home  back to Table 2       back to preceding text
3) Policies to reduce externalities. We have looked at a cost-benefit analysis based on job location externalities. We have discussed quantifying the job surplus/housing deficit using a model and a spreadsheet. Now we discuss policy that would prevent the imposition of even more externalities by a few businesses and cities.

Currently, hyper-growth in a few locations (3 of 34 superdistricts) has created a two-tier society because the disadvantaged, and even the middle class, are completely priced out of local housing markets. Abusive practices by a few cities-expanding jobs grossly in excess of local housing supply-are anti-environmental and anti-equity. Part of the solution is smart growth and transit over moderate distances in dense corridors to reach the severe surpluses, but also part of the solution is to restrain job growth.

Regional job location management requires a willingness to take effective action against a small number of cities. Should severe job surplus locations be allowed to continue to increase jobs even more despite costs to the region?

Regional job location management does not assume a reduction in the number of jobs; it affects only their location in the region or outside it. We have three main choices: losing jobs because of housing and transportation problems (current policy); uncontrolled job growth that is unsustainable (also current policy); and sustainable job growth. When linked to the other policies, job management helps improve the prosperity of people in the region. Those other policies require, for example, that the jobs be accessed by short to mid-distance commutes served by transit, and that they shorten and shift modes for existing commutes and not be a basis for more sprawl.

Total regional jobs are affected only when some jobs leave the region. Jobs outside the Bay Area help other regions and sustainability. Jobs would go to places like Tracy, giving them a better job-housing balance. They would go to other places in the U.S., taking advantage of their affordable housing and shorter commutes. They would go abroad, helping economic development of less wealthy nations. They would, in short, follow the pattern of the jobs that have already gone. The Bay Area gets a better job housing balance, more affordable housing, shorter commutes, cleaner air, and customers in other regions.

The concepts for sustainability in one region apply to all. For example, job growth in Tracy should redress the existing imbalance and not be so great that it leads to more sprawling hypergrowth, spreading ever-outwards to meet Sacramento and Fresno. The jobs should be within a tight urban limit line and accessed by transit; neighborhood development should be Smart Growth at higher densities.

Regional consensus is the necessary political basis for creation of a regulatory scheme to be implemented by a regional agency or initiative. Regional job location management would place a job-creation moratorium on a small number of cities with severe job surpluses. In the Bay Area, for example, only five cities seem cause regional costs greater than benefits. They would be barred from making decisions that create new jobs. These decisions would be those relating to general plans, land use designations, zoning, building permits, use permits, and so on. Job growth is strongly influenced by, if not fully controlled by, such city decisions. Dominant paradigm land use policies, which are usually used to promote unsustainable growth, would be reversed. Instead of perpetuating a never-ending quest to build houses to meet job growth, job growth would be slowed to let housing catch up.

The moratorium would be performance-based, using quantified, objective criteria that can be specifically stipulated ahead of time. Severe surplus cities could escape controls by not externalizing costs: building enough housing, or providing enough transit from close-in housing, so that housing costs, commute durations, and air pollution fall to acceptable norms. Freeway performance could be used to measure the results.

Would a moratorium work? Land use controls have already been used to stop growth completely, with an impact on growth and jobs that is not just a possibility but accomplished fact. Whole counties like Marin have restricted growth so much that their population is stable or close to it. Similar growth management exists in Northern Napa, Western San Mateo, and most of Santa Cruz counties. These policies have affected the distribution of the population, in other words, migration.

Restrictive land use policies have been motivated by environmental protection and by social and economic exclusivity with little consideration for growth and equity. They have mostly ruled large areas off-limits to growth. While the incidental restriction on job growth may be helpful for sustainability, the resulting elitism and lack of equity give them a bad name in the context of social justice. The sustainability paradigm, however, deals effectively with affordable housing with policies that reduce demand (job location management, this section) and promote supply (section 1. Smart Growth, section 7. Fiscal reform and affordable housing).

Regional job management is not an entirely new idea. Santa Barbara in the 1970s reduced designations for development in its plan for purposes of stabilizing population with a target of 85,000 people, a plan approved by the voters and placed in the city charter. New zoning cut residential potential and land zoned for industrial and commercial development. Santa Barbara County voters reinforced the city growth limits by rejecting water from the state water plan. From 1967 to 1989 these voters approved 13 of 16 measures restricting growth, and slow growthers controlled city and county governments.(1) A severe drought complicated the use of restricted water capacity, and in any event the city grew to 90,000 even by 1990, so it is difficult to judge the success of the plan.

Is it feasible for the job surplus cities to meet their housing need? There is no real physical impediment to serious increases in density using new urbanist and Smart Growth concepts. Such changes, however, are foreign to the dominant paradigm of suburban local government, and not even very well understood in "urban" San Francisco. Since it is very difficult to overcome a long history of irresponsible land use planning, these cities would probably have job growth limited for some time, especially the four in Silicon Valley. They could even decide they do not want to grow if it means more housing, and would accept the job moratorium. Ironically, an unwillingness to supply needed housing could result in some second rate sustainability. The solutions are not clear to local leaders, and in the meantime the new sustainability paradigm of responsibility is much needed to turn off the job-housing hypergrowth treadmill.

How many jobs could be affected by regional job location management? Using the spreadsheet approach, the actual numbers seem quite manageable.

In 2020 ABAG estimated that the Bay Area would have about 4,438,000 employees and 4,688,000 total jobs, a surplus of 250,000 jobs, or 5.3 percent of total jobs in 2020. We will assume that the surplus jobs should relocate outside the region in order to achieve a balance of jobs and housing in the region. Considered each year over the 20 years, 12,500 jobs per year would turn up elsewhere, worth a lot of headlines, or a quarter of one percent of the 2020 job total, not worth any headlines.

Despite jobs moved outside the region, jobs in the region keep growing. They grow by 750,000 excluding the 250,000 sent to other regions. Hopefully the resulting growth of 37,500 jobs per year would get three times as many headlines as the jobs moving away, just to reassure the old paradigm.

Some jobs would move within the region. ABAG figures, adjusted for reasonable commutes and for jobs moved outside the region, indicate that the severe job surplus areas would get worse in 2020 by about 100,400 jobs,. This figure, or most of it, would move within the region from severe surplus areas to others, improving all balances. Only about 13 percent (100,400/750,000) of new jobs would wind up in a different location within the region. The 100,400 moved jobs are only 2.3 percent of the total balanced employment (100,400/4,438,00) in 2020. The relocation would take place over 20 years, or about 5,000 jobs per year relocating to better balanced locations.

Given powerful and dynamic national and international economic forces affecting the regional economy, these relatively small shifts in job location would not be significant in the larger picture.

To recapitulate much of the above, under the dominant paradigm, a small number of new jobs in job-rich cities will aggravate already severe regional problems with impunity. In the Bay Area, a few cities-Palo Alto, Sunnyvale, Mountain View, Santa Clara, and San Francisco-with huge job surpluses derive fiscal benefits while imposing severe costs on the Region. The dominant paradigm holds that these cities should build more housing, but is unwilling to impose any "sticks" to make it happen. In the new paradigm, cities which create the need for housing would have primary responsibility to supply it, and regional job location management would prevent them from making the situation worse. Stabilizing jobs while increasing housing would help lower housing costs for less affluent workers, improve commutes, and clean the air.

There needs to be a wider perception that businesses and cities creating the problem are behaving unethically. Neighborhoods, environmentalists, and cities with housing surpluses should not be blamed.

While the focus of this discussion has been severe policies to deal with the most irresponsible cities, there are additional ideas for linking housing creation to job creation. Such policies would apply where job creation does not aggravate an existing severe imbalance, but does create problems of increased housing demand. Policy can focus on the major land use decisions that affect employment, such as the approval of new industrial buildings and of new offices. New state law could link approvals to the building or rehabilitating of some of the housing needed by the job-creating project. The applicant for the job project could be required to invest in or otherwise guarantee creation of housing. The law would give a city less ability to get the jobs and avoid the housing, and would instead have an incentive to expedite housing if it wanted the jobs. To work economically, there would also have to be measures to prevent a competitive disadvantage to older central cities by competing areas creating more sprawl and auto-based commuting.

7. Fiscal reform and affordable housing.    Home

Perverse local tax incentives encourage one city to get taxes from people who live in other cities, and penalize cities for providing affordable housing.
This discussion focuses on the revenue which supports the urban services of cities and counties and how it relates to affordable housing. It does not look at county-wide services or schools.

