This is the third installment in a multi-part series identifying policy reform opportunities that could improve the quality of life for rural Americans.

Despite the name, “urban” planning policies can have large impacts on rural communities. Unfortunately, this influence is often negative. Policymakers seeking ways to help remote constituencies should, therefore, scrutinize how urban planning policies can also hurt other areas.

Urban growth boundaries are one policy idea that deserves reconsideration, argues Mercatus scholar Emily Hamilton.

What Are Urban Growth Boundaries?

An urban growth boundary (UGB) is a growth management rule that designates what areas can and cannot be developed around a city center. Essentially, planners create an invisible boundary around a metropolitan area that is set aside for “greenfield” use (e.g. farming and forestry). Prospective or current property owners within the greenfield area are limited in what they can do with their lands. The goal is to not only preserve the dedicated greenfield but also limit commuting between towns and the country that surrounds them.

UGBs can take many forms. They can be a literal circular “greenbelt” surrounding a city, as were the first efforts Great Britain established under the Town and Country Planning Act of 1947. This strict UGB model was adopted in the US by places like Portland, OR and Lexington, KY.

Other land use policies can effectively act as UGBs. For example, one study of Florida cities identifies other restrictions that mimic UGBs, like farm preservation policies, development impact fees, large-lot zoning, and open space mandates. Many Florida cities still maintain literal UGBs as well. At one point, state law required that localities adopt growth management policies. That mandate was repealed, but many cities have kept those policies in place.

Whatever the form, UGBs attempt to cut down on sprawl and encourage denser development within a metropolitan area, as particularly promoted by the “smart growth” school of urban planning.

However, Hamilton’s forthcoming chapter on UGBs (and past research) points out that these growth management rules often artificially increase housing and rent costs while having a negligible role in restraining sprawl.

The Problem with UGBs

Although the US has an impressive expanse of undeveloped land, many American cities have trouble with sprawl. Not only can runaway sprawl present a frustrating and unpleasant living environment for residents, but it can also raise the cost of municipal administration, as cities must provide ever-expanding infrastructure to ever remoter locations.

It is understandable that policymakers would want to tame the thicket of suburban sprawl. UGBs are a poor tool to do so, however, and often backfire in counter-productive ways.

Ironically, UGBs can have the unintended consequence of encouraging sprawl. Consider the case of Portland. Research suggests that the city’s growth management policies have stimulated a wave of development far outside of the city since UBGs artificially raise prices within the greenbelt. People who want to work in Portland may not be able to afford these high prices, so they simply choose to live farther away.

Why do UGBs generate these outcomes? Simple supply and demand.

Putting a government-created boundary on development will not necessarily encourage the density that planners desire. This is especially pronounced when a city has other policies that restrict new housing development, as Urbanity scholar Salim Furth recently wrote is the case in Seattle. Restricting the supply means higher prices within the boundary, which pushes development farther into the country.

How UGBs Hurt Rural Communities

This state of affairs hurts many groups, including the working class, renters, and new entrants to a city. It also hurts rural communities in a few important ways.

First, it makes it harder for people living in the country to move to the city if they want to. State and local policymakers have effectively prioritized the well-being of people who were lucky enough to live or move to a UGB-protected area at the right time. This is unfair to future generations of potential city-dwellers who find themselves preemptively shut out from urban opportunities.

It also may make housing more expensive in now-formerly-rural areas. As mentioned earlier, UGBs may force people to move outside of artificially-expensive city centers. But the jobs are still downtown. So the price of properties surrounding a UBG may rise as people bid up land that is close to a city.

This price inflation would be in addition to any other shocks to housing prices in more rural areas.

For example, Kevin Erdmann’s new book Shut Out argues that housing restrictions in desirable cities—like New York, San Francisco, and Boston—channeled people into other areas, thereby driving up prices in those markets. Florida was among the states most impacted by the “housing bubble” of the new millennium. As mentioned earlier, many Florida cities maintain UGBs that restrict growth. The combination of Erdmann’s “housing refugee” effect and growth management policies like UGBs make affordable housing all the harder for lower-income people to attain.

How Rural Communities Could Benefit from Reform

Rural communities are hurt doubly by growth management policies that restrict what people can do with their land. First, it is harder for them to move to a city center because prices are too high. Next, it could make it hard for them to buy even rural land, as “refugees” from the high-cost city bid up prices in the country.

Hamilton suggests that state and local policymakers address the problems head-on. Twelve states mandate that locations enforce some kind of UGB: Washington, Oregon, California, Vermont, Connecticut, New Hampshire, New Jersey, Maine, Rhode Island, Maryland, and Delaware, and Tennessee. Other cities have independently promulgated UGB policies on their own accord. Then there are states and cities that do not have literal UGBs, but the sum of their restrictive zoning policies have similar effects, like the study of Florida cities found.

Policymakers in the states that mandate UGBs should strongly consider repealing or reforming them to benefit constituents of all backgrounds.

Even if a state does not have a UGB mandate on the books, there are still available reforms. Policymakers could determine whether or not cities in their states have adopted growth management policies that artificially raise the prices inside and outside of the greenbelt area. Perhaps these policies could be remedied at the state level. Additionally, policymakers could consider preempting the issue by passing a state-level ban on the practices.

Preserving the natural environment and encouraging urban density are admirable goals. But the weight of the evidence suggests that UGBs not only fail to achieve their objective, they can also harm rural communities in the process. Policymakers would be wise to reject these ineffective policy tools and take steps to protect communities from their damages in the future.

Photo credit: Harold Litwiler/Flickr