OECD presentatie

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The OECD’s work on the Governance of Land Use Tamara Krawchenko Economist/Policy Analyst [email protected] October 10, 2016

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Metropolitan Review of Rotterdam-The Hague (MRDH)

The OECDs work on the Governance of Land UseTamara KrawchenkoEconomist/Policy [email protected] 10, 2016

Thank the Ministry of Interior & Kingdom Relations, and the new metropolitan governance body for Rotterdam-The Hague (the MRDH).

As you will soon discover, this review is all aboutmetropolitan governance.

In this respect, we were fortunate to have PR from Barcelona and Portland, two global authorities in metropolitan governance.1

The governance of land use projectSelected findings from MRDH reviewMetropolitan governance in the MRDH & across the OECDMaking metropolitan governance models work

Todays presentation

I will brieflypresent just a few of the mainfindings of the report,

and then focus on the lessons that can be drawn from the case of the MRDHas we think about how to govern & strengthen metropolitan areas across the OECD.



The governance of land use

The governance of land use work in GOVPillar 1: Breadth (all OECD)

Overview of formal land use planning systems across the OECD and description of common characteristics, typical features etc.Econometric analysis of the relation between characteristics of land use planning systems, property tax revenues and land use patternsShort profiles and diagrams of the formal spatial planning system, summary table of relevant land use statistics (3-4 pages per country)Pillar 2: Depth (case studies)

Spatial and land use planning for each country as a whole, including fiscal relations, key reforms and major challenges.In depth case studies of Lodz, Umm al-Fahm, Netanya, Clermont-Ferrand, Nantes Saint-Nazaire, Amsterdam, Prague. Background: social and economic profile, urban morphology, housing and real estate, major land use pressures.Governance, spatial and land use plans, fiscal relations and instruments.System of incentives and disincentives and how they work together (or not).Assessments and recommendations for reformOutput:Manuscripts per country (90-130 pages each).

Joint output: Synthesis report


Pillar 1: Case studies

Very different cities: Lodz, Umm al-Fahm, Netanya, Clermont-Ferrand, Nantes Saint-Nazaire, Amsterdam, Prague. Flexible versus rigid systemsHigh versus low levels of social trustConsensus driven versus conflictual (and litigious) planning


The big pictureHow land is used now and in the futureInstitutionsGovernance, legislation, rules, regulations, policies, plans, fiscal frameworks, and the patterns of incentives and disincentives they create. Mode of control or influenceSocial norms (e.g. home size, locale)Social cohesion and trust (conflict and plan elaboration) Economic land uses, industrial compositionSocial-economic and demographic characteristics and change over timeLegacies of the build environment and changing urban morphologyGeographical features of the environmentAnd so on..Exogenous to the planning system


The big questionsgovernance and scaleWhat is the role of government when it comes to how land is used now and into the future?What can plans achieve and what can they not achieve? How can rural and urban locales coordinate and cooperate on land use?At what scale should planning issues be tacked? What are the trade-offs?What is the role of regions vis-a vis land use planning? How to effectively engage citizens and other stakeholders in participatory planningparticularly when scale and complexity present obstacles? When and when not to engage?


The big questionsthe systemHow to balance the desire for a flexible and adaptive system against the need for certainty and fairness?How to design a system that can address complexity and change over time, while at the same time streamline the system and its procedures?How to ensure that the multiple incentives and incentives within the formal planning system and those outside of it pull in the same direction?


The big questionsnegotiating trade-offsHow to balance the goals of environmental sustainability and social equity?How to balance the demands of economic growth and expansion against liveability-wellbeing considerations?


