Transfer of Development Rights: A Market-Based Approach to Sustainable Growth

Apr 11, 2012James Underberg

earth-150As part of the 10 Ideas: Generating a Green Future series, a proposal that can continue to foster growth while keeping it under control.

earth-150As part of the 10 Ideas: Generating a Green Future series, a proposal that can continue to foster growth while keeping it under control.

"If in a given community unchecked popular rule means unlimited waste and destruction of the natural resources-soil, fertility, waterpower, forests, game, wild-life generally-which by right belong as much to subsequent generations as to the present generation, then it is sure proof that the present generation is not yet really fit for self-control, that it is not yet really fit to exercise the high and responsible privilege of a rule which shall be both by the people and for the people." - Theodore Roosevelt, 1916

Long before the juggernauts of suburban development and urban sprawl began to ravage our purple mountain majesties and fruited plains, Theodore Roosevelt cautioned the nation against excessive development. He challenged communities to think with foresight and to exercise self-control in their dealings with nature. To do otherwise would be to rob future generations of what is rightfully theirs, and would demonstrate that Americans are not capable of responsible self-rule. Almost a century later, it would be sacrilege for a politician to suggest that Americans might be incapable of self-rule.

Yet an application of Roosevelt's litmus test produces unsettling results. Between 1945 and 2002, while the U.S. population roughly doubled, its urban land area quadrupled. As development continues to charge forward, it absorbs 6,000 acres of U.S. open space every single day. The lost lands are forests, plains, and swamps that perform vital social, economic, and environmental services that we could not and would not want to live without. These open spaces mitigate flooding and erosion, filter our water and air, provide homes for wildlife, and support a $730 billion outdoor recreation industry that sustains 6,435,000 jobs and generates $88 billion in federal and state tax revenues every year.

While a society certainly profits from new homes, commercial buildings, and infrastructure, it can only thrive as long as it maintains an appropriate balance between development and conservation. Yet since the economic rewards of development are generally awarded to private entities, and the ecological losses are distributed over an entire population, rational, self-interested human beings will not naturally strike a balance that benefits society as a whole over the long term. This is what Garrett Hardin diagnosed as the "Tragedy of the Commons." Yet what Hardin did not consider was the possibility that market forces could be manipulated and realigned to promote shared good and protect the commons.

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Transfer of Development Rights (TDR) programs do just that. TDRs leverage market forces to promote development in areas targeted for economic growth, while preserving agricultural or open space land in key preservation areas. Land owners in the preservation areas, or "sending areas," can sever the development rights to their land and sell them on the TDR market. Stripped of development rights, the land can still be bought and sold, but can never be developed. Meanwhile, developers with property in the growth areas, or "receiving areas," can buy development rights on the market to allow them to build at higher density or height limits. This empowers planners to target particular areas for higher density development, which makes for more efficient urban areas. The increases in density in the receiving areas finance land preservation in the sending areas.

Since the 1980s, TDR programs have been implemented throughout the country. Two of the most successful programs are flourishing in Montgomery County, MD, where TDR has preserved over 50,000 acres of agricultural land and open space, and in the Pinelands, NJ, where TDR has preserved 59,000 acres. Particularly at a time when so many municipal governments are struggling with budget cuts, TDR is a cost-effective way to pursue conservation goals, since it places the financial burden on the market.

TDR is not, however, a silver bullet. It is not appropriate for every municipality, successful implementation requires scrupulous planning and oversight, and it should always be employed along with other smart growth planning tools. Yet even if TDR is not the be-all and end-all solution to urban sprawl, it is illustrative of the kind of shrewd policymaking that the 21st century demands.

After an era of unchecked free market development, the United States must choose whether it will continue to grow itself into oblivion, or find innovative ways to exercise self-control and realize sustainable growth. Policies like TDR that use market forces to curb market excesses can be essential tools in addressing the array of complex challenges we face today, from climate change, to increasing income inequality, to a monetized political system. These kinds of market-based policies take advantage of America's greatest strength, its unwavering ambition and commitment to growth and progress, to protect against its most dangerous weakness, its predisposition to profligacy.

Teddy Roosevelt understood that what we have today belongs to future generations as much as it does to us. With this in mind, he wondered whether rule by the people could ever be rule for the people. The jury is still out on that one. But with the help of creative policies like TDRs, that balance growth with foresight to forge a sustainable path forward, perhaps we will one day finally be able to answer Teddy's question and show that Americans are, indeed, fit "to exercise the high and responsible privilege of a rule which shall be both by the people and for the people."

James Underberg is a junior studying government at Cornell University. After interning at the Roosevelt Institute in 2010, he started a new Roosevelt Institute | Campus Network chapter at Cornell.

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How States Can Get Serious About Offshore Wind Development

Apr 10, 2012Stewart Boss

earth-150As part of the 10 Ideas: Generating a Green Future series, a call for policies that level the playing field for wind power, which would in turn create jobs and revenues for the states.

earth-150As part of the 10 Ideas: Generating a Green Future series, a call for policies that level the playing field for wind power, which would in turn create jobs and revenues for the states.

