Cities across Canada are trying to find new ways to contain or reduce suburban sprawl. While the causes and consequences of sprawl are complex and varied, problems of misaligned incentives are at the core. Coming changes to Alberta’s Municipal Government Act (MGA) could give municipalities new policy options to help realign these incentives and take a bite out of sprawl.

Giving municipalities the right tool for the job

After four years of deliberation, the Alberta government has proposed significant changes to its Municipal Government Act. The planned amendments cover wide terrain—the availability of low-income housing, creation of nature reserves, disparities between businesses and residential taxes, and regional cooperation between adjacent municipalities. Together, these changes mark an effort to improve municipal-provincial coordination, encourage cooperation between municipalities, and eliminate barriers to smarter, denser regional planning.

Some of the most widely anticipated changes to the MGA concern the powers that municipalities have (or don’t have) to charge for new development. Like many municipalities in Canada, local communities in Alberta struggle to pay for the infrastructure and services that new communities demand: sewers, roads, libraries, police and fire services, parks, etc. And like many Canadian municipalities, Alberta’s municipalities are currently unable to levy development charges that reflect the full scope of these new costs. Instead, they are most often paid from the general tax base—not by the people that directly benefit from them.

To fix this mismatch in pricing incentives, the Alberta Government is looking at allowing municipalities to charge developers for new additions in infrastructure and services. This could include new charges to help pay for community recreation facilities, fire halls, police stations and libraries.

Getting the prices right and reducing sprawl

Now, back to ecofiscal policy. These changes to the MGA could have important implications for controlling sprawl.

First, municipalities derive all of their authority from the provinces, so these changes are expected to have a big impact on how local communities plan, operate, and coordinate.

Second, prices can have a huge influence on urban development. If cities do not have the ability to charge fees/taxes that reflect the true cost of new infrastructure or services, many of the economic, environmental, and social costs of sprawl (see here, here, and here) are not borne by people who choose to relocate to newly developed, low-density neighbourhoods. This, in effect, makes living further away seem cheaper than it really is, and influences whether a family decides to move into the burbs, or whether a firm moves into a business park, far away from the city-centre.

Tackling an urgent issue sooner rather than later

Getting the prices right for new development matters now more than ever. The suburban growth rate is 160% higher than the urban rate, to the point where about half of residents of metropolitan areas now live in suburbs. And despite suffering two years of economic recession, the stampede province still has the highest population growth rate, making sprawl especially pertinent in Albertan communities.

The connections between development charges and suburban sprawl have real consequences for cities, but by no means tell the whole story. Suburban sprawl is deeply rooted in North American culture and crosses many dimensions. Stemming sprawl is more than just charging smarter (and fairer) development fees, but it is a step in the right direction.

At the end of the day, price incentives affect how and whether cities build up, or build out. And the long life of infrastructure means that today’s choices will have economic and environmental implications for decades to come. Thus, the best time to get incentives right is yesterday. The second best is now.