Main message of this workSpatial policies have ambitious goals but often limited and restrictive tools within the planning system to realise themA wide range of policies outside the planning systems affects land useMore integrated approaches can make land use planning more flexible and more effective

From government to governanceMultiple actors across multiple scalesThis is has benefits and drawbacksLinks to political authority and accountability can be weakNot clear how funds are structured and spentwho pays and who benefits?Links between strategic scale and implementation can be weak

Strategic spatial planningMulti sectoral considerationsDiversity of voices and concerns

Metropolitan planning is growing in importanceThere is a growth in metropolitan planning institutionsState policies have been highly instrumental in encouraging this.E.g., Territorial coherence plans in France (SCoT)Places where planning ignores functional spaces/connections encounter major planning challenges

Housing costs have risen strongly in most OECD countriesInflation-adjusted property pricesMany factors are responsible (e.g. low interest rates), but evidence suggests that land use restrictions are at least partially to blame

The need for flexible planningPlanning is too slow to respond to changing economic, demographic and social conditionsPlanning can be an answer to market-failures, but may also prevent efficient market solutions from emergingRestrictive land use regulations prevent densificationSingle-use zoning makes mixed-use developments impossiblePlanning can serve as a barrier-to-entry and restrict competition

The need to consider incentivesAlready today planning does not achieve many objectivesIf planning becomes more flexible, how can spatial objectives be achieved?Our answer: better align the incentives for land use that public policies outside the planning system provide

How land is usedPublic policies aimed at steering land useSpatial planningLand use planningEnvironmental regulations Building code regulationsPublic policies not targeted at land useTax policies Fiscal systems and inter-governmental transfers Agricultural policies Energy policiesHow land is permitted to be usedHow individuals and businesses want to use landHow public policy affects land use

Paying greater attention to incentivesBy paying greater attention to the incentives that public policy provides for land use, planning can become less restrictive and more effectiveTaxes and fiscal systems matter mostRegulatory and economic instruments need to be combinedEffective governance mechanisms are a prerequisite for a successful implementation

Fiscal systems incentivise local governments planning policiesFiscal systems create incentives for local governments to pursue specific planning policiesReliance on own-source revenues linked to land leads to expansionary planning and vice versaLocal governments respond strategically to land use policies in neighbouring jurisdictions (risk of negative feedback effects)Local tax and land use policies may be used to attract desirable newcomers (e.g. high income residents) and keep out others

Fiscal systems incentivise land use decisions by firms and individualsCurrently, property taxes do not provide strong incentives for specific land use But can achieve many objectives if well structuredCosts of road transport most important factor for land use patterns in 20th centuryCar transport is under-priced Incentives for sprawlFarming only possible with subsidies in much of the OECD0.7% of GDP, approximately 18% of farm revenues Subsidies can lead to mono-cultures and loss of bio-diversity; well-structured, they may preserve heritage landscapes and biodiversity

Incentive-based policies to steer land use exist, but are underutilisedBrownfield redevelopment incentivesHistoric rehabilitation tax creditsTransfer of development rightsUse-value tax assessmentDevelopment impact feesBetterment levies

Three chapters: i) key trends and challenges; ii) policies; iii) governanceOpportunities and risks under new Environment and Planning ActThere will be great interest from other OECD members in your approachThe governance of land use in Amsterdam

Selected findings from the Metropolitan Review of MRDH


The Netherlands could be getting more out of its largest citiesLabour productivity of select European FUAs Sorted by population size (2010)

Labour productivity GDP per worker (USD PPP 2005)

Let me begin by highlighting a few of the key findings of the OECD report of the MRDH.

The starting point of our analysis was to build on the findings of the 2014 Territorial Review of the NLDS: The countrycould be getting more out of its largest cities & urban areas.

This OECD review raised the visibility and awareness for urban policy questions in the NLDS.

Large Dutch cities are not benefiting as much as expected from agglomeration economies, when compared to other similarly-sized European FUAs:

This is surprising, given that the NLDS is among the top performers at country level and the countrys highly urbanised landscape why is productivity sub-optimal?

[next slide]


The MRDH faces pressing challengesUnemployment rate (2014)

Unemployment rate (2014)

At same time, important to point out that MRDH faces some particularly pressing challenges.


- The MRDH has struggled to recover from the global crisis and continues to be outperformed by other metropolitan areas in the Randstad. - GDP per capita levels in the MRDH remain significantly lower than those in the Amsterdam region


In terms of unemployment: the MRDH registered an unemployment rate of 9.1% in 2014 more than double the rate in 2008, and one of highest across all Dutch regions.

Figure: MRDH has an unemployment rate just below that of the EU (which includes Spain, Greece), with a much higher rate than Amsterdam, the national average, and the OECD average.

