A Better Urban Planning System?

The Productivity Commission is soon to report back on its investigation into urban planning. Previously I have commented on the Commission's draft report and its narrow view of planning. See this blog.

Time then to set out what I think a better performing urban planning system should look like? That is quite a big task, so the following is more the start of an exploration of what a better system could be. 

I think that any consideration of urban planning needs to be built around three things:

1. The purpose of planning
2. The players involved
3. The processes involved.

My pick is that the productivity commission will focus on the last consideration (process) and spend most of its time looking at how planning processes can be made faster and simpler.  Faster and simpler are ok objectives, but not if they are at the expense of good planning. The worry is that to make things faster, the only route left after so many previous reforms of the planning system is to slim the planning system down, that is take things out. To do that, all you need to do is to start with a narrow view of the purpose of planning.

The purpose of planning.

As a start, it is interesting to consider the following statement:

The overarching purpose of the Bill is to create a resource management system that achieves the sustainable management of natural and physical resources in an efficient and equitable way.

Interesting the use of the word “equitable’ in the statement. Even more interesting is that the statement  is talking about the current reforms of the Resource Management Act. The RMA reform documents do not explain what is meant by ‘equitable ways’. Neither did equity get a mention in the Commission’s earlier enquiry into planning. I don’t think the Bill means equity in the sense of equal access to the benefits of resource use or equal sharing of the costs of resource use.

The use of the term ‘efficient’ is also instructive. The Bill is not about more ‘effective’ planning. Will the Productivity Commission look at efficiency or effectiveness? Efficient is probably a word that the Commission will also use. What does efficient mean? For most people it means producing an outcome without wasting huge amounts of time and effort (you might say ‘being effective’). In economics, efficiency means something a bit different: Economic efficiency is, roughly speaking, a situation in which nothing can be improved without something else being hurt. There are different forms of efficiency and perfectly competitive markets are inherently thought to be ‘efficient’ .

Overtime, the rationale for planning has shifted. The traditional narrative is that post war, modernist planning was wide ranging in its objectives. It was seen as a means to rationally and efficiently (in the normal sense) achieve society’s objectives, more rationally and efficiently than market-based processes. But that rationale collapsed in the late 1980s under its own weight. Since the 1980s, the rationale for planning has been forced to retreat to that of patching up the immediate weaknesses of neo liberal approaches to economic management.  The management of environmental externalities and management of public goods are the two basic arguments for planning under this approach.

But aspects of other rationales for planning still linger in the current planning system. One of these residual rationales is there in the form of section 6 of the RMA. That is, provision of identified goods that have a strong public good element to them. These are goods that might be privatised - like the coast line - but society has deemed them to be more important than to be left to market forces. These can be called merit goods - a definition of which is goods where the benefit to society from the consumption of these goods exceeds the benefit to the individual who may undertaken their consumption (1).

Another rationale for planning is there in a commitment to consultation and participation, with hints to the type of advocacy planning common in the 1960s and 1970s that sought to place planning as a counter weight to vested interests that had the money and political power to skew allocation of urban resources towards their ends (whether that be by market or government means).

Behind those two rationales is a kind of unwritten bargain that for capital to be able to reproduce itself and accumulate overtime, planning is needed to deliver the range of supporting amenities and infrastructure that society (labour) needs. This is the so called property contradiction. It has been described as follows (2):

The contradictory tendency for a capitalist, democratic society to define property (such as housing or land) as a private commodity, but at the same time to rely on government intervention (e.g., zoning, or public housing for the working class) to ensure the beneficial social aspects of the same property, is what Richard Foglesong (1986) calls the "property contradiction." This tension is generated as the private sector simultaneously resists and needs social intervention, given the intrinsically contradictory nature of property. Indeed, the essence of property in our society is the tense pulling between these two forces. The conflict defines the boundary between private interest and the public good.

While a Marxist inspired argument, the property contradiction has more than a ring of truth to it.  

