The OECD’s work on the Governance of Land UseTamara KrawchenkoEconomist/Policy AnalystTamara.Krawchenko@OECD.orgOctober 10, 2016

• The governance of land use project• Selected findings from MRDH

review• Metropolitan governance in the

MRDH & across the OECD– Making metropolitan governance

models work

Today’s presentation

The governance of land use

The governance of land use work in GOV

Pillar 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 patterns

• Short 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 systems• High versus low levels of social trust• Consensus driven versus conflictual (and

litigious) planning

The big picture

How land is used now and in the future

InstitutionsGovernance, legislation, rules, regulations, policies, plans, fiscal frameworks,

and the patterns of incentives and disincentives they create.

Mode of control or influence

Social 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 time

Legacies of the build environment and changing urban morphologyGeographical features of the environment

And so on…..

Exogenous to the planning system

The big questions—governance and scale

• What 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 planning—particularly when scale and complexity present obstacles? When and when not to engage?

The big questions—the system

• How 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 questions—negotiating trade-offs

• How 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 work

• Spatial policies have ambitious goals but often limited and restrictive tools within the planning system to realise them

• A wide range of policies outside the planning systems affects land use

• More integrated approaches can make land use planning more flexible and more effective

From government to governance

• Multiple actors across multiple scales

• This is has benefits and drawbacks• Links to political

authority and accountability can be weak

• Not clear how funds are structured and spent—who pays and who benefits?

• Links between strategic scale and implementation can be weak

• Strategic spatial planning

• Multi sectoral considerations

• Diversity of voices and concerns

Metropolitan planning is growing in importance

• There is a growth in metropolitan planning institutions

• State 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 countries

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 201540

100

160

220

280

340

400

Australia Belgium Canada SwitzerlandGermany Denmark Spain FinlandFrance United Kingdom Ireland ItalyJapan Netherlands Norway New ZealandSweden United States Average

Inflation-adjusted property prices

Many 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 planning

• Planning is too slow to respond to changing economic, demographic and social conditions

• Planning can be an answer to market-failures, but may also prevent efficient market solutions from emerging

• Restrictive land use regulations prevent densification

• Single-use zoning makes mixed-use developments impossible

• Planning can serve as a barrier-to-entry and restrict competition

The need to consider incentives

• Already today planning does not achieve many objectives

• If 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 used

Public policies aimed at steering land use

• Spatial planning• Land use planning• Environmental regulations • Building code regulations

Public policies not targeted at land use

• Tax policies • Fiscal systems and inter-

governmental transfers • Agricultural policies • Energy policies

How land is permitted to be used How individuals and businesses want to use land

How public policy affects land use

Paying greater attention to incentives

• By paying greater attention to the incentives that public policy provides for land use, planning can become less restrictive and more effective

• Taxes and fiscal systems matter most• Regulatory and economic instruments need

to be combined Effective governance mechanisms are a

prerequisite for a successful implementation

Fiscal systems incentivise local governments’ planning policies

• Fiscal systems create incentives for local governments to pursue specific planning policies– Reliance on own-source revenues linked to land

leads to expansionary planning and vice versa• Local 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 individuals

• Currently, property taxes do not provide strong incentives for specific land use – But can achieve many objectives if well structured

• Costs of road transport most important factor for land use patterns in 20th century– Car transport is under-priced Incentives for sprawl

• Farming only possible with subsidies in much of the OECD– 0.7% 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 underutilised

• Brownfield redevelopment incentives

• Historic rehabilitation tax credits• Transfer of development rights• Use-value tax assessment• Development impact fees• Betterment levies

• Three chapters: i) key trends and challenges; ii) policies; iii) governance

• Opportunities and risks under new Environment and Planning Act

• There will be great interest from other OECD members in your approach

The governance of land use in Amsterdam

Selected findings from the Metropolitan Review of MRDH

The Netherlands could be getting more out of its largest cities

Labour productivity of select European FUAs Sorted by population size (2010)

Labo

ur p

rodu

ctivi

ty

GDP

per

wor

ker (

USD

PPP

2005

)

The MRDH faces pressing challenges

Unemployment rate (2014)

Unem

ploy

men

t rat

e (2

014)

• Past policies (housing, spatial planning) targeted growth centres outside major cities

• Polycentric spatial structure: a drag on productivity in small countries?

Why aren’t Dutch cities doing better?

• Eight city-regions abolished (January 2015), responsibilities transferred to municipal & provincial governments

• Rotterdam, The Hague & 21 surrounding cities join forces to acquire EUR 475 million in transport funds/functions

The MRDH is formed

• In parallel, these 23 municipalities agree to voluntarily co-operate on economic development

Dual policy fields of MRDH

• The new National Urban Agenda (Agenda Stad)

Institutional arrangements can help strengthen cities

2011

The MRDH is a metropolitan area in the making: Commuting flowsCommuting trends in the MRDH: 2001, 2011, 2020

2001The Hague

Rotterdam

2020

?

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

• Tools for better co-operation– Adding value in a crowded institutional environment– Co-operation for what? – Redefining relationships with other levels of government

Making the MRDH effective in the short and long term

Metropolitan governance in the MRDH and across the OECD

• Limited business interactions between different parts of the MRDH– Links between firms: only 9% of the

core of Rotterdam’s 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

• Reduce administrative fragmentation:– Council of MRDH– 23 municipalities

• Facilitate decision-making and service provision at the right scale– Transport, economic development, spatial planning,

housing

• “Look big”

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

Where does the MRDH stand vis-à-vis metro authorities in the OECD?

Co-operative structure

Policy fields of competency

Staffing & budget

Organisational model

Hybrid: top-down & bottom-up

Unique

Transport & economic development

Common (70% and 80%), but no spatial planning (>60%)

95 staff (80/15)~ EUR 475M/5.5M

More modest, but in line with more limited functions

Non-elected metropolitan authority

Barcelona, Montreal, Vancouver (unlike London, Portland)

Geographic coverage & size

23 municipalities, 2.3 million inhabitants

Amsterdam, Portland, Vancouver

MRDH Other OECD metro bodies

• Build on (underestimated?) regional assets

• Focus inward, while looking outward• Align policies for spatial planning,

housing, transport and economic development

• Be bold, but be patient– Economic integration is not automatic, and will

take time

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

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 MRDH• Facilitate development of private rental

market

Making the most of the MRDH: Policy focus - housing

Lessons for OECD countries: The making of a metropolitan region

• An 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

Thank you