North Carolina has 140 gigawatts (GW) of potential offshore wind energy capacity -- the largest resource of any state on the East Coast -- in part because its shallow-water coastline is ideally suited for offshore wind development. But while North Carolina may be number one in potential offshore wind energy, it's hardly alone. The National Renewable Energy Laboratory (NREL) estimates that the U.S. has 4,150 GW of total potential wind turbine nameplate capacity from resources around the country. (For some perspective, the nation's total electric generating capacity from all energy sources was 1,010 GW in 2008). The U.S. Department of Energy reports that North Carolina alone could conceivably install 10 GW of offshore wind capacity by 2030.

Offshore wind farms have existed in Europe for more than 20 years. States like Massachusetts and Rhode Island are advancing offshore wind energy projects, and Maryland's state legislature is currently considering a bill that would create wind industry incentives. But despite all the benefits, there are still no installed offshore wind projects in the U.S. And there are none currently even planned here in North Carolina.

Yet the economic and environmental benefits of turning to this cleaner energy source are substantial. Building just one GW of offshore wind energy in North Carolina would create an economic ripple effect over the next two decades that could pump an estimated $1.1 billion into the state's economy. The more than 8,000 component parts of offshore wind turbines are often too large to transport long distances, so development in North Carolina would mean new manufacturing facilities and thousands of manufacturing jobs in the state. That same DOE study showed that installing one GW of offshore wind power would create 1,628 new jobs and bring $188.5 million into local economies in the construction phase alone. This is not surprising; investing in clean energy projects typically creates three times more jobs than the same level of spending on fossil fuels.

Developing that one GW of wind power in North Carolina would also deliver tangible environmental gains: 2.9 million tons in annual carbon dioxide reductions and 1,558 million gallons in annual water savings. The environmental, climate, and public health benefits of shifting from coal to cleaner forms of energy like wind are well documented. A recent Harvard study found that "the life cycle effects of coal... are costing the U.S. public a third to over one-half of a trillion dollars annually." These externalized costs add roughly 17 cents per kWh of electricity generated from coal. And as one of the most coal-dependent states in the country, North Carolina is spending almost $2.2 billion every year to import coal from other states. That's money that could be invested in developing energy and creating jobs in North Carolina.

Join the conversation about the Roosevelt Institute’s new initiative, Rediscovering Government, led by Senior Fellow Jeff Madrick.

In an event co-sponsored by the Roosevelt Institute | Campus Network at the University of North Carolina, Chapel Hill this past fall discussing the opportunities and obstacles for offshore wind development in North Carolina, we brought together state leaders from government, industry, coastal law, and scientific research. The consensus among the speakers was clear: what's missing in North Carolina is a policy framework for getting turbines installed. Investors and utilities need regulatory certainty to commit to trying something new. As Congress squabbles over what to do about extending the critically important federal production tax credit for wind energy, there's also no state legislation pertaining to offshore wind on the books in North Carolina.

So what can we do? A bill in North Carolina might have an answer. North Carolina's Senate Bill 747, the Offshore Wind Jobs and Economic Development Act, proposed a state-managed competitive request for proposals (RFP) process to develop 2.5 GW of offshore wind energy starting in 2017. If the state determines that a bid has a positive net economic impact, then investor-owned utilities would be required to sign 20-year contracts to purchase power. Incremental costs or savings for ratepayers would appear on customers' utility bills, with limits on the impact of rate increases to large consumers. If the state fails to determine that 2.5 GW of offshore wind energy would result in a net economic benefit, then there would be no obligation to grant a contract.

In an effort to enhance industry support, SB 747 also gives utility companies the option to co-invest or purchase an ownership interest of up to 50 percent in the projects. While the bill does not require any direct government spending, it also extends an existing manufacturing tax credit for wind through 2020 to help attract manufacturing jobs. State agencies (in this case, the Department of Commerce) would review RFPs under a wide variety of criteria, including, but not limited to, the impacts on ratepayers, jobs and economic activity, tax revenue, system reliability, climate change, public health, export opportunities, system reliability, and existing industries.

This policy could create a practical path forward for offshore wind energy. The emphasis on ensuring that any offshore wind project would have a net positive economic impact on the state should make the policy more politically attractive to state legislators concerned about consumer groups opposed to rate hikes, electric utilities eager to avoid anything resembling regulation, and coastal industries that may conflict with proposed turbine locations. This kind of bill also levels the playing field for clean energy in a way that prioritizes economic considerations. Adopting this policy will effectively eliminate cost disadvantages for offshore wind by requiring the government agencies reviewing industry proposals to fully account for the massive and externalized environmental and public health costs associated with continuing to rely on coal and other artificially cheap fossil fuels for electricity.

