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Economic Implications And Consequences Of Population Growth, Land Use Trends, and Urban Sprawl in Southern Ontario

June 2008
Prepared for the Environmental Commissioner of Ontario
by Jack A. Donnan, Environmental Economics Services

Click to download the entire report (PDF) and its appendix (PDF).

Land Use Planning and Development - Problems and Issues in Southern Ontario

Beginning even before the end of WWII, urbanization of the rural lands on the periphery of cities and metropolitan areas through the construction of residential subdivisions and commercial strip developments along highways became the conventional pattern for development in post-war US and Canada. These developments are characterized by vast tracts of low-density, often isolated, 1-2 floor single-family homes that were built on agricultural and pristine forest or open space lands. Construction firms were initially able to build housing subdivisions wherever they could find cheap land. Host municipalities would often welcome these developments in anticipation of increased employment and tax rolls. These municipalities would then incur bond debt to pay for transportation, water, sewer and waste management infrastructure and raise taxes to pay off this debt.

The pattern, popularly referred to as urban sprawl, soon emerged in the periphery farming or rural open space areas around major growth centres of the nations. Much of the new residential construction consisted of isolated subdivisions located far from places of employment, retail shopping centers, schools, libraries and other urban amenities. New developments leapfrogged over existing ones ever farther from urban services and amenities. Because single-family homes on large lots dominated these developments, population densities were typically too low to support public transit and the curva-linear street patterns of these developments presented further barriers to efficient transit systems. Providing the transport, water, sewer, waste management, police, fire and educational services for these ever more sprawling and remote communities imposed mounting debt and tax commitments for the rural jurisdictions in which they were located.

Such remote, low-density residential "bedroom communities" could not have been established without the automobile and low-cost fuel to power it. The vast majority of the residents of these new developments thus spend more than an hour each day commuting to and from their workplaces which were usually located in the central cities. The automobile or special purpose bus transport is required for any and all purposes and destinations away from the residents' homes.

This pattern of development has also dominated the major suburban areas around Toronto, Vancouver, Ottawa, Halifax, Quebec City and Montreal in Canada. By the year 2000, 24% of all (3,091) counties in the United States also evidenced residential development patterns typical of urban sprawl which were expected to affect 13.1 million of the 23.5 million new households that were forecast for the period, 2000-2025 (Burchell and Mukherji, 2003).

According to Miron (2003), the adverse effects and consequences of urban sprawl in the US were first broached in the social science and planning literature as early as the 1950's. Since then a major body of academic, governmental and popular literature has arisen to document the problems and issues associated with these development patterns as well as proposed remedies to these problems. The Environmental Commissioner and his staff have contributed to this literature regarding land use planning issues, urban sprawl and conflicting priorities between population and economic growth versus environmental protection in Ontario (ECO 2005, 2007). Alleged problems and issues that are caused by, or at least associated with, urban sprawl include the following:

  1. irreversible losses of forests, green space, wetlands, wildlife habitat, natural environments, open space and scenery,
  2. loss of agricultural lands and their production,
  3. increased traffic congestion and political pressures to build more roads,
  4. increases in air pollution (mainly due to automobile emissions) and water pollution (mainly due to increases in sewage generation),
  5. inefficiencies due to high costs of providing utilities, roads, highways and infrastructure to scattered, low density subdivisions and bedroom communities,
  6. generation of "fiscal deficits" and rapidly increasing taxes for jurisdictions where infrastructure capital and servicing operating costs exceed the development charges paid by developers and additional tax revenues paid by property owners,
  7. increased conflicts with rural businesses and land uses that are incompatible with residential areas, eg. rendering plants, livestock farming operations, abattoirs, stone and gravel quarries.

In most areas that have experienced urban sprawl, municipal services and infrastructure would eventually catch up to the peripheral subdivisions as subsequent developments "in-filled" vacant spaces between the original subdivisions and shopping malls, schools, parks, offices and other types of land uses were constructed. However, awareness of and dissatisfaction with the magnitudes of the problems and losses that have been caused by urban sprawl have been growing among citizens, elected officials and environmental advocacy groups. Furthermore, municipalities have become more sophisticated in their dealings with developers and now impose site requirements on builders to provide all roads, utilities and other infrastructure elements within the subdivision as well as per-unit "development charges" to pay at least part of incremental costs of infrastructure and services that will be associated with new residential developments.

Consequently, State and provincial governments in the US and Canada have enacted a plethora of new planning legislation, amendments to existing statutes, regulations and policies purported to provide more direction and order to growth and changes in land use and to better protect natural environments, environmental quality and heritage parks and farm lands from conversion and degradation. At least 5 new land use planning statutes have been enacted and implemented since 2002 which have been summarized and critiqued by the Environmental Commissioner (2005, 2007). Major planning initiatives such as the 2005 Provincial Policy Statement regarding land use planning, the Niagara Escarpment Commission, the Green Belt, the Oak Ridges Moraine, the Greater Golden Horseshoe Plan and Ontario's Living Legacy have all been implemented within the past decade. However, as documented by the Environmental Commissioner's office, even these laudable initiatives are often unable to prevent, curtail or even modify developments that are destructive to local environments or financially disadvantageous to communities. More than 50 years of the conventional sprawl land use patterns and development trends and governmental policies to accommodate unlimited population and economic growth have created urban forms that now impose substantial financial, environmental and social burdens on municipalities and citizens, particularly those that are located in Southern Ontario.

Underlying these trends and their associated consequences are economic forces and institutions that help to drive them. People migrate from rural Canada and from other countries to Canadian cities in search of economic opportunities, employment and an improving quality of life. Growing populations demand more housing, transportation, food, education, health care and consumer goods which are supplied by private businesses and various levels of government. Markets are the primary economic institutions wherein customers and suppliers meet, sometimes literally, but most often figuratively, to buy and sell products and services required for every-day living. When it comes to housing, transportation and all non-residential construction activities, land is a fundamental input. Because land is in fixed, finite3 supply, it quickly becomes scarce in desirable locations. Things that are scarce and desired become valuable which is manifested by rising market prices in market economies. Where commodities such as land are inputs to the production or manufacture of other products and services, rising prices due to scarcities translate into higher production costs and, eventually, higher prices for consumer goods and services. Where governments are suppliers of products and services, rising costs for labour and other key inputs translate to higher taxes and user fees.

These and other economic principles help to analyze and explain the actions and behaviours of groups and sectors who stand to gain or lose from land-use related markets and the statutory frameworks that are intended to regulate them. Understanding of the economic implications of land use policy choices and the economic incentive structures facing various stakeholders can help responsible public officials predict potential outcomes and ultimately make informed policy trade-offs and choices. The economic causes and implications of urban sprawl are thus the focus of this report.


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