The Problem. "Fiscal zoning" or "zoning for dollars" is endemic, particularly for the sales tax. Currently, the sales tax goes to the city where the point of sale is located, not necessarily the city where the purchaser resides. A small or rich city with a shopping center next to a big or poor city whose residents shop there drains sales tax from its neighbor. Cities get only one cent of a sales tax of eight cents or more, yet it is enough, given the lack of other options, to determine the location of shopping centers, big box retail, warehouse stores, auto malls, and multiplex theaters, particularly along freeways convenient for people from out of town.

(While our focus is on urban systems, the sales tax also has other problems. It burdens a narrow part of the economy, store-based sales of goods other than food and medicine. Food and medicine, services, and most mail order, telephone, faxed, and Internet sales are exempt. Unlike all other sales taxes, the sales tax on gasoline is designated for transportation and therefore functions like an excise tax and reduces general fund revenues. Sales taxes are also regressive.)

The property tax has similar incentives. Currently, high income residents in a high income city share their property taxes with very few lower income residents, while in the same county high income residents in a low income city share their property taxes with many lower income residents. High income residents in low income cities should be leading the campaign for tax justice. Also, cities with relatively more commerce and industry generate more property tax per resident, while high population cities get much less per resident, especially if they have low incomes.

The sales and property tax incentive results not only from revenue from commerce and industry, but also decreased expenditures to serve them compared with housing. Service costs for commercial and industrial uses are a fraction of the cost of serving neighborhoods. Affordable housing gets a double whammy, because service costs rise and revenues decline with household income.

Finally. the state of California took needed revenues from cities and counties during the Gov. Pete Wilson Administration (1990-1998), crippling the local tax base and intensifying the local quest for revenue.

Cities, in effect, are punished if they provide affordable housing and are rewarded for upper income housing, commerce and industry. They act like small businesses in response to income opportunities. They look at the "fiscal balance," the balance of revenues and expenditures of development proposals. Job rich areas have no incentive to provide affordable housing, and, in fact, have good reasons not to. The lower the income of households served by proposed housing, the greater the potential fiscal deficit and the lower the political support.

The Results. The results are evident in unbalanced land use planning. Data on zoning and land availability compiled by ABAG shows that far too little land is zoned for housing, even less land for Smart Growth, and too much land for industry, office, and commerce. Fiscal zoning and unbalanced plans contribute to extreme job surpluses in a few places and artificially high housing prices in many areas.

Fiscal incentives also contribute to gentrification in certain high-growth neighborhoods of regions such as the Bay Area. The more gentrification and dislocation, the greater the revenues and the lower the expenditure for services, encouraging dislocation of the working poor.

Another result is inequity among cities due to wealth, making it difficult for low wealth cities to provide adequate services.

The dominant paradigm behind local fiscal policy, if any, is, at best, one of inertia, incrementalism, and self-interest. It is hard to find any other explanation; no one really defends the system, just their own revenues. The sales and property taxes when created were more broad-based, with rich and poor in the same jurisdiction. Minor changes along the way in the taxes have not dealt with major changes in the urban system. The legislature has created a game only a few cities can win. Cities benefitting from the system oppose sharing revenues, and poorer cities prefer to try to play the game, too. Local officials tend to define "fiscal reform" as "more money for my local government." The public is blissfully unaware of how things work and are, surprisingly, generally satisfied with local services.

The sustainability paradigm supports revenue sharing and devolution of state revenues to local government, but is still searching for consensus behind some specific proposals.

The Reform. Fiscal reform is needed and would reinforce other sustainability policies if it provides adequate incentives for balanced planning, affordable housing, and fair services. Property and sales taxes need to be shared more rationally to meet service needs. A recent study showed that one possible scenario would benefit 64 percent of the Bay Area population.(2) Property and sales taxes need to be redistributed from high income cities to lower income cities and from business to neighborhoods. Fiscal reform also requires devolution of local revenues taken by the state. While the situation may seem hopeless taking each problem in isolation, in combination there may be hope: use devolution of state revenues as an incentive for locally negotiated revenue sharing plans.

While not perfect, counties are a fairly good basis to frame revenue sharing. (The problem of variation in tax base among counties would have to be managed at the state level.) Sales and property taxes within a county should be distributed, primarily, by population with adjustment to favor lower income households and, secondarily, to uses like retail, office, and industrial, based on reasonable and uniform service costs. Such distribution requires sharing among jurisdictions. This is easier said than done, due to the multiplicity of services, fragmentation of governments, incompatibility of budget categories among governments, and diversity and complexity of revenue sources and transfers. Complexity combined with self-interest is a formula for stasis.

The solution may be legalized bribery: With so many vested interests at stake, great complexity, and public disinterest, local taxes will be reformed only if the state government puts significant new money on the table which counties and their cities would get if they agreed to share revenues. A local fiscal reform law would lay out rules or a framework for how to do it, allowing some flexibility for negotiation and varying circumstances. For example, county governments, which provide county service county-wide and city services in unincorporated areas, would apply revenue sharing to the city service parts of their budgets. The distinction between city and county services is mostly clear in practice, but counties would have to also make it clear in their budgets. Also, special districts both elected and appointed need to be integrated into the scheme.(3)

The reform law would call for and facilitate county-wide compacts among cities and counties to share property and sales revenues and, in the process, simplify and make more uniform the system of accounts, taxes, transfers, taxes, licenses, permits, charges, fees, fines, and special funds. Revenue sharing could start with a small percent of the total tax and small amounts of money, but phase in over a period of years to comprehensive sharing. These complex agreements (which should lead to simplification) will be impossible to negotiate without the carrot of new money. Devolution can provide the incentive to fiscal reform.

Since the economy and state revenues have recovered, there are resources to pay for reform. Governor Davis has shown little interest, but many new legislators come from local government and are sympathetic to sounder funding. Many local officials and interested experts support fiscal reform, and could work out a scheme and even find some consensus. If legislation fails, interested cities could support a state-wide initiative. The major barrier to reform at this time is the lack of consensus among those who want to do it about how to do it.

Fiscal reform would remove a major stimulus to bad land use planning. Cities would lose their reasons for excessive zoning for industry, office, and retail, and be more rewarded for converting that zoning to residential. In the best of worlds, the bias towards unending job growth and beggar-thy-neighbor fiscal zoning would become balanced planning for sustainability. Cities would have more adequate, secure, and equitable funds for services.

Affordable housing. A major impetus supporting fiscal reform is to increase affordable housing. Fiscal reform and Smart Growth should increase housing supply while job management dampens poorly located and destabilizing job growth. We need to discuss the conflict of paradigms, how much housing is enough, and how to manage inequitable dislocation due to gentrification.

Conflict of paradigms. While the sustainability paradigm strongly supports affordable housing, it does not support all the policies advocated by the dominant paradigm, which cause hyper-growth and will not solve the problem. Current law in California, for example, allocates a housing responsibility to cities with no clear connection to how much a city has actually caused the housing need. A state law requires, fortunately without teeth, that cities build enough "fair share" housing to meet a need determined by the state Department of Finance (demographic projections), the Department of Housing and Urban Development, and regional councils of government. Theoretically, a failure to meet targets can lead to loss of federal or state funds, and the hypergrowth paradigm calls for making penalties tougher.

The allocation method, however, seems to have no legitimate basis. ABAG, which implements the law, assumes nothing will be done about job growth and assigns housing responsibilities to cities based on a method few people understand or accept. Cities with housing surpluses that would like to get more jobs are told they must increase their housing. Home builders and coopted housing and environmental advocates support the housing targets without knowing their ethical basis and without dealing with how the lack of growth management means that housing supply can never catch up. The policy would only build more housing, but can never succeed in building enough housing.

Cities with more jobs than local workers are given a mandate, but without a connection to their job surplus. ABAG, for example, assigned Pleasanton 4,947 units, but the city's plan allows only 2,881 more houses. The Bernal property, once proposed to develop to 1,900 units, is likely to get only 581, further reducing the potential. Pleasanton protested the ABAG number as an "unfunded mandate" because there was no money for infrastructure and mitigation of traffic, sewer, and water needs. Pleasanton, which now has its local solution of more jobs than workers, said housing is a regional problem.(4) Pleasanton is a cause of the housing responsibility it rejects, but there is no clear jobs-housing connection in ABAG policy.

ABAG, to its credit, is paying new attention to job surplus areas, a step towards a new paradigm that needs to be strengthened and more clearly explained. As discussed, the sustainability paradigm considers job location externalities and would impose controls on them. For example, a regional scheme could impose a moratorium on more job development until the housing need is met. It would be interesting to hear Pleasanton's response. Dublin is even worse.

How much housing is enough? The housing crisis is real but exaggerated by the hyper-growth paradigm. The great majority of Bay Area residents are at least adequately housed and many have more than enough. Americans in general are far better housed than most people in the world. The market generally works. Most people who can't afford to live in the Bay Area don't live there. From a market view, high housing prices are their own solution; supply meets demand.