Unemployment has especially affected youth and workers with a non-Western migrant background in the MRDH.24

Past policies (housing, spatial planning) targeted growth centres outside major citiesPolycentric spatial structure: a drag on productivity in small countries?

Why arent Dutch cities doing better?

Why arent Dutch cities doing better?

This report assesses some of the barriers to agglomeration benefits in the NLDS:

1) Explicit anti-urban agglomeration policiesPolicies for spatial planning, eco devt, social housing have impeded development of large urban agglomerations. To give just one example:In the past, national spatial planning specifically aimed to prevent the development of large metro areas (urban agglomerations), by strictly regulating housing and urban development into targeted growth centres outside major cities.

2) It is also possible that agglomeration benefits in the Netherlands are smaller because of the countrys highly polycentric structure but this needs more research. We have only begun to study these effects at OECD.

3) Finally, 2 additional factors appear to be relevant for the MRDH:The MRDH is home to 2 (or more) distinct economies that lack complementarities: Economic & cultural roots of Rotterdam are closely connected to the port & logistics activitiesThe Hague is a centre for public admin & servicesThese sectoral strengths also have relatively little in common with those of smaller surrounding municipalities: horticulture and food, knowledge institutions and universities Sub-optimal institutional arrangements Historically, R and The H have not seen themselves as natural partnersLongstanding conflicts btw municipalities & Province of Zuid-Holland over who should take the lead[can mention Aix-Marseille as a counter-example: French metro areas have not been as successful as MRDH in overcoming these initial tensions in such a short time]


Eight city-regions abolished (January 2015), responsibilities transferred to municipal & provincial governmentsRotterdam, The Hague & 21 surrounding cities join forces to acquire EUR 475 million in transport funds/functions The MRDH is formedIn parallel, these 23 municipalities agree to voluntarily co-operate on economic development Dual policy fields of MRDHThe new National Urban Agenda (Agenda Stad)Institutional arrangements can help strengthen cities

Brief background on how the MRDH authority came into existence:

In Jan 2015, the govt abolished the 8 city-regions (C-R intermediate level of govt btw municp and provinces)CLICK

R & The H (and their 21 smaller neighbours) agreed to merge the 2 city-regions toacquire transport functions & funds from the central govt (EUR 475 million)Everywhere else except AMST the province acquired this competency & budget.


In parallel, the 23 municipalities of the MRDH agreed to voluntarily co-operate on economic development. Econ devt pillar of the MRDH activities is much smaller than transport, both in terms of budget (5.5 million EUR) and staff Each of the 23 member municipalities contributes around EUR 2.50 per capita to the MRDH for econ devt.


Finally, institutional reforms are contemplated in the development of a new National Urban Agenda to strengthen cities, a process that is led by the Ministry of Interior & Kingdom Relations.



The MRDH is a metropolitan area in the making: Commuting flows

Commuting trends in the MRDH: 2001, 2011, 20202001The HagueRotterdam



These barriers to agglomeration can help to explain why the MRDH hasnt yet fully emerged as a single metro area in functional terms.

We base this finding on measures of commuting & economic interactions:

Comparing commuting trends in 2001 and 2011:

Commuting has increased within the region, this is driven mainly by increased commuting between smaller cities to R and The H.In 2006, a light-rail connection was completed to complement the existing rail line, connecting R to The H and cities in-between.


yet today you still see two very distinct sub-regions.In 2011, less than 5% of workers commuted btw R and The H


Your challenge: by 2020, will you have made progress toward a more functionally integrated region? You need to get your streams right!

