Fascinating framework for resolving the coordination problem that zoning creates. The Land Rights Map piece is underrated here, becausetransparency alone shifts bargaining dynamics massively. Once people can actually see what rights they hold versus what restrictions bind them, informal norms collapse and real negotiation starts. I saw something similar with broadband mapping, where just publishing coverage gaps forced ISPs to justify their deployment choices publicly. The threestep rollout makes sense politically too since each stage delivers value independently without requiring full adoption.
How much did broadband mapping help really? My sense is that the federal money hasn't resulted in new infrastructure constructed and that broadly the US lags behind other countries in high speed internet access.
I don't think it's true that federal subsidies have not resulted in new broadband construction. It's true that the biggest program, BEAD, has not yet resulted in new construction-- the rollout was slow-- but it has secured deployment commitments to a lot of locations and they'llb probably mostly get it before the end of the decade. Other programs are further along. Of course, you can't know the counterfactual. Lots of broadband has been built outside the framework of the subsidies and deployment to many of the places might have occurred anyway. But the subsidies tend to target places where the business case for deployment was bad.
It seems the quickest way to solve the housing problem.
1. Tax credits/breaks to companies to offer remote work.
2. Allow boomers to sell their houses capital gains tax free
3. Invest in regional rail so more people can commute further away places ( Ex Chicago to South Bend)
This could unleash a lot of housing supply really fast with minimal political resistance, and relieve housing prices in the metros if paired with other YIMBY reforms
Thanks for writing, I love the idea of Coase-ification for rules like small livestock or electricity utilities. Really fun concept for improving a subset of land use regulations, well worth experimentation. And as someone who spends a lot of time reading obscure zoning codes for work, a federal land use map would have clear benefits
However, Coase-ification wouldn’t solve the biggest drivers of NIMBYism against larger-scale development because transaction costs are too high and homeowners often have non-monetary priorities that preclude negotiation. The most commonly cited complaints about externalities from new housing like congestion, noise, views, shadow, and such could all be Coase-ified, but they’d make property rights assembly insanely hard and risky. Developers already mostly avoid projects that involve assembling two adjacent lots bc it takes too long to buy the lots, and if one property owner finds out they can jack up the price. Often comes with high carrying costs. Assembling a set of tradable property rights would be much harder, especially for median or large projects like a mid-rise in a city that would have to negotiate with many neighbors simultaneously. Which gets to the second problem: Oftentimes no amount of monetary compensation will buy out a neighbor. A hypothetical retired homeowner with plenty of savings—maybe the most prominent NIMBY demographic, at least in places like California—will have unlimited value on the most trivial of amenities bc they receive a very low marginal utility from money and don’t want to move
I understand you’re proposing experimentation, not the overnight imposition of all these property rights. Just thinking through the limits of Coase-ification to solve the housing shortage specifically, even in a more efficient digitized land use system
So a lot would depend on how it was implemented, with a pervasive trade-off between (a) more comprehensive definition of property rights in externalities, resulting in more protection but also more gridlock, and (b) less comprehensive definition of property rights, which would facilitate more action but also resulting in more "casualties" where someone would have liked to veto, or get compensation for, a project that harms them in some way, but couldn't because the rights weren't defined in a way that includes them.
I don't want to prejudge the outcomes because part of the beauty of the market mechanism is that we don't *know* what the efficient outcome is, and markets enable a decentralized discovery of it. That said, your comment helps me crystallize a thought that a likely outcome might involve some "leapfrogging," where NIMBY gridlock would still hold back development in some historic city centers, while places where the rights are less dense, or where the holdup problems just don't happen to emerge, would suddenly emerge as new foci of development. Which might actually be optimal... or, if not optimal, might be pretty good.
Modern compute makes Coase-ification viable on a scale that it previously wasn't. But that doesn't mean the emerging markets in Coase-style externality rights will operate with perfect efficiency. Still, capitalism is pretty clever in coming up with creative workarounds, once it's properly unleashed.