The demand for affordable housing cannot be satisfied if the definition is too generous and too subsidized. Many statistics on affordable housing are more political than economic, and have unrealistic notions about affordability. Focusing only on increasing housing supply ignores the role of excessive job growth and sustainability. Housing may be unnecessarily elevated as an absolute good, to the detriment of other values.

We need a coherent definition of what is meant by an "affordable house." A house in 1950 was often 800 square feet on a cement slab on a small lot and a narrow street. Now a house can easily mean a monster home of over 3,000 square feet for two people on a big lot on a wide street, with many technological advances and features over the 1950 house. Statistics based on a constant value home for the same size of family dramatically reduce the estimate of housing need. Using a constant value home focuses on basic housing rather than the enhancements and investment value.

Similarly, the history of home ownership reveals there used to be many more renters. Fewer could buy, and those who did would typically purchase a home later in life than now, and to house bigger families. For a few years of the early suburbanization boom of 1946-1965, housing was more affordable than before or since, but that is an unrealistic basis for understanding housing. The long-term picture still shows great success. Nationally, as a result of the Home Mortgage Disclosure Act, the Community Reinvestment Act, and vigorous enforcement by the Clinton administration, loans to low and moderate income home buyers rose 80 percent from 1993 to 1998. Home ownership is now 68.8 percent, the highest in U.S. history.(5)

The true housing crisis, where the disadvantaged suffer deprivation, affects a small percent of the population. The problem is to define carefully where markets result in social inequities that government should correct, and to fix the problem in a way consistent with sustainability. There is a middle ground between unsophisticated advocacy of unending building and blind faith that the market will solve everything.

The affordable housing problem falls primarily on lower income renters with stable incomes facing rising rents. Migrants are both a factor in keeping wages down and in pushing housing prices up, but are generally better off than in their impoverished areas of origin. There is some irony in the fact that they partly cause the crisis, suffer from the crisis, and are better housed than before. The affordability crisis falls secondarily on middle income workers with jobs in job-surplus centers like Silicon Valley and San Francisco.

Inequitable dislocation due to gentrification. Inequitable dislocation is not a sustainability problem, but a simple matter of social justice. Market forces, current fiscal incentives, and Smart Growth may cause gentrification. Gentrification is a process of neighborhood improvement based on newcomers paying higher rents. Cities always have some neighborhoods where decay pushes middle income people out and others where reinvestment pushes lower income people out.

Not all gentrification means inequitable dislocation. More affluent people may move into new buildings on vacant lots, or convert old non-residential buildings to housing, or use other developments that do not affect low to moderate income renters. In some cases there may not be clear equity issues in dislocation.

There are typically four housing situations affecting equity in low to moderate income neighborhoods. 1) Some residents are owners, who love gentrification because it brings retail improvements, crime reduction, and restoring the neighborhood to the higher quality the old-timers remember. They are better off if they keep living there, and better off if they sell for a good gain on their investment. 2) Other residents are at the bottom of society; they are highly transient and generally have many problems. It takes an effort to find and help them. They are difficult to house without comprehensive social intervention. They are the first to disappear when a neighborhood starts to come up. 3) The third type of residents are working poor not rooted in the neighborhood and willing or wanting to move, e.g., closer to work or other family, for the same reasons that other people move.

4) The fourth type of residents are renters rooted in their neighborhood, who are important for the economy and the social fabric of the neighborhood and city. They can be subject to evictions above normal levels and undergo great stress in finding alternatives. Through no fault of their own, their world gets turned upside down.

The dominant paradigm tolerates some charitable efforts but mostly supports dislocation as part of a free market process that revitalizes the city and expands the housing supply, with benefits trickling down to low and moderate income households. The sustainability paradigm holds that working class renters often need and deserve help with housing.

There are many ways to help. For example, the Community Capital Investment Initiative of the Bay Area Alliance is looking for ways to invest in local businesses in low income neighborhoods so as to benefit disadvantaged residents. In addition, education and training of the disadvantaged can help their incomes and thus their housing. Welfare (TANF, SSI) and minimum wage floors need to be high enough to pay for adequate housing without undercutting incentives to work. More money for section 8, vendor pay, board and care reimbursement, foster care, nursing home, and tax credit and other financing of projects by non-profit agencies like Bridge Housing and Eden Housing can help. Such subsidized housing tends to be restricted to seniors, the disabled, and, in a few cases, working families of moderate (not low) income, and the program needs to be expanded. Also, many redevelopment agencies have accumulated large surpluses they must somehow spend on affordable housing. Requirements for ten percent affordable units in larger housing projects can help.

Rent control may have some role if sharply focused. Circuit-breaker policies might be needed, so that when rents and evictions rise too far above normal rates, as started happening in Oakland in 2000, rent moderation policies would kick in until supply catches up with demand or other assistance can help the household. Overly strict rent controls, however, can reduce the supply of rental housing and favor politically skillful sitting tenants over those of comparable income who are willing to pay more to live in a neighborhood.

It generally is more effective in the long run to raise incomes and increase housing supply rather than to hold investment returns down. Here the dominant paradigm and the sustainability paradigm overlap, but sustainability also calls for more aggressive protections of working class renters, more Smart Growth housing (which is inherently more affordable), and management of job growth. Realistically, affordable housing programs are not going to get large-scale new funding, and they cannot work well unless job growth is also moderated to allow housing supply to catch up with demand. The new paradigm solves the affordable housing problem with policies that also lead to sustainability.

8. Global warming.    Home

People, especially Americans, have already substantially and irreversibly changed the global climate, requiring a dramatic reduction in carbon loadings.

Global warming is already happening on such a massive and global scale that it defies our imagination. The science is conclusive. The evidence is overwhelming.(6) The computer models work with increasing accuracy. No data are inconsistent with the views of the International Panel on Climate Change, the large international body of climate scientists. They are now essentially working on the details: on cloud formation, the North Atlantic oscillation, other ocean currents, details of climate history and backcasting, and why the process is uneven. How much agriculture will be lost in Texas? How much of Florida will be flooded? Recently, the IPCC decided global warming was happening a little faster than some projections.

The global average temperature is increasing slowly in human terms, but very rapidly in geologic terms. Ice cores from the Himalayas show the late 20th century to be the warmest period in 1,000 years. The 1980s and 1990s broke heat records. Seas are rising, storm events are increasing. A few years ago a piece of ice the size of Rhode Island broke off the Antarctic ice cap. Around the north pole is water in summer, not ice. Both ice caps are melting, along with the glaciers of Asia, South America, and Africa, and most of the Greenland ice sheet (some of the top of Greenland is getting thicker from increased snowfall, also due to global warming). The ice sheets are so reduced that they feed less water into their rivers.(7) In the northern hemisphere, plant and animal species are moving their northern and southern ranges ever northward, as spring comes earlier and fall starts later. Tropical disease-bearing insects are moving north, and warmer temperatures allow the outbreak and spread of more communicable diseases. The permafrost is melting, releasing more warming gases, yet also partially offsetting this with more plant growth. Coral reefs are bleaching.

The primary cause of these effects is increased carbon dioxide in the atmosphere caused mainly by human burning of fossil fuels for transportation and electrical energy. Atmospheric carbon has been increasing slowly in human terms, but very rapidly in geologic terms. The cause and effect the scientist can see so clearly over hundreds of thousands of years is not visible to the uninformed person in a few years.

America causes more global warming that any other nation in the world, both per capita and in aggregate. In the Bay Area, for example, fossil fuels supply 80 percent of energy. The region emits about six tons of fossil carbon per person per year. Adding the weight of oxygen to the carbon makes 20 tons of carbon dioxide per year.(8) The Bay Area is doing virtually nothing about global warming. The dominant paradigm simply ignores the issue.

The sustainability paradigm calls for a carbon tax, which would internalize the external cost of global warming by placing a tax on fossil carbon (called a Pigovian tax). The tax would be highest on coal, which is mostly carbon, lower on oil, which is hydrogen and carbon, and lowest on natural gas, which has even more hydrogen. A parallel tax could also be applied to other global warming gases. Activities like reforestation and insulation which reduce carbon dioxide could get an incentive, assuming a simple and fair way to do it could be found.

The carbon tax to be effective would produce too much revenue, so it should be swapped with other taxes. As carbon tax revenues go up, other tax revenues would come down equally, maintaining steady governmental revenues and constant aggregate demand. This is the "tax swap" idea. As a result, the price of carbon would go up relative to other prices, with no windfall for government or the oil business, and no loss of purchasing power in the economy.