[next slide: business interactions]27

Policies and strategies to enable greater economic integrationIncreased integration: a means to what end?A long-term process that will result from a range of actionsFocusing inward, while looking outward

Tools for better co-operationAdding value in a crowded institutional environmentCo-operation for what? Redefining relationships with other levels of governmentMaking the MRDH effective in the short and long term

Turning now to the policy recommendations : how to make the MRDH effective in the short & long term? I will only speak to a few of these:

1) First: consider strategies to facilitate greater economic integration of the MRDH:One of the primary objectives of the MRDH is to bring the economies of Rotterdam & The Hague closer together, to develop a single, larger functional metropolitan area and take advantage of agglomeration benefits (NOTE**)

Keeping in mind that increased integration should be understood as a means to an end (higher productivity, well-being), and not just as an end itself

And that it is a long-term process that will result from a range of policies


2) Second, we focus on the tools for better co-operation:First point: the MRDH needs to add value in an already crowded institutional environment: there was resistance at the inception of the MRDH 28

Metropolitan governance in the MRDH and across the OECD

Now like to broaden the discussion to consider potential lessons for other OECD countries29

Limited business interactions between different parts of the MRDHLinks between firms: only 9% of the core of Rotterdams business interactions are with firms in The Hague (Van Oort, Burger and Raspe, 2010; Ruimtelijk Planbureau, 2006)The MRDH is a metropolitan area in the making: Economic interactions

Similarly, there are limited economic interactions between the different areas of the MRDH region: The functional integration of the MRDH is also limited in terms of interactions between firms.A 2010 study of business interactions among cities in the Randstad found that: Only 9% of the core of Rotterdams business interactions are with The Hague much smaller than would be expected, given their size.

The low level of interactions may be explained in part by the distinct economies of Rotterdam and The Hague.

From a functional perspective, the MRDH is still a metropolitan area in the making


Reduce administrative fragmentation:Council of MRDH23 municipalities Facilitate decision-making and service provision at the right scaleTransport, economic development, spatial planning, housingLook big

The MRDH is a metropolitan area in the making: Co-operation pays

MRDH is a metro area in the making: Co-operation pays.

MRDH is not alone in some of the challenges it seeks to resolve through better governance. Many metro governance reforms have been implemented within and outside the OECD.

These reforms often share a common rationale:

Need to reduce admin fragmentation in MRDH because fragmentation has costs: in terms of economic growth and productivity: recent OECD research finds that the productivity of an urban agglomeration is linked to the functioning of its governance. in terms of quality of life: when neighbouring municipalities dont cooperate, citizens can pay a high price with congestion, pollution, sprawl, etc.

2) Need to facilitate decision-making & service provision at the right scale (for ex: decisions about econ devt, transport networks, as well as housing and spatial planning).

3) Notably in the NLDS: from an international perspective, Dutch cities are small. The combined population of the MRDH is closer to that of Amsterdam, Portland or Vancouver. By joining forces, the MRDH can look and act big potentially making it more attractive to investors, to employers and high-skilled workers.31

Where does the MRDH stand vis--vis metro authorities in the OECD?Co-operative structurePolicy fields of competencyStaffing & budgetOrganisational modelHybrid: top-down & bottom-upUnique

Transport & economic developmentCommon (70% and 80%), but no spatial planning (>60%)95 staff (80/15)~ EUR 475M/5.5MMore modest, but in line with more limited functionsNon-elected metropolitan authorityBarcelona, Montreal, Vancouver (unlike London, Portland) Geographic coverage & size23 municipalities, 2.3 million inhabitantsAmsterdam, Portland, VancouverMRDHOther OECD metro bodies

What does metropolitan cooperation look like across the OECD, and how does the new MRDH body compare?

[click through chart, highlighting the main points:

In terms of geographic coverage & size: MRDH is comparable in population to Amsterdam, Portland & Vancouver

Its organisational model, as a non-elected metro authority, makes it similar to Barcelona, Montreal and Vancouver (but unlike London & Portland)

Its fields of competency are common: around 70% of metro governance authorities in the OECD work on transport and 80% on economic development. HOWEVER, over 60% of metro governance bodies in the OECD work on spatial planning (a competency that the MRDH lacks).

The co-operative structure of the MRDH top-down responsibilities & budget designated by the national govt for transport; bottom-up, voluntary cooperation for economic development among the 23 member municipalities is unique in the OECD.

The staffing & budget of MRDH are more modest than those of many other OECD metro governance bodies, but this is in line with its more limited functions.

