by Yevgeny Shrago
An interesting paper (gated) by Matthew Kahn and Jonathan Zasloff focuses on the effects that California’s Coastal Boundary Zone regulations had on housing prices in the area. The authors find (unsurprisingly) that a house located within the Boundary Zone sells for a substantial price premium over a similar house located just over the boundary. This is a fantastic support for the seemingly intuitive but hotly contested thesis that land use regulations are a determinant of high house prices.
This paper’s conclusions highlight an important contradiction between two major planks of progressive policy: environmental protection and affordable housing. The Coastal Boundary Zone and the commission that administers it were created in the 1970′s to protect California’s natural coast. The Coastal Commission takes this job seriously and has done it admirably, fighting interests like the Hearst Estate and David Geffento protect against major development. Unfortunately, as the paper finds, the result of this smashing success are persistently high house prices across the region.
Because coastal property was desirable to start, the rising house prices mean that the Coastal Boundary Zone transfers wealth from the taxpayers that maintain the commission to the wealthy landowners. Meanwhile, the desperate demand for affordable housing throughout notoriously overpriced California runs into another roadblock, this one thrown up by progressive allies. Families with incomes outside of the top few percent find themselves shut out of the thousand mile long strip. Undoubtedly the residents of the coastal strip employ landscapers and household help who are sealed out of the area, which increases their commute and puts pressure on housing prices in the areas where they do live.
The progressive movement consists of dozens of worthy causes, each pushed by devoted, well-intentioned interest groups. The lesson here is that although a certain solution may seem like it’s the most effective for advancing a group’s interests, it needs to be weighed against the whole basket of progressive policy interests before being pushed forward. Maybe the Coastal Commission should have had a mandate to provide some level of affordable housing. Maybe the proceeds from the sale of permits for development could be used to develop affordable housing and better public transportation elsewhere in the state. When a carbon tax comes, substantial attention should be paid toward how the revenues are spent to ensure that the tax does not become regressive. Interest groups should realize that their issues do not operate in a vacuum and work to ensure that policy outcomes don’t have nasty unintended consequences.