On a national level, the public strongly supports developing clean energy technologies like wind. A recent nationwide survey conducted by the Civil Society Institute showed that roughly 71 percent of Americans support shifting federal "support for energy away from nuclear and towards clean renewable energy such as wind and solar." The sooner we start implementing policies that lead to more wind development, the better.

Stewart Boss is the co-director of the Roosevelt Institute| Campus Network's center on energy and environmental policy at the University of North Carolina, Chapel Hill.

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Millennials are Committed to a Multidimensional Approach to Saving the Environment

Apr 9, 2012David Weinberger

Reports that Millennials don't care about the environment may not take into account their creative and comprehensive approaches to creating a cleaner planet.

Reports that Millennials don't care about the environment may not take into account their creative and comprehensive approaches to creating a cleaner planet.

Students in the Roosevelt Institute | Campus Network are routinely faced with a number of challenges as they develop and promote their ideas for change. From disenfranchisement to flat-out mockery, from being ignored to antagonized, Millennials often find that their efforts are not taken seriously.

Add to that list this recent report from a University of San Diego professor, which claims that Millennials are less concerned with environmental protection than our parents and grandparents were at our age. Accusations of flawed research methodology aside, the report doesn't take into account the tremendous work being done by a number of environmental groups such as 350.org, the Sierra Club, USPIRG, Green for All, I.D.E.A.S., and of course, the Campus Network, all of which claim young people as the majority of their active bases.

Perhaps one reason that Millennials' environmental concerns appear undetectable is that researchers are accustomed to a very particular, narrow approach to measuring environmental awareness. Millennials view environmental protection more as a value to be incorporated into all policymaking than as its own, isolated discipline. We are concerned with economic growth, job creation, enhancing public health, bolstering educational achievement, and national security and diplomacy. Young people recognize that each of these concerns is inextricably tied to the environment and see environmental health and protection as a means to arriving at any of these outcomes.

To compare the environmental movement of the 1970s to the work of young environmentalists today is also to ignore the changes in sentiment and the nature of the challenges that have occurred over the course of the past 40 years. While environmentalists of years past were primarily aiming to bring clean air and clean water concerns into the national policymaking calculus, environmentalists today are far more worried about solving global problems like climate change by using local environmental solutions.

We are a generation of innovators and entrepreneurs. We are pioneering new and exciting strategies to shake the country's dependence on oil and other nonrenewable resources, remedy environmental damages, and ensure that all Americans have access to clean air and water.

Common to many of the ideas that came out of the Campus Network this year is a fundamental belief in the potential of market-driven innovations for reducing natural resource consumption and encouraging the development of renewable energy sources. Young progressives have come to understand the power of the market in shaping consumer behavior. Campus Network students are uniquely aware of the powerful role that public-private partnerships can play in reforming energy markets.

Join the conversation about the Roosevelt Institute’s new initiative, Rediscovering Government, led by Senior Fellow Jeff Madrick.

For proof that there is life in the youth environmental movement, one need look no further than the Campus Network's 10 Ideas for Energy and the Environment. Students from around the country submitted ideas to be considered for publication in this year's journal. Students' policy recommendations ranged from innovative ways to develop offshore wind power to a novel approach to encouraging brownfield development.

In particular, students are looking at ways to use policy mechanisms to reduce demand for energy without forcing families to take a hit. Erin Hiatt, a student at the University of North Carolina, Chapel Hill, suggests that the U.S. Department of Energy should repurpose the "Cash for Clunkers" model that worked well to bolster sales of high-efficiency cars for the market for appliances. By offering financial incentives to consumers looking to offload their old, energy-guzzling home appliances in favor of newer and more efficient models, this program stands to reduce Americans' demand for oil while minimizing costs and inconvenience for households.

At the same time that they are finding painless ways to reduce energy demand, many students are also looking at new sources of energy. Stewart Boss, another student at the University of North Carolina, Chapel Hill, supports bills and policies that help make offshore wind turbines a reality and ensure that electric utilities sign on. Recognizing that the country has a huge amount of potential offshore wind power that we're not making use of, he drills down on what it would take to tap into this clean resource.

Another interesting idea to emerge from the Campus Network this year is from Cornell University student James Underberg. James proposes that New York State should allow agencies to internalize environmental and labor costs when choosing among bidders for a development contract. Another example of Millennials' attention to the crosscutting nature of environmental values across policy areas, James's idea would shift the development paradigm in his state from a one-dimensional cost consideration to a holistic determination that takes environmental damage into consideration.

The Millennial green movement is a movement of future economists, health experts, rights activists, educators, and diplomats, each aware of the interrelation of their disciplines to the global fight for environmental protection. Whether you see them or not, the leaders of tomorrow are already working around the clock to find ways to reform the market to reflect this generation's demands for a cleaner future.

David Weinberger is the Senior Fellow for Energy and Environment at the Roosevelt Institute | Campus Network and a senior at Hunter College of the City University of New York.

Banner image: Shutterstock.com

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