An International Perspective on the U.S. Zoning System

Paul Cheshire
London School of Economics

Zoning (or planning) has important functions. Markets play a fundamental role in efficiently allocating urban land (Bertaud, 2018), but there are endemic problems of market failure. There are also conflicts of interest in land use—between owners of undeveloped and developed land and between local interests and the wider society. If ‘rule-based,’ planning can also reduce uncertainty and development risks. In planning systems, the level to which decisions are rule-based, discretionary, or reflect local or wider societal interests varies globally. Internationally, the U.S. system is among the most locally controlled but significantly rulebased because of the use of zoning. In contrast, in the United Kingdom and a range of other countries, local politicians largely decide on development on a case-by-case basis. More local control and discretionary decisions increase the power of the “not in my backyard,” or NIMBY, interest because development costs are highly localized, but benefits range over a wide area, even a whole country. This process tends to end with generally restricted development, resulting in higher housing and land costs. This problem is increasingly visible on both U.S. coasts. Local control also enables zoning systems to protect the interests of insiders and exclude those below the poverty line, for example, by applying extravagant minimum lot sizes or zoning for single-family housing. More recently, attempts have been made to use planning to reduce carbon emissions or force mixed communities. The evidence suggests that zoning is unsuited for achieving either objective.