Elasticity is an extremely important for policy. Elasticity is the amount of change inspired by a change in price. A small, short-term price change causes little if any measurable change in behavior. A large, long-term price increase can cause much change, but can be very disruptive and costly in the short term. Optimal increases in price, balanced between minimal change and excessive disruption, can spur changes in consumer preferences and technology in ways that reduce environmental costs and support long term growth. The amount of carbon tax increase should be high enough to get some people to make some changes based on the relatively higher price. It should not be so high that it causes too much disruption of the economy. In short, it would be tailored to the elasticity of improving energy productivity and developing alternative supply. Technology would then change at the margins to reduce carbon emissions without hurting the economy. The economy also benefits by reducing warming costs.(9)

Market price is an equally important for policy. Generally, the more each consumer pays directly and fully for the cost of a purchase, the more efficient the economy becomes. Such choices by millions of optimizers generally work better than governmental allocation decisions by a few, no matter how well-intentioned. When market prices are severely distorted by indirect pricing, elasticities cannot work to improve efficiency. Ironically, government must intervene to make markets work. However, a jump to full market price could create costs of disruption greater than the benefit, especially in the short run, and could engender a political reaction against the policy. Elasticity and market price have to work together.

Elasticity and market pricing thus balance two policy principles: including external costs in the market price, and moving towards it with optimal speed. To the extent other problems like sprawl, pollution, and inefficient use of fossil fuels are mitigated, the carbon tax makes the economy even more productive. It is an example of robust policy, something we should be doing for many different reasons.

Education for opinion for politics. There is as yet no visible political support for the new paradigm. We need to educate people about carbon taxes, tax swaps, elasticities, and market prices that drive systemic change, support incentives for productivity, and stimulate growth of the non-fossil economy. There is considerable evidence that major improvements are possible in both productivity and equally important reductions of environmental impacts across a wide range of industries. In fact, more efficient alternative technologies are on the verge of commercialization and are beginning to happen already.(10) Therefore, a properly implemented carbon tax would probably not cause too much disruption.

Of the many issues of sustainability, global warming is the strongest indicator yet that we are going in the wrong direction and may not be able to change.

9. Carism.     Home

Auto dependency has unacceptable economic, social, and environmental costs. Car use should generally be a market good (drivers pay), not a social good (public pays).

Carism, the dominant paradigm, is not use of cars. Carism is, rather, a way of thinking that supports indirect pricing of car use, dramatically reduces the cost of car use, and externalizes costs to others. Americans are almost totally unaware of indirect pricing. They know about many of the resulting problems but don't connect them to each other or relate them to a common cause. As a result, pricing reforms proposed by the sustainability paradigm are seen as "punishing drivers" and as an assault on equity.

Carism is the major cause of a host of other problems related to indirect pricing. Congestion delay is a substitute for a user price. Land use is dispersed, inefficient, and auto-dependent. Farmland, open space, and wildlife are lost to sprawl. Transit declines with loss of ridership and interference from cars, and in suburbia becomes inefficient and heavily subsidized. Walking and bicycling decline. Older walkable neighborhoods and community centers decline. "Free" parking and roadway consumes large land areas. Construction of uneconomic parking is forced by zoning regulations. Parking costs are bundled into property rents and sales. Taxes for military defense of oil is disproportionately imposed on the less car-dependent. Auto use causes public health and safety externalities. Energy and resource use are intense and inefficient. Auto use causes air, water, land, noise, and solid waste pollution, and ozone depletion. Carism, considering its transportation and land use aspects, is the single most important reason for unsustainable global warming. About half of carbon dioxide in the U.S. comes from transportation.

The combination of carism and sprawl create auto dependency. Auto dependency is the dominance of car travel, a lack of alternatives to car travel, and loss of mobility for those unable or unwilling to use cars. High levels of vehicle miles traveled, high vehicle hours traveled, high auto trips per person, high drive-alone mode split, and low walk/bike/transit mode use are correlated with indirect pricing of auto use.

Carism and auto dependency are not sustainable.

The U. S. is by far the most carist and auto-dependent nation in the world. See Exhibit 1. Americans use cars for 84 percent of their trips. Western European countries average about 40 percent, with England halfway between them and the U.S. Canada and Australia (not shown) are between England and the U.S. Using a car is about three times as expensive for a German as for an American. Taxes on gasoline equaled $3 per gallon and the pump price was $4.20 in 1997 compared with $1.22 in the US. Germany is taxing cars to pay for alternatives and is reducing the share of auto trips.

Exhibit 1
Modal Split Distributions for Urban Travel in Europe and North America
(1990 or latest available year)

 Country                                                        Percent of Trips by Travel Mode
 (Ranked by bicycle use)                                            (All trip purposes)
                                   Bicycle         Walking      Public Transport    Auto      Other
 Netherlands        30      18         5          45     2
 Denmark            20      21        14          42     3
 Germany (Western)  12      22        16          49     1
 Switzerland        10      29        20          38     3
 Sweden             10      39        11          36     4
 Austria             9      31        13          39     8
 Germany (Eastern)   8      29        14          48     1
 England and Wales   8      12        14          62     4
 France              5      30        12          47     6
 Italy               5      28        16          42     9
 Canada              1      10        14          74     1
 U.S.A.              1       9         3          84     3

Source: Ministries of transport and departments of transport in each of the individual countries.

Source: John Pucher, "Bicycling Boom in Germany: A Revival Engineered by Public Policy," Transportation Quarterly 5:4 Fall 1997 p. 32.

Indirect pricing takes many forms.(11) The major categories of indirect pricing are environmental externalities,(12) congestion delay, parking, local government,(13) federal and state government,(14) zoning regulation, market imperfections,(15) energy (foreign dependence, dispersion costs), resources (dispersion, distance, and vehicle costs), land use,(16) other social,(17) and other economic.(18)

American carists generally see congestion as a sign of a need for more roadway, which can be called the "capacity model." It treats road supply as a public good which has a public benefit and which should be free to the user. Congestion is evidence of excess demand which, even at a price of zero, justifies more capacity. For example, the proposed Foothill Freeway in Hayward, mentioned in part 2 above, would be paid for by the sales tax (not the gas tax).

A related carist idea is "reasonable" commute time. More roads have made commutes longer, faster, and more dominated by drive-alone. The media pay attention with great sympathy to the outer margin: the very small number of long distance commuters who cause, and suffer from, most of problem. The political concept of reasonable time is shorter that what people, in practice, want, so people use new capacity to move even further away from work to find better housing values in even more dispersed settlement. Then, to justify more pavement, policy makers project unrealistic trend lines about current congestion and make false claims about how much things will get worse. They overlook the fact that congestion itself reduces demand, while expanding capacity induces demand and facilitates more sprawl.(19) Carist solutions just yield more traffic.

People are willing to spend a certain amount of time getting to work, typically about 26 minutes, which strongly influences locational decisions. Once the locational decision about where to live or work has been made, the value of commute time is essentially zero. If a commute would be too long, a person does not look for work or a home in the distant area, or is willing to move or change jobs.

The highway lobby ignores indirect pricing and induced demand. Its leading lobbyist, William Fay, said, in support of more roads, "In fact, probably the greatest threat we have to future air quality improvements is the traffic congestion that is snarling our cities. . ." Environmentalists ". . . want to force people out of their cars . . . they still want to do everything they can to make it so miserable for us to choose to drive that we have to get out of our cars. That's a terrible thing for America's working mothers. I think that's a terrible thing for people that are struggling to try to go from welfare to work because, in most cases, they are going to try to get to work using a vehicle."(20)

This carist rhetoric ignores pricing issues as well as the importance of urban buses, but environmentalists have not yet unified in support of pricing reforms. They are stuck on CAFE (Corporate Average Fuel Economy) standards, which do not work partly because of political erosion and partly because they are not directly related to the goals of conserving gasoline and reducing pollution.(21)

Europeans are aware that more supply just leads to more traffic without solving anything, and generally refuse to increase capacity. Reducing capacity, by the same token, reduces trips. This "congestion model" works but causes pollution and wastes time. It does not answer the question, how much pavement is needed?

The best answer for sustainability is "the pricing model." The amount of pavement needed is that which would meet demand if drivers paid more fully and directly the costs now externalized. If drivers paid closer to the true price, travel demand would fall so much that there would be little congestion and new freeway capacity would not make sense economically. This sustainability paradigm treats car use as a market good. like most goods in our society, instead of as a social good, like national defense, police, education, health, and welfare.

