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 With the collapse of the 1990s stock market bubble and several years of national economic slowdown, a tense new climate of austerity has sharpened debates over government spending, economic development, and the physical growth of states and metropolitan areas, making public leaders increasingly eager for fiscally prudent ways to simultaneously support their communities and stimulate their economies. To point out the potential of compact development for contributing economic stimulus, the Funders Network for Smart Growth and Livable Communities and the Brookings Institution have released Investing in a Better Future: The Fiscal and Competitive Advantages of Smarter Growth Development Patterns.
Prepared by Mark Muro and Robert Puentes, this paper makes the case that more compact development patterns and investment in projects that improve urban cores would save public money and improve overall regional economic performance. Investing in a Better Future relies on a review of the best academic empirical literature to weigh the extent to which a new way of thinking about growth and development can benefit governments, businesses and regions during periods of fiscal stress. Findings include:
1. The cost of providing public infrastructure and delivering services can be reduced through thoughtful design and planning. Several studies suggest that rational use of more compact development patterns from 2000 to 2025 promises significant savings for governments nationwide: 11 percent, or $110 billion, from 25-year road-building costs; 6 percent, or $12.6 billion, from 25-year water and sewer costs; and roughly 3 percent, or $4 billion, for annual operations and service delivery. School-construction savings are somewhat less.
2. Regional economic performance is enhanced when areas are developed with community benefits and the promotion of vital urban centers in mind. Studies show that productivity and overall economic performance may be improved to the extent that compact, mixed-use development fosters dense labor markets, vibrant urban centers, efficient transportation systems, and a high "quality of place." Productivity increases with county employment density, and communities that practice growth management realize improved personal income shares over time.
3. Suburbs also benefit from investment in healthy urban cores. Finally, studies suggest that because more compact development patterns foster equity in regions by improving center-city incomes and vitality, they also enhance the economic well-being of suburbs. City income growth has been shown to increase suburban income, home prices, and population. Reduced city poverty rates have also been associated with metro-wide income growth.
The paper concludes that during times of tight budgets, more efficient and beneficial growth strategies make more sense than ever.
As these strategies become more widespread, the challenge for the research community will be to move beyond the obvious fiscal savings and continue to quantify the profound effects on economic competitiveness, equity, and quality of life available through better planning and community design. These issues are at the crux of what better development is really all about. To view an Acrobat compatible version of the report, direct your browser to http://www.brookings.edu/urban/pubs/200403_smartgrowth.pdf.
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