Eco-labels and Green Consumers

We investigate the environmental and economic benefits derived from the adoption of corporate sustainability practices.

Eco Labels

Environmentalism as a Determinant of Housing Supply Regulation

Matthew Khan

Kahn is investigating the role that environmentalism plays in enacting regulatory barriers faced by real estate developers in California. Why do housing supply regulations differ across metropolitan areas and across communities within the same metropolitan area? One explanation focuses on the median voter’s narrow self interest. Home owners have a financial incentive to discourage new construction because it reduces the scarcity value of their asset. Richer communities may engage in fiscal zoning to keep the poor out. Minimum lot zoning reduces the likelihood that new entrants will be much poorer than incumbents. Communities may also enact housing supply regulation to preserve and enhance their local quality of life. Environmentalist communities are especially likely to pursue such goals. Environmentalists may seek to block local growth to preserve local public goods such as open space, bike paths and clean air and to preserve the character and culture of their community. By limiting housing growth, environmentalist communities minimize the likelihood that they suffer the downside of “sprawl”. At the same time that residential developers celebrate that their products help households achieve the “American Dream” at an affordable price, many environmentalists have countered that single family homes are wasteful and contribute to the destruction of natural capital and exacerbating climate change challenges.

Kahn, Matthew E., Environmentalism as a Determinant of Housing Supply Regulation.

April 08 2008