At a more simplistic level  (and within an safer economic framework), lack of information and co-ordination problems can bedevil urban environments. As one report(3)  puts it:

Individuals and firms may co-operate to overcome market failures where:

• The potential beneficiaries are a fairly small group and therefore the effort of co- operating/ co-ordinating is low.
• The potential beneficiaries are homogenous group and therefore the benefits are valued equally
• Even though some of the beneficiaries will ‘free ride’ on the investments of others the private benefits of the co-operative activity are expected to be greater than the private costs of co-operation / co-ordination
• There are incentives or mechanisms to overcome free riding.

Sound like any urban environment you know of? Maybe co-operation is possible between two neighbours on a small extension to a house, but for any major development or redevelopment?  The same report says that there may be a case for public intervention to encourage, enable or catalyse co-operation. Intervention might include

• Alleviating some of the risk to private agents of initial costs of co-ordination
• Mechanisms for enforcing collective decisions to overcome the free rider problem
• Mechanisms for people with shared interests to find one another.

So is a more nuanced understanding of planning required? I think so. Planning is not and should not be based solely on the theoretical limitations of markets. To do so places planning in the claws of endless debates about the best way to address market (and government) failure. It also (perhaps deliberately) misses the point that planning has always had a normative element to it - how the world should be, not just what it is today.  

To me planning has a legitimate and necessary role in:

1. Managing negative externalities
2. Promoting positive externalities
3. Managing public goods
4. Achieving efficiencies in the allocation of publicly funded infrastructure
5. Providing a degree of certainty and stability to the development sector and to communities
6. Promoting collective interests of the community, including the provision of highly valued ‘merit goods’
7. Addressing the spatial distributional effects of public and private actions (equity).

While not a bad list, I think that this approach to defining the rationale for planning will not get much traction. Apart from the problem of a departure from the standard neo liberal basis of planning as good housekeeping, the above rationales for planning do not really explain the potential strength and weakness of planning -  the strength of planning in delivering long term benefits, but the weakness of friction, delay and capture by special interest groups in trying to get to the long term picture.  

Players and Processes

This is where the players and processes come into play.

It is the ability of market-based processes to overcome the short term weaknesses of plan-based approaches (or at least have them subsumed into myriad calculations of private costs and benefits) that is said to be the main benefit of market-based decision making. This is the classic ‘wicked problems’ critique of planning - that planning is all too hard in a pluralistic society.

Yet market-based decision making is short term, not long term.  In standard economics, future costs and benefits are discounted. Discounting reflects that people prefer consumption today to consuming things in the future, and that invested capital is productive and provides greater benefits than if that capital is sitting around not doing much.

However it is one thing for an individual or a group of people to say that they value more highly benefits today than costs tomorrow (provided that they will face those costs, of course). It is another thing altogether to say that future generations can face costs created today.  There is a strong argument that thinking longer term is more crucial than ever these days. We have invented all sorts of ways of passing on costs to future generations, whether that be in the form of climate change, poor water quality in aquifers, massive financial debts, ageing infrastructure or high house prices.

Somebody said that if the 20th century was about conflict between classes, then the 21st century  will be about conflict between generations.   So is planning not so much about managing externalities experienced by today’s environment, as it is about negative externalities experienced by tomorrow's environment and tomorrow's generations?

If we switch focus away from how planning fits into an economic model, but rather look at how planning can be seen as a form of collective longer term decision making that is different to short term, market-based decision making, then I think we begin to get a more rounded picture of the role of planning.    The following table lists two ways of decision making and associated dimensions,  with a nod to Thinking Fast and Slow by Kahneman.

Instinctive decision making (quick thinking)	Deliberative decision making (slow thinking)
Efficiency	Effectiveness
Short term	Long term
Marginal costs and benefits	Cumulative
Net benefits	Distribution of costs and benefits
Shifting costs to others	Reducing / mitigating costs at source

As an aside,it seems a common tactic to try to bend deliberative (planning) decision making processes so that they resemble instinctive decision making processes. Hence lots of talk about efficiency, net benefits and the like, rather than how planning can be made to be more forward looking and more effective   

However this is not the complete story for planning. There is still a weakness to address and overcome.

