28 Jul 2008

Cap and Develop

In many parts of the world, new demand from additional development is outpacing current or future supplies of power and water, e.g., Las Vegas, Atlanta, San Diego...

Don Wood, of the Pacific Energy Policy Center, has written some nice briefings on water [PDF] and growth [DOC]. The water brief calls for regulations that require new development have a "net zero" impact and/or meet certain efficiency standards. In the growth brief, Wood observes that politicians have an incentive to adopt pro-growth, pro-sprawl policies when they stand to gain campaign contributions from developers and increase their tax base. Politicians, e.g., support rezoning land from agricultural to residential, subsidies to road extensions, low-cost access to public utilities, etc.

I agree that these unsustainable incentives exist. Reversing them will require, first, that politicians/bureaucrats change their attitudes towards growth, sprawl and resource inefficiency; second, they will have to adopt policies that promote sustainable growth and development. Ignoring the first step (!), I suggest policies that are light on specific means and heavy on measurable ends, i.e., set goals and then let the market work.

My cap and develop proposal for sustainable development has these steps:
  1. Measure and cap water and energy demand (at annual usage) for all buildings.
  2. Issue permits to those buildings. Buildings without permits cannot be occupied.
  3. Require that new buildings purchase existing permits. Buildings that sell permits must be replaced (new building) or turned into parks with a net zero demand for water and power, i.e., if the new building is located elsewhere -- on virgin (greenfield) land.
  4. Permits can be traded in a market.
  5. Total use can be reduced by requiring that new buildings use <= 90% of the energy and water represented in the purchased permits.
Bottom Line: Development and re-development is wonderful, but it should not happen without bounds. Cap and Develop to live within your means.


  1. OK I'll bite: If you agree that a carbon tax is preferable to cap & trade on CO2, why not a water tax?

    You've got a lot of really specific plans for someone who loves spontaneous order... :)

  2. Bob: do you like the spontaneous order in all those private organizations getting together to help define rights to atmospheric resources, like you expect them to do with water?

    You know, the ones the don't exist?

    Yeah, the ones that you were counting on for serious, market-based solutions to global warming?


  3. @Bob -- because SD (and other regions) already know how much water/energy they have to allocate.

    Carbon taxes are meant to address consumption, which leads to UNKNOWN amounts of emissions. That's why I like taxes with carbon and C&T for water, etc.

    The right tool for the right problem.

    @Silas -- v. funny rhetorical structure.

  4. Energy caps are way outside my jurisdiction, but it's likely that over the next year or so I'll be working with some water agencies on writing water neutral development ordinances. They won't be popular with the development community and are bound to get litigated. I'll let you know how things go.

  5. Interesting.

    This obviously won't work if there are other communities that may affect your water supply; one's city's cap just leaves more for the others.

    So do you ban water trading and imports?

    You don't address the gray water/rainwater issue - a new or existing building doesn't need a permit if it can access recycled gray water or other water not included in the city supply.

    You don't address lack of competition in water supply: if there was competition, price pressures would make the supply system much less leaky, as well as offering an array of pricing options.

  6. @TT -- I was taking supply as given. Rain/graywater would be "free"

    I am also taking competition in supply as given. Cap and Develop could work for SD NOW.


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