This video is about how surface parking lots have crowded out actual development in many U.S. downtowns. An interesting thing is happening in Philadelphia, where I live. Surface parking lots that have been here as long as I have (1999) are suddenly turning into development sites, all over turn. This tells me that they were being held in a holding pattern waiting for the next boom. This works in Philadelphia because there were never huge areas of parking in the central city, just smaller lots scattered here and there. But there must be some critical mass where you have so much parking that you no longer have a city at all, and maybe it is hard to recover from that.

The lots that are “temporary” for only a few decades still cause environmental problems of course. Philadelphia has the good sense to charge industrial and commercial landowners by the square foot of pavement for stormwater management, a good policy that more cities should consider (disclosure: I have some professional ties to this program). This general idea of tieing taxes and fees to external costs – in this case the environmental impact of building materials – is basic textbook economics and it works!

In theory, you could cap and trade the right to pave. Initially the credits could be sold to real estate development companies. Then, when the cap is hit, a new development would have to buy enough credits from somebody else who is willing to part with an equal amount of pavement. The alternative would be to use porous materials or low impact development techniques. Credits could be retired over time – either because the government or non-profit groups buy them and retire them, or they could be retired when an owner goes bankrupt or falls behind on property taxes. Maybe they could even be accepted as payment for certain fees or taxes (for example, fees that would have been spent on stormwater management anyway), then retired. Set up a system like this and entrepreneurs would find ways to get in on the game, putting the private sector to work on behalf of the environment.