Implementation of direct pricing in Europe is partial because, according to economists, prices, despite seeming to be high by American standards, are still much too low. European governments use gas taxes for revenue rather than for sustainability, and there is little effort to understand and to educate the public about market pricing, tax swaps, and elasticities.(22)

The amount of land needed for transportation is decided politically by the dominant paradigm of tax-and-spend central planning rather than economically by a sustainability paradigm. From a market point of view it is difficult if not impossible to have efficient allocation of resources when demand is subsidized. Those benefitting from the subsidy will always demand more than they pay for, so others have to pay, and they resist paying. Gas tax purchasing power in relation to car miles driven eroded after 1970 by two-thirds from its effective average rate from 1930 to 1970. Underpricing causes congestion, reduces revenues, and creates the appearance of demand exceeding supply.

Indirect pricing not only affects travel demand, it also affects land use. Transportation facilities and subsidies do not create growth, but they almost dictate where and how development occurs on the land. In the 1950s Caltrans (then the California Dept. of Highways) made two decisions, on financing and alignments, that determined the next fifty years of land use in California.

One, Caltrans decided that drivers on old roads should subsidize drivers on new roads. The gas tax on drivers using existing roads, rather than tolls or other direct charges, financed new roads. The new roads would be free of charge to new users. The gas tax would cover all of the state's road costs, but only a small part of local road costs. Local governments had to use local sales and property taxes for local roads and road services. Thus, the subsidy flowed from local taxpayers and local drivers on existing roads to new long-distance drivers on freeways.

Two, Caltrans laid out the alignments of the state freeway plan. The developers then knew where to buy land for future neighborhoods, shopping centers, industrial parks, and office complexes. Next, the developers told the cities how to change their land use plans, and the cities did so. Almost all these decisions were politically very successful. People got "solutions" without understanding why they would not work, elected officials got campaign contributions to persuade the voters they were right, and suburbanizers and Caltrans prospered.

The challenge now to the sustainability paradigm is to persuade people-voters, officials, media, developers-that the costs of sprawl are too great and that there is a market-based alternative that works better. The alternative, however, can not complete on a playing field tilted toward cars. Driving is so cheap that substantial price changes over time are needed for elasticities to kick in. The marginal cost of driving a new car 25 miles has fallen from $4 in 1929 to $1 in 1989 (1986 dollars).(23)

Pricing reforms generally have common characteristics: they impose costs directly on drivers, reduce costs now externalized to others, and improve economic efficiency. When the prices are right, drivers pay their own way. Pricing reforms shift from indirect to direct payments for all kinds of subsidies. There are, however, many different ways to implement these principles.

One example of a reform, already discussed, is the carbon tax swap needed for global warming, which might push the price of gasoline above bottled water, maybe even milk. The gas tax should also be increased to cover related costs, such as local road and road user services (police, fire, emergency, legal). In another application of the tax swap idea, taxes now covering these costs wold be reduced.

Congestion. Until a few years ago, it was technically difficult to charge on major roads for use during peak hour. Now variable congestion charges on gridlocked highways can use electronic tags in vehicles with stored value or with billing information like a credit card. These tags can be read by readers along an equipped and designated lane of roadway. They are already used for bridges and could be used on bridge-like distances of freeway on land. They are theoretically very effective but require careful planning in practice, because most existing commuters, as explained, do not place much value on their time. Such charges seem to work best when they can vary with demand, and when drivers have an alternative route even if it is slower. The productive impact of such charges is to give drivers some flexibility, to pay if they are short on time, or not pay if they have time. Charges also influence new users, who make more market-based locational decisions. This very important impact takes place gradually over time.

Parking charges. Sustainability requires moving gradually and pragmatically to more parking charges in tandem with increasing alternatives.

We should cash-out "free" employee parking. In the Bay Area a survey found that 67 percent of commuters drove alone mostly to free parking and 80 percent of them drove because of free parking.(24) Cash-out gives employees with free parking a choice of the parking or its value in cash. If the value of parking at work is about $4 a day, then we are paying people about $1,000 each per year to drive their cars to work and, in the process, causing congestion, long commutes, and air pollution. Since cash-out reduces peak hour trips, it has some of the benefits of congestion charges.

BART should levy market-rate parking charges at high-demand BART stations. BART now charges nothing for parking, yet at the West Oakland station a private lot successfully charges $5 a day. A market charge would lose no riders but generate funds to improve service, lower fares, and improve access with shuttle transit. Thus, parking charges properly used will increase ridership.(25)

Suburbia is characterized by so much parking that the market price may be zero. Without some economic demand for parking, a business that tried to charge could face a competitive disadvantage. Parking lots and structures in old centers commonly do impose a charge, but street parking is too often free. Some streets have hourly parking charges that rely on a comparatively ancient technology, the parking meter. Experimentation is needed with more convenient methods and with less risk of draconian fines. For example, treating a neighborhood grid of street parking like a parking garage should be fairly easy, with kiosks for entry tickets and exit payments. Parked cars would display a valid ticket. The system could be further automated with kiosks that use credit cards or electronic tags with stored value read by a reader, a technology already widely implemented on bridges.

Some places already have neighborhood parking permit programs on public streets. These programs could be expanded. They could use auctions to establish a market price and avoid overselling the spaces. They could provide an incentive for neighborhood support by using the proceeds to improve the neighborhood.

Parking supply involves a mix of pricing and design considerations. German cities have made parking more expensive toward centers ($3 per hour in 1997), and reduced supply. Parking in some residential neighborhoods is limited to residents with official permits.

Traffic Calming. Another pricing reform is "traffic calming," which deals with a non-monetary pricing problem. Drivers impose social costs on non-drivers on neighborhood streets and shopping streets. They go too fast to be compatible with the social uses of streets, and their parking often preempts space needed by others for non-car transportation and for social purposes. Traffic and parking degrade the aesthetic qualities of neighborhoods and shopping areas. To make life work on the street for pedestrians and transit, cars should be more expensive and less convenient, based on having to pay their own way. Drivers can be prevented from imposing many externalities if they slow down. The regulatory cost of effective policing is high, and occasional policing is ineffective.

The solution has been to change the architecture of the street to change driver behavior and make it compatible with other needs. Most German streets have a speed limit of 19 mph, often enforced by narrowing streets, which has also been implemented in a few places in the U.S. ("skinny streets"). Germans have also increased the sharpness of curves, built bottlenecks (chicanes) and wider sidewalks, and installed speed bumps, speed humps, ornamental posts (bollards) and big planters (to block illegal parking). Slower traffic alone increases safety and comfort for walkers and bikers, making streets usable for bicycles.

Where pedestrian access is great enough, typically on shopping streets in town centers, cars may be banned altogether, with strong support for walk, bike, and transit access.

In California the sustainability paradigm had a small victory with the passage of the Safe Routes to School bill in 1999. The new law dedicated a few million dollars to pedestrian safety projects, which had been grossly underfunded.

Bicycling. Despite their variable climates, Germany, Denmark, and the Netherlands have substantially increased bicycling with strong bicycling programs. German cities have built bicycle lane networks, expanded bike racks and bike lockers, and increased rental services. Muenster, which used the bicycle once as an official symbol, is building a 3,000 space parking garage to deal with excessive parking demand by bicycles (over 10,000 per day at that location, a train station). The city has even converted car lanes and parking lots to bicycle use. Bicycles line up at stop lights in front of cars and get their own, early, green light. Cyclists can use bus lanes, make turns prohibited to cars, and, on some streets, can go both ways while cars can go only one way. Some car routes go the long way around while the bike route is direct. Education, festivals, awards, and police enforcement supplement the design measures. Switzerland, Sweden, and Austria are not far behind. European bicycling is not just a spandex and speed youth cult; elders in street clothes pedal sedately along on fat-tired one-speed bikes with big baskets in front.

In the U.S. bicycles have .2 percent of person travel miles and 2.0 percent of traffic deaths. Only a few college campuses and smaller cities support bicycle use.

Transportation meets land use. The Location Efficient Mortgage (LEM) corrects a problem with dominant paradigm mortgages, the failure to consider transportation costs in calculating income available to repay a loan. Despite underpricing, cars are still expensive to own and operate, about $7,000 per year in major metropolitan areas of California, less than what is spent housing but more than that spent on health care, education, and utilities combined.(26) A household in a dense area near transit can save up to $6,000 on transportation, yielding up to $60,000 in increased borrowing power on a mortgage.

The LEM reminds us of the link between land use and transportation, and how subsidies on the land use side, for single family detached housing, have distorted land markets in ways that reinforce carism. Subsidizing sprawl creates demand that cannot be met, just like subsidizing roads.

Other reforms include removing parking requirements from zoning, reforming real estate markets to rent and sell parking separately from other uses, ending tax breaks for the oil business, and taxing oil to pay for military defense of oil supply.