***NOTE: international comparison based on results from the OECD Metropolitan Governance Survey (which covered 263metropolitan areas of at least 500000inhabitants)32

Build on (underestimated?) regional assetsFocus inward, while looking outwardAlign policies for spatial planning, housing, transport and economic developmentBe bold, but be patientEconomic integration is not automatic, and will take time

Making the most of the MRDH:Building blocks for greater integration

Identify the challenges that remain for the MRDH:

1) Build on underestimated regional assets:Internal and external accessibility & connectivityHigh levels of well-beingAn educated workforce, from an international perspective Presence of a number of Top Sectors Largest port in Europe (cargo throughput); among top 15 worldwide (containers shipped)Strong political will to co-operate: this is not a given across OECD metropolitan areas (Ex: Aix Marseille)CLICK2) FOCUS INWARD to deepen economic links within the regionOne of the primary objectives of the MRDH is to bring the economies of R & The H closer together, to take advantage of agglomeration benefits.The MRDH will need to take steps to facilitate the regional economic transition process in the short to mid-term: Efforts to boost quality of life, workforce development, labour mobility

at same time, the MRDH needs to LOOK OUTWARD to cement its position nationally and globally:Other metro authorities have done this by: Establishing MRDH as voice for external relationsDeveloping an internationalisation agendaPursuing large-scale projects & flagship eventsCLICK3) Align policies for spatial planning, housing, eco devt and transportThe MRDH does not have competencies in all fields: critical to work with other levels of government in this direction


4) Finally: Be bold but be patientGreater economic integration is not automatic ...and will take time.No silver (policy) bullet to achieve it but will result from a range of measures.


Challenge: Constrained labour mobility, due to allocation of social housing and a limited private rental sector

Recommendations: Merge the two waiting lists for social housing in the MRDHFacilitate development of private rental market

Making the most of the MRDH: Policy focus - housing

This OECD report also recommends reforms in specific policy sectors HOUSING policies, for instance, can have a huge impact on labour mobility and regional integration. This is indeed what we find in the MRDH and the NLDS more broadly:

Challenge: On the one hand, the allocation of social housing limits labour mobility: (Note that social rental housing makes up more than 80% of all rental housing in Rotterdam.)

Social housing market is governed at smaller, sub-regional scales: there is one waiting list & set of rules for social housing in/around Rotterdam, and another list & set of rules in/around The Hague.This makes it easier to move around within the same sub-regional social housing market, rather than to move to another social housing market.

AS A RESULT: Strong evidence that renters of social housing have lower mobility rates and higher local unemployment levels.OECD has widely studied this challenge in recent Economic Surveys of NLDS, concluding that generous social housing policies have aggravated mobility problems.

Recommendation: Merge the two waiting lists for social housing in the MRDH. Would require national government decision (not something MRDH could do on its own).

More broadly: facilitate the development of the Dutch private rental market. 34

Lessons for OECD countries: The making of a metropolitan regionAn institution to match the reality you want: the MRDH authority aims to anticipate and ideally, shape future metropolitan dynamics

Hybrid structure: a bottom-up & top-down co-operative structure to manage two related policy fields

Evolving relationships: redefining relationships (and competencies?) between levels of government (e.g. inter-municipal co-operation, metropolitan & provincial authorities, national view of cities) is an ongoing process

What lessons beyond Dutch borders, as we think about how to govern other OECD metro areas?

The MRDH authority aims to anticipate and ultimately, shape future metropolitan dynamics Most metro authorities are created to reflect and manage complex urban areas (existing challenges). Could this be an effective model elsewhere? Is it politically feasible?

Mentioned the unique hybrid structure: a bottom-up & top-down co-operative structure to manage two related policy fields Will this structure prove sustainable over the long term, and could it be attempted elsewhere?

Evolving relationships: redefining relationships (and competencies?) between levels of government (e.g. inter-municipal co-operation, metropolitan & provincial authorities, national view of cities) is an ongoing process


Thank you

This review of particular interest for the OECD, as it sheds new light on two areas of inquiry that we have been pursuing in earnest:

First: the mechanics of metropolitan governance, and ways in which institutional arrangements can help (or hinder) economic performance in cities. For years, experts suspected that weak or fragmented governance led to negative effects on cities but it is only recently that the OECD has broken new ground by quantifying these impacts.

Second: the lessons from the MRDH can help chart the way forward for other cities.