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.

"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.

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

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.

Share This