Rather than the common criticisms of delay, friction and capture being the weakness of planning,  I think the real trouble with planning-based approaches is that they can more easily fall foul of ‘status quo bias’ and ‘loss aversion’ than market based approaches. Hanging onto the status quo and going to great lengths to avoid loss are two very strong emotions that dominate how people make decisions.  In fact all the good things of looking long term, thinking about effectiveness and cumulative effects can get swept away as planning becomes a means to maintain the existing environment. This is where delay, friction and capture comes from.

Planning involves a wide range of players, all with their own status quo to be maintained and losses to be avoid. There include:

1. Landowners
2. Developers
3. Residents (owners and occupiers)
4. Infrastructure providers
5. Business owners
6. Visitors
7. Future generations
8. Natural environment (intrinsic values).  

How do we keep the benefits of all these parties thinking and co-operating long term, but not see those benefits lost in the resulting short term tussles over resource use as everyone fights to keep their status quo?

Not too sure if anyone has the answers here. But there are a few pointers:

1. Getting the parties to talk to one another is important
2. Decision making has to be in the hands of an impartial body
3. Somebody has to represent those not at the table - eg future generations and the environment
4. There needs to be an incentive for parties to participate, other than just hanging onto the status quo
5. The short term pain of acting long term needs to be shared around
6. Some aspects of plans need to be bolted down for the long haul, other parts need to map out a step-by-step series of changes.

So what might that mean for urban planning?

1. Processes need to be participative - both in terms of plan development, but also in terms of administration. I think maintaining wide submission rights is important; what could be limited is appeal rights, for example. At the moment there seems to be a push to limit both. But participation needs to be guided by good principles of engagement.  

2. Decision making needs to be apolitical, but with the right checks and balances. I think it is time for some sort of stand alone planning commission to draw up and administer urban plans. But that approach needs to be backed up by all of the other moves listed.  Part of the checks and balances needs to be a form of an ERO for planning - rather than Education Review Office, it would be a Planning Review Office, an independent body that can cast its eyes over the work of planning commissions and hold them to account for bad practice.

3. We need some form of ‘public good defender’ who is not the decision maker. Maybe the EPA should be the EPA, able to set environmental bottom lines and to push for enhancement and restoration of the environment. Maybe Generation Zero should be the Next Generation with the mandate and funding to get involved.

4. Lessening the pain of change needs to involve some sort of ‘goody’ to look forward to. Infrastructure upgrades, more funding for local improvements when development occurs; all of those things need to be addressed and bolted into the urban planning system. This means a much stronger link into infrastructure planning and delivery (social and hard infrastructure). Equally a requirement to look long term needs to be given more prominence in the urban planning system. This is in terms of both protection and use of resources. The NPS on urban development capacity is asking for a long term view of capacity, but it is only one side of the equation. What about a long term view of natural hazards, or ‘no go areas’?

5. Sharing the short term pain means the need for some form of consideration of equity when drawing up plans, how costs and benefits fall and how winners can help compensate losers.   This obviously needs a bit more work. Fair share policies for housing, jobs and infrastructure are one example.

6. Finally plans need to be both more certain and more fluid. Some aspects of plans need to be super glued - they can’t be changed easily or readily. The King Salmon decisions bend this way, while Acts like the Hauraki Gulf Marine Park Act and the Waitakere Ranges Protection Area are recognition of the need for long term protection. They are also recognition that somethings cannot be traded off for other outcomes. Other aspects of plans need to be more about a series of changes over time. Building heights and mix of uses  come to mind. Should a plan set out a series of steps for increases in building heights, as land values rise, rather than one set height, for example?

Notes:

1. The rationale for public sector intervention in the economy, March 2006. Greater London Authority March 2006.

2. Green Cities, Growing Cities, Just Cities?  Urban Planning and the Contradictions of Sustainable Development  ©Journal of the American Planning Association (Summer, 1996).

(3) The rationale for public sector intervention in the economy, March 2006. Greater London Authority March 2006, page 20.