Each reform needs to be carefully tailored to the problem it is trying to solve. Surprisingly, much research remains to be done. Who is hurt, and how much, by subsidies to drivers? How much, for example, are non-drivers, low mileage drivers, non-parkers, non-peak hour travelers, and non-freeway users paying for the flip side? In a given case, should we use a tax swap or spend the money? Should we spend congestion charges and parking charges on transit? How much do pricing reforms boost efficiency and productivity? How can we get people to see existing cost and future benefit when they focus only on a new cost? How can we mobilize those disadvantaged by the current system?

The initial adjustments by drivers to pricing changes will be modest and easy to make. Cars can easily become more fuel efficient, and can be used more efficiently. Fuel economy can be dramatically improved by more aerodynamic design, cutting weight by half to two thirds using lighter materials, and using hybrid electric motors or, in the longer term, fuel cells.(27) Commute modes can shift from incentives created by just two pricing reforms: cash-out, and congestion pricing. More effective use of existing land use balances can take place by household moves among existing dwellings, i.e., moves closer to work and by taking jobs closer to home.

Urban system change. As this slack in existing car use and land use is taken up, urban system change kicks in, the change to Smart Growth and non-car modes. Long-term rebuilding of cities is always going on. Pricing reform, after the initial elasticity responses, would be a profound incentive for improving the urban system.

The optimal elasticity for urban system change can be estimated based on the "net moving rate." The total moving rate is the number of people who move to a new location in a region in a given time period, mostly into existing dwellings. The net moving rate counts only moves into new or rehabilitated dwellings. The net moving rate is about equal to the number of new and rehabilitated units created in a given time period. The rate of change of the urban system depends on the location and number of these units.

Since World War II, the net moving rate has grossly favored suburbia. Pricing reform helps reverse that process and create market demand for dwellings which are closer in, denser, mixed use, and transit-served. Pricing reform makes suburbia more expensive and reduces negative impacts of cars in central areas. Suburban housing demand declines as the commute becomes too expensive in time and money. Pricing reform provides a incentive to supply new and rehabilitated units closer to jobs and stores so that Smart Growth dominates the net moving rate.

Increasing demand for units closer to jobs tends to increase the price of such units, which in turn stimulates the supply of such units until a new equilibrium is reached. The new market price is the one created by pricing reforms which increase the cost of car travel and thus increase the value of closer in housing. The equilibrium is such that savings from less car use is greater than the increased cost of the dwelling.

Pricing reform also encourages new jobs to move toward housing surpluses, e.g., to Tracy, thus improving imbalances from the job side. Over fifty years, the change would become substantial, even shrinking the urbanized area.

Education before politics. Given the lack of awareness, education in the sustainability paradigm is the critical first step toward eventual stronger political action and sustainability. Simply getting housing closer to jobs, or stopping freeways, or pushing more subsidized transit on reluctant riders, will not work, because driving is still so inexpensive and subsidized, and because people are willing to spend a lot of time commuting to reach good jobs. Directly charging for currently externalized costs would increase the costs of car use, parking, and peak hour road use would create a context for more responsible personal choices, which in turn lead to demand for more balanced land uses, higher density, and non-car modes.

10. Indicators.        Home

Sustainability requires a radical change in accounting systems to include social and environmental values in income statements, balance sheets, and regional accounts.

The dominant paradigm measures best what it cares about the most, money changing hands. Often money does not help measure a problem or indicate a solution. Sustainability is currently unmeasured. The sustainability paradigm measures environmental and social realities that are now poorly measured and relates them to a more comprehensive definition of progress.

The indicators paradigm deals with the issue of how rich do we want to be? how rich do we need to be? and what does being rich mean? It is not clear if business seeks to increase money wealth for its own sake or because of cultural values about shareholders, historical traditions of score keeping, socialization, prestige, and a lack of better things to do. Success in business results from immersion in the details of competitive situations, organization, planning and execution; the money results seem as much a feedback reporting mechanism as a reward. Really successful people build mansions they spend little time in and give huge chunks of wealth to foundations in order to give their money away. They get to be prestigious and can buy a lot of stuff. Too much of this is nonsense and would come up short with a better measuring stick.

In the dominant paradigm, if a private company owns a tree, cuts it down, and sells it for lumber, the company records the income from the sale. The company also makes a corresponding reduction in the value of its assets to equal the value of the tree. Such is the elegance of double entry book keeping. If the U.S. Forest Service owns a tree, cuts it down, and sells it for lumber, the Service records the income but makes no entry for reduction in asset value. The federal government, the world's biggest business, has no balance sheet. An oil company may reduce the value of its reserves as it extracts oil, but based on a market value that ignores its true value.

Thus, we live off nature's capital--fossil capital, forest capital, soil capital, ocean capital, air capital, water capital, species capital. We are almost totally unaware of it, no different from uneducated barbarians that ravaged the treasures of civilization to steal gold and silver. Much of our income comes from using up our fortune, and we don't even know how much.

Government has generally been wise to avoid picking winners and losers in the market place, preferring to let competition improve productivity and wealth. Government, however, has unwisely failed to measure fairly obvious and quantifiable costs not measured by money transactions. In the sustainability paradigm, the human economy is a wholly owned subsidiary of nature. The decline, even collapse, of habitats and their carrying capacities eventually can only cause economic decline, and already we have lost many assets.

Nature sustains our economy three ways, with resources, dumps, and services.

1) Resources. Our food, energy, water, built environment, and other consumption are derived from nature. We now understand better that the application of technology and energy allows a great deal of growth without clear unsustainability for some resources, like inorganic construction materials and minerals. Other resources, however-fresh water, cultivable land, forests, ocean fisheries-are not being used sustainably. Ocean fisheries, in fact, have largely collapsed and we are strip mining the remaining ocean life at a colossal and unsustainable rate. Arable land is being lost to deforestation, over-grazing, salinization, humus depletion, erosion, and urbanization, with losses hidden by increased use of fossil fuel fertilizers, by vulnerable monocultures based on hybrid seeds, and by massive applications of pesticides. Ancient aquifers are dropping from over-pumping, as we mine fossil water to depletion.

2) Dumps. Nature is where we dump our air pollution, water pollution, hazardous chemicals, solid waste, and radioactivity.

3) Services. Nature provides many services. It is the world's biggest biochemical research and development business, producing genetic material for plants, animals, and medicines. Its bees pollinate our farms and gardens. Its good bugs eat its bad bugs. Nature provides recreation and spiritual re-creation. It provides wilderness and habitat so that we might be awed by creation and see ourselves as part of a larger whole, rather than become greedy and ignorant exploiters with only a mirror for measurement. Nature cleans the rain and stores it for gradual release into streams, and its vegetation cleans the air and reflects the heat. Worms, ants, bugs and microbes decompose organic matter providing the basis for the next round of life. Nature takes carbon dioxide out of the air, cooling the climate. Nature is the infinite sandbox for scientists to pursue infinite questions, and their discoveries edify us all. Nature is the creation where we came from and where we are going.

Current calculations of the U.S. Gross Domestic Product put the value of nature's resources, dumps and services at approximately zero. It's not just the government; the whole country lacks a meaningful balance sheet.

Two major, new analyses light the way to better score keeping: "Genuine Progress Indicator" and "Ecological Footprint." The regional GDP (Gross Domestic Product) can be recalculated to subtract some "bads" and add some "goods," creating a new measure, regional Genuine Progress Indicator (GPI). While experimental and not yet widely accepted, GPI quantifies our declining welfare while, for the same years, GDP purports to show its rise.(28) Once we get past the single measure of GDP per capita, or other money-based average measures, it becomes clear the U.S. is not very advanced.

Besides measuring the value of natural resources, dumps, and services, GPI assesses social equity. Progress is indicated more by median income and median wages than by average income. Median household income in constant dollars in the U.S. has risen in fits and starts over the years, from $32,783 in 1967 (first year available) to $40,816 in 1999, a 25 percent increase. Over this same 33 year period average household income rose from $36,666 to $54,842, a 50 percent increase. In 1967 average household income was 12 percent ahead of the median; in 1999 it was 34 percent ahead.

Median household income topped $37,000 in 1973, fell, rose, fell, rose to over $38,000, fell, and rose to over $37,000 in 1995 and 1996. Thus, the gains over 1973 have occurred just in the last three years, 1997 - 1999. Except for these last three years, the rise in income of the affluent pulled up average income, but the stagnation of the less affluent left median income unchanged. Equity of income distribution can also be measured by family median income, male and female persons over 14 median income, quintile ratios, and Gini coefficients. The U.S. has a more unequal income distribution than Western European nations (as mentioned under 4. Aggregate Growth above).

Median wages in 1998 were 8.1 percent below the 1973 peak. Household income increased by having more women work and by working more hours. Americans work eight weeks more than Western Europeans and recently surpassed Japan.