In addition to Coasian compensation to neighbors, say when a shop owner wants to open a store, what about also having the shop owner negotiate on some of the rules for the shop? If the shop owner and neighbors could negotiate things like opening and closing hours for the patio, rules on when recorded music could be played on outdoor speakers, etc., it could lead to better shop owner neighbor relations.
Yes, that's the spirit! This is where Coase-ification shines. You make the rights legible and tradable, and then people can explore subtle complementarities in land use.
At the end of the day, residential vs. commercial vs. industrial is a pretty crude set of zoning classifications. There's room to get a lot more subtle and organic than that.
I'm also curious what structural reason says the Land Rights Map has to be Federal. Could this start at the bottom, with one city making such a map, then trying the trading? Are there State and Federal laws that have to be changed first?
It probably should start at the state level anyway because each state has its own tradition of property rights and laws. 50 dictatorships require 50 approaches 😎
There's a lot to be said about state versus federal initiative in Coase-ification of land use rights.
I designed the proposal as federal-first in part because the essay competition seemed to be calling for a general solution to the problem, so a federal-led policy seemed more responsive to the essay contest prompt. On the merits, too, there are a lot of advantages to federal leadership, including superior fiscal and technical capacity, and the fact that housing affordability is partly a free-rider/externalities problem, where everyone wants affordable housing somewhere else.
Of course, the core point of Coase-ification as a "NIMBY Buyout Plan" is to solve the free-rider/externalities problem through compensation, and to that extent, it should have a peculiar power to dissolve local opposition. But I wouldn't expect that to help in the early stage because people won't understand the cost-benefit analysis for them personally until the policy has gone pretty far down the path of implementation.
Even if federal-led, a handoff to states has to be part of the implementation because it's states that have the clear legal authority, and some of the administrative footprint, to regulate land use. And then a further handoff to local governments is needed because that's where the administrative rubber hits the road, so to speak.
One *could* advocate Coase-ification as a *local* government initiative. And if New York City calls me up tomorrow and says, "we read your plan for land use reform and we want to Coase-ify land use rights in New York City, can we hire you as a consultant?" -- I definitely won't say, "No, it won't work, cities aren't smart enough to implement this." But for thousands of small towns and medium-sized cities, this is out of reach. They just wouldn't have the technical capacity to do it, and even if they managed to pull it off somehow, the eccentricity of it would lose most of the benefit, since to any company with a national or regional footprint, the weirdness of the arrangements would be a source of opacity.
But if a large state like California, Florida, or Texas were to adopt this policy under strong leadership, I think they could make it work. And the state-led and federal-led approaches aren't mutually exclusive, but if anything, mutually helpful. In particular, if California, Florida or Texas decided to Coase-ify property rights across the state, any future federal initiative along the same lines could derive great benefit from studying their example. It would be as useful in advocacy as in administrative policy design.
So yes, a state-led implementation is also a good idea. If anyone reading this sees an opening to advance a policy like this at the state level, I'd love to help!
Do you expect the bargains to be for one-time fees, or regular payments? As with pollution cap and trade, there would be value in incentives to reduce externalities over time
I'd expect both arrangements to emerge, as well as more complex arrangements like option contracts. Assembly of rights is a complex, high stakes business, and a lot of ingenuity would be invested in getting it right-- at least in some places.
Good article, I think the land rights map is a good step in providing a better view of how we can make smart decisions regarding land use and housing development. But it still needs real oversight from the state and federal government and that is not necessarily central planning in a bad way. The book Abundance has a few good ideas about how governments need to evolve beyond a NIMBY world and have government be part of the solution and not the problem.
Fascinating framework for resolving the coordination problem that zoning creates. The Land Rights Map piece is underrated here, becausetransparency alone shifts bargaining dynamics massively. Once people can actually see what rights they hold versus what restrictions bind them, informal norms collapse and real negotiation starts. I saw something similar with broadband mapping, where just publishing coverage gaps forced ISPs to justify their deployment choices publicly. The threestep rollout makes sense politically too since each stage delivers value independently without requiring full adoption.
