Moving Forward in Hamilton:Transportation, Sprawl and

Environmental Pricing Reform

Hamilton Transportation Summit 2011March 9, 2011

David Thompson

Director, Sustainable Communities

Sustainable Prosperity

www.sustainableprosperity.ca

Making markets work for the environment

Overview

• Context and challenges

• Environmental Pricing Reform - EPR

• EPR tools for local governments

• Transportation, Sprawl and EPR

• Challenges

• Conclusions

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Making markets work for the environment

Context

• Employment lag behind economic recovery

• Green goals vs. results – gap widening

• Local financing challenges to get worse?

– New downloading (unfunded)

– Reduced transfers and grants

• Age of cheap energy has passed

• Crisis?

– Not yet - danger and opportunity

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Making markets work for the environment

Transportation problems

• Traffic-caused smog in Toronto

– kills 440 people / yr.

– Costs $2.2B / yr.

• Collisions cost Hamilton $300M to $500M / yr.

– Future congestion with increased volume (TMP)

– Add all other costs, total ten times higher.

• Road legacy costs: infrastructure maintenance, policing, EMS, repair and replacement

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Making markets work for the environment

Closely related: sprawl problems

• Eats up farmland

• Hollows out established neighbourhoods

• Locks in automobile dependency

• Makes transit less feasible

• Health – heart disease, diabetes, cancers, etc

• End of cheap oil = homeowner financial risks

• Legacy costs higher with sprawl– Lancaster,California: $5,500 vs $10,800

– Calgary: Plan It 33% cheaper than status quo

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Making markets work for the environment

Traditional policy tools

• Transportation planning and infrastructure

– Emphasis on active transport > transit > car (e.g. TMP)

• Land use planning and bylaws

– mixed use, compact devo, urban boundary, brownfield devo. [e.g. GRIDS]

• Public education and exhortation

• Etc.

• Have they succeeded? Enough?

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Making markets work for the environment

What are the actual causes?

• Consider “Home X”

– Nice, 3 BR, 2 bath, 1800 sq. ft., finished bsmt

• Two location options:

– Westdale

– Suburban greenfield

• Neighbourhoods are different

– amenities, community, access to town, etc.

• Another difference?

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Making markets work for the environment

The elephant in the room: prices

• Price is a major influence on decisions

• For individuals & firms, homebuyers & developers

• Can “urge” infill, provide public education, create targets for downtown development

• But if sprawl cheaper, what will happen?

• Organic produce vs. regular produce?

• Bullfrog electricity vs. regular electricity?

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Making markets work for the environment

Environmental Pricing Reform (EPR)

• EPR: adjusting market prices to reflect environmental costs and benefits

• A response to problems– Nobody wants problems; no ‘bad guys’

– Current set of incentives creates problems

• Approach: change the incentives– Align financial incentives with environmental goals

– “Tax bads, not goods”

– We do it already: RRSPs, tobacco taxes…

• Outcomes– environment, economy, jobs, revenue diversification, etc.

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Making markets work for the environment

EPR tools

Issues and tools:

• Buildings and energy efficiency

– On-bill financing: pay back with savings

• Solid waste

– Pay-as-you-throw to subsidize recycling

• Water

– Inclined block billing

– Stormwater

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Making markets work for the environment

Adjusting which prices?

• Three examples:

– Transportation prices (brief – later presentation)

– Development cost charges

– Property taxes

– Stormwater (not cover – later presentation)

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Making markets work for the environment

Transportation pricing (brief)

• Road pricing– Remove subsidy, examples worldwide (RHC, Linc?)

• Parking pricing– Free parking isn’t free – taxes, wages, prices

– Parking stall fee: level playing field - centre & fringe

• Vehicle registration– Feebates, PAYD

• Affordable or even free transit?– E.g. Calgary downtown

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Making markets work for the environment

Development cost charges

• Development entails costs for a city

– E.g. roads, facilities, policing, libraries, etc.

– Costs vary depending on location

• DCCs: charges on development to help pay costs

• Hamilton DCCs: mixed bag

– Zero rate downtown core, brownfield credits

– Could scale to distance from centres

– Could reduce DCCs near transit

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Making markets work for the environment

Property Taxes

• Taxes = value x rate (encourages sprawl)

– Land is cheaper at fringes, so taxes are lower

– Rate are lower in smaller communities, so taxes lower

– Change: reduce rates at centers, raise at fringes

• Proximity to transit

– Rates are lower where no transit, or poor service

– To encourage density near transit, reverse it

• Yes, there is history and rationale

– But also there is the future to consider

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Making markets work for the environment

Challenges, and overcoming them

Can arise from…

• Equity and fairness

o Smart instrument design

• Vested interests

o Change the incentives of those interests

• Fiscal impact

o Not just subsidies – include revenues

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Making markets work for the environment

Another challenge? Politics

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Making markets work for the environment

Politics

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• Alberta: home of anti-tax, anti-gov’t hysteria?

• Calgary IPSOS Reid 2010

Making markets work for the environment

Conclusions

• General principle: get root causes of problems– Often root cause is price

• A powerful opponent• A powerful ally

• EPR can address many issues– environment, economy, jobs, revenue diversification

• Diverse challenges. Solutions:– Policy design, communications, stakeholder work, etc.

• Tailored process needed– Goals, research, design, consultations, etc.

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Making markets work for the environment

ReferencesHealth impacts of sprawl:

• Alberta Health Services, “Urban Sprawl and Health” (April 2009) http://www.albertahealthservices.ca/poph/hi-poph-hpp-info-urban-sprawl.pdf

• Johnson and Marko, “Designing healthy places: Land use planning and public health” (Capital Health, 2007) http://www.capitalhealth.ca/NR/rdonlyres/eh4qelt76mejjmxogexsmbh5qrs32flyyiknqr3z6jn6xcfgyjqbeqpip3xrsztvr27joqqj2bd2pyr7myh74cnflib/DesigningHealthyPlaceslandusePublication.pdf.

• More: Bray, Vakil, Elliott, “Report on Public Health and Urban Sprawl in Ontario – a Review of the Pertinant Literature” (Ont College of Family Physicians, Jan 2005) http://www.ocfp.on.ca/local/files/Communications/Current%20Issues/Urban%20Sprawl-Jan-05.pdf

Environmental Pricing Reform

• Thompson and Bevan, “Smart Budget Toolkit: Environmental Pricing Reform for Municipalities” (Sustainable Prosperity, 2010) http://www.sustainableprosperity.ca/article172.

• Thompson, “The Power of Prices and the Failure of Markets: Addressing Edmonton’s Environmental and Fiscal Challenges” (City of Edmonton, June 2010). http://www.edmonton.ca/city_government/documents/Discussion_Paper_17_Power_of_Prices_and_Failure_of_Markets.pdf

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David ThompsonDirector, Sustainable CommunitiesSustainable Prosperitydthompson@plrc.cawww.sustainableprosperity.ca