GPI covers many other indicators and showed improvement in 1999, but is still 13 percent below its 1976 peak.(29)

Ecological Footprint measures our impact on land and water, looking at the land area needed to supply us with food, clothing, shelter, etc. What we consume leaves its "footprint" both within a region and globally as we take resources from distant corners of earth. Americans in general and of the Bay Area in particular have a huge footprint compared with other nations and regions. Our consumption does not look equitable or sustainable. Urban development policy should not ignore the larger footprint beyond the urbanized area.

Sustainability emphasizes improving the earning power of the less affluent, not necessarily direct redistribution of income. The American tax system is so complex it is hard to tell if more direct redistribution is needed. The income tax is definitely progressive, but its loopholes allow many to escape, and other taxes are regressive, making the total system somewhat proportional. The income tax may be for some a disincentive to work. Taxing "bads" like carbon emissions, resource severance, or pollution may be better for sustainability than taxing "goods" like labor.

We should tax waste, not work. The challenge of sustainability is to allow scope for entrepreneurship without damaging the environment or equity. Better indicators are a better way of keeping score; they help change the rules of the game without ending the game.

The dominant paradigm fails to measure adequately what it is doing; therefore it cannot see signs of failure. As stated above, "the air is polluted, commutes are terrible, housing prices are astronomical, and open space and agriculture are being lost." Sustainability requires more comprehensive measurement. Improved indicators are essential for measuring the results of policy, which in turn is essential for improving policy. The industrial investor, subdivider, and city are not playing with a full deck. Externality cost cards are not being laid on the table. Too many people are working more hours for less money. Better score keeping will tell us we are losing the game and need to change the way we play for sustainability.

Achieving Sustainability Goals        Home

The ten paradigms and their policies interact to achieve sustainability goals in three areas: environment, economy, and equity.


Environmental goals are to move toward population stabilization, promote sustainable consumption and technologies, and support a high quality of urban life.

Population stabilization. A major difference between the dominant paradigm and the sustainability paradigm is that the first assumes that significant population growth is inevitable and the second believes it can and should move towards stabilization. Urban planners, reinforced by demographers, elected officials, editors, and campaign contributors of the dominant paradigm, assume aggregate growth is destiny and take population projections as a given. They avoid discussing population stabilization and the tools available to local government for that end.

In the sustainability paradigm the impacts of the human population on the environment result from the number of people multiplied by technology and consumption.(30) All three are important. We do not have to do one or the other; we can work on all three. In fact, we can't deal effectively with consumption and technology unless we also deal with population. How otherwise do we attain sustainability?

The next logical question is, how many people can a given area support? What is the "carrying capacity" of a given area or of the earth as a whole? The answer is complicated by the inter-dependence of areas, particularly the "ecological footprint" of one area on others for food, energy, other resources, natural services, and waste disposal. Conclusions about ultimate carrying capacity should be tenuous because there is so much we are still learning about technology and economic feasibility. Sustainability could allow more people-but could require fewer. Whatever the answer, it is not just a population number; it will have to consider consumption and technology.

Population carrying capacity is closely related to the quality of life. Generally, the lower the quality, the higher the possible population. Thus, for some, sustainability allows accommodating many more people at a lower quality of life: the Bay Area, for example, could grow towards a Japanese density of population and be sustainable. For others, it means protecting more of nature and preserving a higher quality of life. We will use this definition. Pending more definitive research, it is safe to say that less population growth at least makes it easier to attain sustainability.

The issue of population carrying capacity is increasingly world-wide, as to total numbers, quality of life, and the impact of the wealthy on carrying capacity needed by others. World population growth is a matter of natural increase, and is affected mainly by national and international policies which affect the status of women, such as legal protections, educational and economic opportunities, and health care including family planning services and teen health services. The impact of the wealthy through globalization is also largely addressed in terms of national and international policy. Local, urban, and regional policies can, however, still affect natural increase and globalization, but they are rarely assessed or integrated into planning.

The debate has not just a rational analysis for pragmatic survival, but also an emotional side. Those who feel comfortable with a Bay Area population of four million may be uneasy about six million, and the Region is still growing. We are already at seven million and are planning for one million more because it is projected to happen. But are we better off because of the last million that joined us? Will we be better off if a million people more come in the future? Many people feel there are too many people: At some point, a gut feeling kicks in: no, this just isn't right, there has to be a better way. We may apply the feeling mainly to China and India. Some bury the feeling, not knowing where to go with it in a media opinion climate supporting hypergrowth, or fearing political incorrectness. Others are ready to talk, if only to speculate about what now seems politically impossible. People who feel this way have largely been excluded from regional planning and dismissed as politically unrealistic, economically ignorant, personally selfish, overly pessimistic, and even racist.

Stabilization of population is happening more by regions than uniformly throughout the world. Some areas, from groupings of nations like Western Europe all the way down to a few cities, are attaining population stability in ways largely consistent with prosperity and opportunity. Places that achieve some stability face the dilemma that the resulting quality of life can attract migrants, who would undermine that quality. The movement of people is usually discussed as immigration among nations, but can also be studied as migration among regions, metropolitan areas, cities, and even neighborhoods. Successful areas need to export ideas about sustainability instead of unsustainably importing more people.

Regional population growth has three sources-native population natural increase, migration, and migrant population natural increase. Regions can gain population from any of the three sources, it doesn't matter which: the population goes up and thus the impacts go up. From 2000 to 2020, for example, the Bay Area will grow by 1,415,610 people according to the State Dept. of Finance (1,096,300 according to ABAG). The Dept. of Finance estimates 59 percent of growth will be by natural increase and 41 percent by migration.

The sustainability paradigm has three policies relating to population: #3. improving the status-of-women, #4. education and training, and, particularly, #6. managing job creation. Status-of-women policies would reduce natural increase, although probably not by a large amount. Status of women policies and education and training help residents compete with migrants for jobs, indirectly affecting migration. Similarly, job management would tend to prevent job growth faster than the growth of the local labor supply, indirectly affecting migration. Of the three policies, job management seems the most powerful for reducing excessive short term population growth. The other two can be important medium and long term. The three policies can significantly lower projected population growth in the region while improving equity and the economy.

While sustainability is facilitated by a stable population, some ways of getting there are not acceptable. Two problems should be prevented. 1. Natural increase may be greater than permitted job growth. Localities should be required to accommodate their own growth; they should not be allowed to externalize their net population growth. 2. Localities may also try to get a fiscal advantage from disproportionate retail or employment, and they should be required to share revenues.

Promote sustainable consumption and technologies. Technologies that use fewer natural resources, less energy, water, and land, and that pollute and waste less can sustain more people at the same level of end-use consumption. Sustainability policies provide strong, effective incentives for reducing fossil and auto dependencies and for more efficient urban systems.

Support a high quality of urban life. Smart Growth systems can have a comparable quality of life to suburbia, losing back yards and car-mobility while gaining street amenity, walking and transit accessibility. There are some interesting cultural issues about how comfortable suburbanites may feel with higher density and less car use, and how much travel time and expense they will tolerate to get a dispersed neighborhood. There are some practical and attitudinal issues about urban crime, race, and schools. Most people don't know that urban crime has fewer victims than suburban auto accidents. The range of densities for Smart Growth is very wide, and it is not clear what a reformed market would demand. Smart growth, however, already works well in many places, showing that problems can be overcome.


Sustainability population policy would advance economic growth defined as per capita growth, and measured with better indicators. Sustainability needs entrepreneurship to advance the new technologies and consumption that close the circle and benefit the bottom 60 percent. The policies emphasize quantitative economic analysis of land use imbalances, pedestrian neighborhood potential, externalities, elasticities, Pigovian taxes, market prices, tax swaps, etc., designed to reduce governmental direction and optimize-indeed, make responsible-individual and business choices in the marketplace. Such choices in turn encourage innovation for sustainability and increase economic efficiency. Sustainability does not rebel against consumption, but tries to channel it towards sustainability, a kind of informed materialism for the long run, for future generations as well as ourselves. It may be possible to increase consumption while changing it toward sustainability.


A balanced population policy would affect both migration and natural increase in ways that advance social equity. Sustainable local and regional land use policies do not mean "pulling up the drawbridge," but helping others build their own sustainability. The issue of sustainable population has never been posed this way before. The anti-equity effects of migration have not been recognized, nor the equity potential of giving some growth away, nor the need to shift from investing in infrastructure for "inevitable" growth to investing in overcoming inequity. While conceptually logical and clear, the details of how to make these new ideas work have yet to be discussed by the Bay Area. There are risks in this uncharted policy territory, but more promise of sustainability.