How much did broadband mapping help really? My sense is that the federal money hasn't resulted in new infrastructure constructed and that broadly the US lags behind other countries in high speed internet access.
I don't think it's true that federal subsidies have not resulted in new broadband construction. It's true that the biggest program, BEAD, has not yet resulted in new construction-- the rollout was slow-- but it has secured deployment commitments to a lot of locations and they'llb probably mostly get it before the end of the decade. Other programs are further along. Of course, you can't know the counterfactual. Lots of broadband has been built outside the framework of the subsidies and deployment to many of the places might have occurred anyway. But the subsidies tend to target places where the business case for deployment was bad.
All good ideas though in terms of practical implementation there will be a lot of challenges with current suboptimal state capacity, along with a wide spectrum of execution ability across the US: https://medium.com/a-r-g-o/the-future-of-california-housing-planning-and-permitting-2520ecf43f37
It seems the quickest way to solve the housing problem.
1. Tax credits/breaks to companies to offer remote work.
2. Allow boomers to sell their houses capital gains tax free
3. Invest in regional rail so more people can commute further away places ( Ex Chicago to South Bend)
This could unleash a lot of housing supply really fast with minimal political resistance, and relieve housing prices in the metros if paired with other YIMBY reforms
How would mass deportations of the ~10 million illegal non-citizens impact housing prices? How would it effect boomer’s equity?
Demand curve shifts left.
Equilibrium price falls.
Less homeowner equity.
Thank you. That confirms my best guess.
Thanks for writing, I love the idea of Coase-ification for rules like small livestock or electricity utilities. Really fun concept for improving a subset of land use regulations, well worth experimentation. And as someone who spends a lot of time reading obscure zoning codes for work, a federal land use map would have clear benefits
However, Coase-ification wouldn’t solve the biggest drivers of NIMBYism against larger-scale development because transaction costs are too high and homeowners often have non-monetary priorities that preclude negotiation. The most commonly cited complaints about externalities from new housing like congestion, noise, views, shadow, and such could all be Coase-ified, but they’d make property rights assembly insanely hard and risky. Developers already mostly avoid projects that involve assembling two adjacent lots bc it takes too long to buy the lots, and if one property owner finds out they can jack up the price. Often comes with high carrying costs. Assembling a set of tradable property rights would be much harder, especially for median or large projects like a mid-rise in a city that would have to negotiate with many neighbors simultaneously. Which gets to the second problem: Oftentimes no amount of monetary compensation will buy out a neighbor. A hypothetical retired homeowner with plenty of savings—maybe the most prominent NIMBY demographic, at least in places like California—will have unlimited value on the most trivial of amenities bc they receive a very low marginal utility from money and don’t want to move
I understand you’re proposing experimentation, not the overnight imposition of all these property rights. Just thinking through the limits of Coase-ification to solve the housing shortage specifically, even in a more efficient digitized land use system
So a lot would depend on how it was implemented, with a pervasive trade-off between (a) more comprehensive definition of property rights in externalities, resulting in more protection but also more gridlock, and (b) less comprehensive definition of property rights, which would facilitate more action but also resulting in more "casualties" where someone would have liked to veto, or get compensation for, a project that harms them in some way, but couldn't because the rights weren't defined in a way that includes them.
I don't want to prejudge the outcomes because part of the beauty of the market mechanism is that we don't *know* what the efficient outcome is, and markets enable a decentralized discovery of it. That said, your comment helps me crystallize a thought that a likely outcome might involve some "leapfrogging," where NIMBY gridlock would still hold back development in some historic city centers, while places where the rights are less dense, or where the holdup problems just don't happen to emerge, would suddenly emerge as new foci of development. Which might actually be optimal... or, if not optimal, might be pretty good.
