional planning. Individual developers may make environmentally-sustainable subdivisions, but people will likely still have to commute long distances to work, shopping, etc... While the fees are going to be utilized for air quality improvement projects, such as public transportation enhancements, it is unclear if these enhancements will be effective without regional plans that concentrate higher-density land development around urban centres.

Interestingly, the New Urbanist-type of developments that would be encouraged under these regulations are already sought after in many markets, making developers more likely to build these types of developments regardless of the savings from lowered pollution fees.

This initiative will certainly merit observation in the long term.

Here is more information on the new regulations from the Fresno Bee. Here are a couple of pro and con editorials also from the Bee. Draft materials relating to the regulations can be found here.