How do moderate to low income families improve their well-being without consuming more? Sustainability can have an anti-consumption bias that raises this question. We can discourage unsustainable aspects of consumption while still allowing upward mobility, as discussed under economy. Sustainability policies will make housing affordable and greatly improve transit, with great equity benefit.

Equity and ethics. The ten policy areas often have ethical issues overlooked by the dominant paradigm. These issues have been discussed above and are summarized below. The following ethical questions have answers from which sustainability policies logically follow.

Ethical decisions lead to new policy ideas, to education about those policies, to political debate and feasibility, and to eventual implementation based on new social paradigms.

Conclusion: A Spiritual Crisis Requires Spiritual Transformation    Home

Concerning sustainability, Americans are ignorant, arrogant, selfish, and self-indulgent. We are destroying the earth for future generations and we have lost any right to claim moral leadership in the world. We are rich, but not an advanced country. When we buy commercial fish from Lake Victoria we are causing the malnutrition of the children of the subsistence fishermen. When we buy old growth redwood we are destroying the forest primeval. We no longer buy cod from the North Atlantic, or from many other fisheries; it is all gone. Our beef consumption is denuding the forests of Central and South America, as well as causing massive soil erosion in Australia. Our oil consumption is degrading the land of the Ibos in Nigeria, and, in Venezuela, salinizing water that once produced fish for local villagers near Lake Maracaibo. Our clothing purchases too often throw Americans out of work and exploit cheap labor from Saipan to China, labor that does not know freedom, labor that does not have the right to organize.

Many crises loom just out of sight of our daily life: the extermination of more species than in any geologic era since the end of the dinosaurs, pollution by chlorine and cyanide and other chemicals from the stratosphere to the ocean, the loss of fixed nitrogen and humus from soil due to lack of organic fertilizer, dwindling supplies of clean water, burgeoning populations, and global warming.

The problems are not only global and environmental but also local and social, hurting the life chances of people just a few blocks away because the richest nation in the world can't quite afford to provide health care, or dental care, or a safe neighborhood, or a good education for our less fortunate children. Our educational system in poor neighborhoods failed many years ago, and the population in our prisons has never been higher, at the same time we are draining the talent of other nations to work in our high tech industries. We are thus, compounding the problem of population growth at the same time we fail to provide real opportunity for low income families.

We should radically change the way we think about our economy, our cities, and ourselves. We should learn to think about sustainability, to think green.

Notes for parts 5-10     Home

1. Santa Barbara Planning Task Force, The Effects of Urban Growth: A Population Impact Analysis, Praeger, 1976, by Richard Appelbaum et al. The Santa Barbara City Council, based on a range of choices documented in the task force report, chose a eventual size of 85,000 people and approved job zoning consistent with that number. Voters overwhelmingly approved the plan in a citywide advisory referendum. See also Kee Warner and Harvey Molotch, "Growth Management in Three Areas: Use and Exchange Values in Political Practice," paper for Western Political Science Meeting, Newport Beach, March 22-24, 1990, 19 pages. Covers Santa Barbara, Santa Monica, and Riverside.

2. Urban Habitat Program, What if we shared?, San Francisco, May 1998, based on Myron Orfield, San Francisco Bay Area Metropolitics; A Regional Agenda for Community and Stability, 1998.

3. Concerning the property tax, assessment districts would probably be unaffected. Mosquito abatement, paramedic, vector control, flood control and urban runoff would be considered county-wide functions and would not be affected. School maintenance assessments and other education amounts would be assigned to education and not be affected. The countywide tax, landscape and lighting fees, park debt service, park maintenance, and recreational assessments would be part of the scheme.

4. "Pleasanton takes aim at ABAG numbers," Valley Times, Sept. 28, 2000.

5. Neal Pierce, "Disclosure: Key Weapon for Neighborhoods," Washington Post Writers Group, July 23, 2000.

6. Sherman Lewis, 2000 Christmas essay, has a 3 page summary of evidence.

7. AP, "Himalayas heating up, sample finds," SF Chronicle, September 15, 2000.

8. Peter Lydon, "The climate change issue and Bay Area metropolitan planning," personal communication, July 20, 2000.

9. Sherman Lewis, "Comparing Gas Costs; Elasticity Illustration," draft, 2000.

10. Paul Hawken, Amory B. Lovins, L. Hunter Lovins, Natural Capitalism : Creating the Next Industrial Revolution, Little Brown, 1999.

11. Sherman Lewis, "Paying Directly for Driving Alone," draft, 2000.

12. Air (ROG, NOx, CO, PM, CFCs), water (pollution, sediment, runoff volume), noise, solid waste (auto bodies, tires, batteries, litter), vibration, land contamination, wildlife; mining, construction and industry impacts.

13. Road capital projects and maintenance not from user fees; local road user services: police, fire, ambulance, hospital, legal, liability costs; municipal revenues forgone to ROW.

14. Road capital projects and maintenance not from user fees, Strategic Petroleum Reserve, petroleum subsidies in tax code, petroleum research and development subsidies, export financing subsidies, Army Corps of Engineers subsidies, Dept. of Interior Oil Resources Management Programs; car share of Mideast oil military expenditures, moral jeopardy and turpitude in supporting violent, non-democratic governments, regulatory costs for oil pollution oversight, monitoring, inspection, enforcement, clean up, and liability not paid for by polluter, Coast Guard and DOT Maritime Administration uncompensated protection services, mortgage subsidies.

15. Bundling of property rents and sales to include parking, new road capacity impact on localities competing for commercial and industrial development to raise revenues, "fiscal zoning," impact on downtowns, old industry, lack of car rentals in dense neighborhoods, lack of location efficient mortgages (LEM); lender bias toward sprawl houses, construction liability costs for condos.

16. Land consumption, shadow effects on agriculture, nuisance lawsuits, land value and opportunity costs of ROW and parking, decline of older neighborhoods, industrial areas, and downtowns, land inefficiency of low density, increased cost of freeway-served land for open space protection, hindering acquisition.

17. Quality of life along streets, in neighborhoods, driver externalities, costs to pedestrians and bicyclists, increased walking distances, barrier effects, decreased amenity, increased danger, pedestrian intimidation, sedentation (making sedentary), costs to non-drivers, costs to drivers as chauffeurs, driver social isolation and loss of neighborhood networks , diminished choice of modes, aesthetic degradation costs, impacts on historical and cultural heritage.

18. Induced demand, economic inefficiency, inequity of externalities among income levels, gas tax cross-subsidy from local road users to state and federal road users, gas tax cross-subsidy from present, unbenefitted payers to future, benefitted, but non-paying, users of new capacity, cross-subsidy from those who drive less or not at all to those who drive more, cross-subsidy from those who pollute less, pay to park, don't drive during peak hour, to the opposites, economic risks of auto dependency (dependency on imported oil, monoculture instabilities).

19. Sherman Lewis, "Better Roads Cause More Driving," draft, March 1999.

20. William Fay, President, American Highway Users Alliance, quoted by Jim Burns, CNS Senior Staff Writer, "Transportation Group Criticizes Environmentalists On Highway Construction," September 13, 2000.

21. Richard C. Porter, Economics at the Wheel; the Costs of Cars and Drivers, Academic Press, 1999, pp. 44-53, 60, 63, 106, 192, 201.

22. The AFFORD Project, www.vatt.fi/afford/, urban transport research by a consortium of 11 European partners coordinated under Concerted Action on Transport Pricing Research Integration (CAPRI) conducted for the General Directorate for Transport, DG VII Research and Technological Development Programme (DGVII), Commission of the European Communities 4th Framework Programme, Jul 2 00 (last update). See also European Conference of Ministers of Transport, Internalising the Social Costs of Transport, Paris: OECD, May 1994 and Efficient Transport for Europe, Policies for Internalisation of External Social Costs, Paris: OECD, 1998. See also European Federation for Transport and Environment, Getting the Prices Right, A European scheme for making transport pay its true costs, T&E 93/7, May 1993.

23. Hawken et al, p. 40.

24. Carl Nolte, "Driving force for many - Parking survey finds 67% are alone at the wheel," San Francisco Chronicle, Sept. 4, 2000. This article is a rare violation of the media blackout on reporting the role of free parking.

25. Sherman Lewis, "Market Economics and Social Justice in BART Parking," June 2000.

26. Surface Transportation Policy Project and Center for Neighborhood Technology, Driven to Speed, 2000. Www.transact.org/ca/.

27. Hawken, chapter 2.

28. Redefining Progress, http://www.rprogress.org/.

29. Redefining Progress, http://www.rprogress.org/

30. Robert Engelman, People in the Balance, Population Action International, Washington DC: 2000. www.populationaction.org shows the centrality of the impacts of population.