The document discusses transportation issues like traffic congestion and accidents in Hamilton and their high economic costs. It also discusses related problems with urban sprawl, like farmland loss, increased infrastructure costs, and health issues. Traditional policy tools to address these problems, like transportation and land use planning, have had limited success. The key underlying cause of the problems is that market prices do not reflect environmental costs. Environmental pricing reform aims to internalize these external environmental costs by tools like road pricing, parking fees, development cost charges that vary by location, and property tax rates that encourage dense development near transit. While political and fairness challenges exist, well-designed pricing reforms could help address transportation, sprawl and environmental issues while also generating revenue.

1. Moving Forward in Hamilton:
Transportation, Sprawl and
Environmental Pricing Reform
Hamilton Transportation Summit 2011
March 9, 2011
David Thompson
Director, Sustainable Communities
Sustainable Prosperity
www.sustainableprosperity.ca

2. Overview
• Context and challenges
• Environmental Pricing Reform - EPR
• EPR tools for local governments
• Transportation, Sprawl and EPR
• Challenges
• Conclusions
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3. Context
• Employment lag behind economic recovery
• Green goals vs. results – gap widening
• Local financing challenges to get worse?
– New downloading (unfunded)
– Reduced transfers and grants
• Age of cheap energy has passed
• Crisis?
– Not yet - danger and opportunity
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4. Transportation problems
• Traffic-caused smog in Toronto
– kills 440 people / yr.
– Costs $2.2B / yr.
• Collisions cost Hamilton $300M to $500M / yr.
– Future congestion with increased volume (TMP)
– Add all other costs, total ten times higher.
• Road legacy costs: infrastructure maintenance,
policing, EMS, repair and replacement
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5. Closely related: sprawl problems
• Eats up farmland
• Hollows out established neighbourhoods
• Locks in automobile dependency
• Makes transit less feasible
• Health – heart disease, diabetes, cancers, etc
• End of cheap oil = homeowner financial risks
• Legacy costs higher with sprawl
– Lancaster,California: $5,500 vs $10,800
– Calgary: Plan It 33% cheaper than status quo
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6. Traditional policy tools
• Transportation planning and infrastructure
– Emphasis on active transport > transit > car (e.g. TMP)
• Land use planning and bylaws
– mixed use, compact devo, urban boundary, brownfield
devo. [e.g. GRIDS]
• Public education and exhortation
• Etc.
• Have they succeeded? Enough?
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7. What are the actual causes?
• Consider “Home X”
– Nice, 3 BR, 2 bath, 1800 sq. ft., finished bsmt
• Two location options:
– Westdale
– Suburban greenfield
• Neighbourhoods are different
– amenities, community, access to town, etc.
• Another difference?
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8. The elephant in the room: prices
• Price is a major influence on decisions
• For individuals & firms, homebuyers &
developers
• Can “urge” infill, provide public education,
create targets for downtown development
• But if sprawl cheaper, what will happen?
• Organic produce vs. regular produce?
• Bullfrog electricity vs. regular electricity?
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9. Environmental Pricing Reform (EPR)
• EPR: adjusting market prices to reflect
environmental costs and benefits
• A response to problems
– Nobody wants problems; no ‘bad guys’
– Current set of incentives creates problems
• Approach: change the incentives
– Align financial incentives with environmental goals
– “Tax bads, not goods”
– We do it already: RRSPs, tobacco taxes…
• Outcomes
– environment, economy, jobs, revenue diversification, etc.
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10. EPR tools
Issues and tools:
• Buildings and energy efficiency
– On-bill financing: pay back with savings
• Solid waste
– Pay-as-you-throw to subsidize recycling
• Water
– Inclined block billing
– Stormwater
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11. Adjusting which prices?
• Three examples:
– Transportation prices (brief – later presentation)
– Development cost charges
– Property taxes
– Stormwater (not cover – later presentation)
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12. Transportation pricing (brief)
• Road pricing
– Remove subsidy, examples worldwide (RHC, Linc?)
• Parking pricing
– Free parking isn’t free – taxes, wages, prices
– Parking stall fee: level playing field - centre & fringe
• Vehicle registration
– Feebates, PAYD
• Affordable or even free transit?
– E.g. Calgary downtown
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13. Development cost charges
• Development entails costs for a city
– E.g. roads, facilities, policing, libraries, etc.
– Costs vary depending on location
• DCCs: charges on development to help pay costs
• Hamilton DCCs: mixed bag
– Zero rate downtown core, brownfield credits
– Could scale to distance from centres
– Could reduce DCCs near transit
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14. Property Taxes
• Taxes = value x rate (encourages sprawl)
– Land is cheaper at fringes, so taxes are lower
– Rate are lower in smaller communities, so taxes lower
– Change: reduce rates at centers, raise at fringes
• Proximity to transit
– Rates are lower where no transit, or poor service
– To encourage density near transit, reverse it
• Yes, there is history and rationale
– But also there is the future to consider
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15. Challenges, and overcoming them
Can arise from…
• Equity and fairness
o Smart instrument design
• Vested interests
o Change the incentives of those interests
• Fiscal impact
o Not just subsidies – include revenues
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16. Another challenge? Politics
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17. Politics
• Alberta: home of anti-tax, anti-gov’t hysteria?
• Calgary IPSOS Reid 2010
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18. Conclusions
• General principle: get root causes of problems
– Often root cause is price
• A powerful opponent
• A powerful ally
• EPR can address many issues
– environment, economy, jobs, revenue diversification
• Diverse challenges. Solutions:
– Policy design, communications, stakeholder work, etc.
• Tailored process needed
– Goals, research, design, consultations, etc.
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19. References
Health impacts of sprawl:
• Alberta Health Services, “Urban Sprawl and Health” (April 2009)
http://www.albertahealthservices.ca/poph/hi-poph-hpp-info-urban-sprawl.pdf
• Johnson and Marko, “Designing healthy places: Land use planning and public health” (Capital
Health, 2007)
http://www.capitalhealth.ca/NR/rdonlyres/eh4qelt76mejjmxogexsmbh5qrs32flyyiknqr3z6jn6xcfgyj
qbeqpip3xrsztvr27joqqj2bd2pyr7myh74cnflib/DesigningHealthyPlaceslandusePublication.pdf.
• More: Bray, Vakil, Elliott, “Report on Public Health and Urban Sprawl in Ontario – a Review of the
Pertinant Literature” (Ont College of Family Physicians, Jan 2005)
http://www.ocfp.on.ca/local/files/Communications/Current%20Issues/Urban%20Sprawl-Jan-05.pdf
Environmental Pricing Reform
• Thompson and Bevan, “Smart Budget Toolkit: Environmental Pricing Reform for Municipalities”
(Sustainable Prosperity, 2010) http://www.sustainableprosperity.ca/article172.
• Thompson, “The Power of Prices and the Failure of Markets: Addressing Edmonton’s Environmental
and Fiscal Challenges” (City of Edmonton, June 2010).
http://www.edmonton.ca/city_government/documents/Discussion_Paper_17_Power_of_Prices_a
nd_Failure_of_Markets.pdf
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20. David Thompson
Director, Sustainable Communities
Sustainable Prosperity
dthompson@plrc.ca
www.sustainableprosperity.ca
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