Modern compute makes Coase-ification viable on a scale that it previously wasn't. But that doesn't mean the emerging markets in Coase-style externality rights will operate with perfect efficiency. Still, capitalism is pretty clever in coming up with creative workarounds, once it's properly unleashed.
In addition to Coasian compensation to neighbors, say when a shop owner wants to open a store, what about also having the shop owner negotiate on some of the rules for the shop? If the shop owner and neighbors could negotiate things like opening and closing hours for the patio, rules on when recorded music could be played on outdoor speakers, etc., it could lead to better shop owner neighbor relations.
Yes, that's the spirit! This is where Coase-ification shines. You make the rights legible and tradable, and then people can explore subtle complementarities in land use.
At the end of the day, residential vs. commercial vs. industrial is a pretty crude set of zoning classifications. There's room to get a lot more subtle and organic than that.
I'm also curious what structural reason says the Land Rights Map has to be Federal. Could this start at the bottom, with one city making such a map, then trying the trading? Are there State and Federal laws that have to be changed first?
Mainly: capacity. It would be a difficult computational exercise. I don't think state governments would be capable of doing it right.
There's also a benefit to standardization. Developers don't have to adapt to different maps+data structures in every state.
Good question!
It probably should start at the state level anyway because each state has its own tradition of property rights and laws. 50 dictatorships require 50 approaches 😎
There's a lot to be said about state versus federal initiative in Coase-ification of land use rights.
I designed the proposal as federal-first in part because the essay competition seemed to be calling for a general solution to the problem, so a federal-led policy seemed more responsive to the essay contest prompt. On the merits, too, there are a lot of advantages to federal leadership, including superior fiscal and technical capacity, and the fact that housing affordability is partly a free-rider/externalities problem, where everyone wants affordable housing somewhere else.
Of course, the core point of Coase-ification as a "NIMBY Buyout Plan" is to solve the free-rider/externalities problem through compensation, and to that extent, it should have a peculiar power to dissolve local opposition. But I wouldn't expect that to help in the early stage because people won't understand the cost-benefit analysis for them personally until the policy has gone pretty far down the path of implementation.
Even if federal-led, a handoff to states has to be part of the implementation because it's states that have the clear legal authority, and some of the administrative footprint, to regulate land use. And then a further handoff to local governments is needed because that's where the administrative rubber hits the road, so to speak.
One *could* advocate Coase-ification as a *local* government initiative. And if New York City calls me up tomorrow and says, "we read your plan for land use reform and we want to Coase-ify land use rights in New York City, can we hire you as a consultant?" -- I definitely won't say, "No, it won't work, cities aren't smart enough to implement this." But for thousands of small towns and medium-sized cities, this is out of reach. They just wouldn't have the technical capacity to do it, and even if they managed to pull it off somehow, the eccentricity of it would lose most of the benefit, since to any company with a national or regional footprint, the weirdness of the arrangements would be a source of opacity.
But if a large state like California, Florida, or Texas were to adopt this policy under strong leadership, I think they could make it work. And the state-led and federal-led approaches aren't mutually exclusive, but if anything, mutually helpful. In particular, if California, Florida or Texas decided to Coase-ify property rights across the state, any future federal initiative along the same lines could derive great benefit from studying their example. It would be as useful in advocacy as in administrative policy design.
So yes, a state-led implementation is also a good idea. If anyone reading this sees an opening to advance a policy like this at the state level, I'd love to help!
Do you expect the bargains to be for one-time fees, or regular payments? As with pollution cap and trade, there would be value in incentives to reduce externalities over time
I'd expect both arrangements to emerge, as well as more complex arrangements like option contracts. Assembly of rights is a complex, high stakes business, and a lot of ingenuity would be invested in getting it right-- at least in some places.
Good article, I think the land rights map is a good step in providing a better view of how we can make smart decisions regarding land use and housing development. But it still needs real oversight from the state and federal government and that is not necessarily central planning in a bad way. The book Abundance has a few good ideas about how governments need to evolve beyond a NIMBY world and have government be part of the solution and not the problem.