How Land Use Decisions Affect the Economy and Government Service Costs

One of the most convincing arguments for smart growth in the San Joaquin Valley is the economic impact and increased government service costs of increased sprawl over the past decade.  We have seen in the last two years that sprawl has lead to fiscal strain for cities and counties in the Valley and across California.  How elected officials learn from this growth pattern will determine whether cities and counties become fiscally solvent now and into the future. With local governments under increased pressure to reduce costs and reenergize slumping economies much evidence confirms that embracing smart growth can help on both accounts. 

Planners and engineers have researched two related ways smart growth can affect public capital and service-delivery costs:

• Economies of scale—the marginal cost savings that result from advantages of serving a larger population over a smaller geographic area. Also referred to as “density efficiencies”; and
• Economies of geographic scope— the marginal costs of serving each additional person decrease as each person locates more closely to existing major public facilities.

Together these theories suggest that more compact and dense settlement can reduce government capital and operating costs.

• For instance, in terms of capital spending, smarter, more compact growth should entail smaller outlays to extend roadways, sewers, water lines, and other infrastructure to reach each new consumer. This follows from the fact that reducing the distance between houses and businesses can be expected to reduce the necessary length of streets, sidewalks, storm drain systems, and sewer and water lines.
• Similarly, by pursuing more compact development patterns, states and localities could reduce their per capital outlays on service delivery such as maintaining their roads and providing water, solid waste, transit, and school bus services. Again, the argument is geographical and geometric. Fire departments may be able to respond to more emergencies or get to major accidents faster with fewer personnel if development is more compact.
• Better bus service can be provided to more commuters with shorter routes and fewer vehicles in a more densely populated, more compact service area. Nor are these potential efficiencies trivial.

Spending on capital and services makes up more than one-quarter of annual local spending, underscoring the importance of examining the savings smarter growth development patterns seem to offer.

Resources: 

Fiscal and Competitive Advantages of Smart Growth Development Patterns