Release: urban sprawl costs US economy more than $1 trillion per year

Washington, DC, March 19th: Urban sprawl costs the American economy more than US$1 trillion annually, according to a new study by the New Climate Economy. These costs include greater spending on infrastructure, public service delivery and transportation. The study finds that Americans living in sprawled communities directly bear an astounding $625 billion in extra costs. In addition, all residents and businesses, regardless of where they are located, bear an extra $400 billion in external costs. Correcting this problem provides an opportunity to increase economic productivity, improve public health and protect the environment. The report identifies specific smarter growth policies that can lead to healthier, safer and wealthier communities in both developed and developing countries.

The report, Analysis of Public Policies that Unintentionally Encourage and Subsidize Sprawl—written for the New Climate Economy by the Victoria Transport Policy Institute, in partnership with LSE Cities—details planning and market distortions that foster sprawl, and smart growth policies that can help correct these distortions.

Sprawl increases the distance between homes, businesses, services and jobs, which raises the cost of providing infrastructure and public services by at least 10% and up to 40%. The most sprawled American cities spend an average of $750 on infrastructure per person each year, while the least sprawled cities spend close to $500. In its Better Growth, Better Climate report, the New Climate Economy has found that acting to implement smarter urban growth policies on a global scale could reduce urban infrastructure capital requirements by more than US$3 trillion over the next 15 years.

The new report defines smart growth—the opposite of urban sprawl—as compact, connected and coordinated urban development. Smart growth cities and towns have well-defined boundaries, a range of housing options, a mix of residential and commercial buildings, and accessible sidewalks, bike lanes and public transportation. By reducing per capita land consumption and infrastructure and transportation costs, smart urban growth policies can deliver significant economic, social and environmental benefits.

Todd Litman of the Victoria Transport Policy Institute, lead author of the report said:  “Smart growth is not anti-suburb. Instead, it ensures that diverse housing options are available and incentivizes households to choose the most resource-efficient options that meet their needs. We are now seeing growth in demand by millennials and the elderly for affordable, compact housing in accessible and multimodal neighborhoods. However, current government policies tend to favor larger, less-accessible homes. For example, in most communities there are strict limits on development densities, restrictions on multifamily housing and excessive parking requirements, which drive up housing costs and encourage sprawl. Consumer preferences are changing; government regulations on housing should too.”

Sprawl is bad for your health. Americans who live in sprawled neighbourhoods are between two and five times more likely to be killed in car accidents and twice as likely to be overweight as those in more walkable neighbourhoods.

Residents of compact, connected communities in the United States save more money and have greater economic opportunity than they would in more sprawled, automobile-dependent neighbourhoods. Households in accessible areas spend on average $5,000 less per year on transportation expenses, and real estate located in smart growth communities tends to retain its value better than in sprawled communities, due to greater accessibility to services. These communities are also more inclusive for people who cannot drive: they offer easier access to schools, public services and jobs, and encourage mixed-income communities. Because of these factors, research shows that lower-income children tend to be much more economically successful if they grow up in smart growth communities.

Helen Mountford, Global Programme Director for the New Climate Economy, said: “Reducing urban sprawl is good for the economy and the climate. For a real-world example of sprawl versus smart growth, compare Atlanta and Barcelona. Both cities have approximately the same population and the same level of wealth per person, but Atlanta takes up over 11 times as much land and produces six times the transport-related carbon emissions per person as Barcelona. And congested, sprawling cities are costly to the economy; for example through all the hours that commuters or delivery trucks waste stuck in traffic jams. Cities that are compact, connected and coordinated can unleash productivity and growth opportunities, while minimizing harm to the climate.”

All cities can benefit from increased economic productivity, more affordable housing options, more liveable communities, infrastructure cost savings, reduced accident risk, improved public fitness and health, increased opportunity for physically and economically disadvantaged groups and improved mobility options for non-drivers. These benefits are particularly important in rapidly developing cities where resources are limited and a greater portion of households are impoverished and cannot afford automobiles.

Adoption of smart growth policies would also help fight global climate change. Urban sprawl is a significant contributor to greenhouse gas emissions, according to Better Growth, Better Climate, the New Climate Economy’s flagship report from September 2014. Cities are responsible for 70% of global greenhouse gas emissions.  The adoption of compact, transit-oriented cities could reduce annual greenhouse gas emissions by about 0.6 billion tonnes of CO2 equivalent in 2030, rising to 1.8 billion tonnes CO2 equivalent by 2050, more than twice the annual emissions of Canada.


Supporting Quotes

Nick Godfrey, Head of Policy and Urban Development, New Climate Economy:

The New Climate Economy’s new report on urban sprawl proves that there is both an economic and an environmental case for smart cities. Smarter growth leads to cities that are greener, more productive and more prosperous. Developing countries in the early stages of urbanisation can reduce urban infrastructure and transportation costs by learning from the mistakes made by developed countries.  Ninety percent of urban growth between now and 2050 is projected to take place in the developing world. By avoiding urban sprawl, developing countries can stimulate their economic growth while avoiding climate risks.

For media inquiries contact:

US: Blair Fitzgibbon,, +12025036141

UK: Alfonso Daniels, P +447810311998, M +447437471087


The $400 billion in external costs of sprawl was highlighted in the New Climate Economy’s earlier flagship report Better Growth, Better Climate.

This report was commissioned by the New Climate Economy and also reviewed by LSE Cities.

About the Global Commission on the Economy and Climate: The Global Commission on the Economy and Climate was established by seven countries: Colombia, Ethiopia, Indonesia, Norway, South Korea, Sweden and the United Kingdom, as an independent initiative to examine how countries can achieve economic growth while dealing with the risks posed by climate change.  Chaired by former Mexican President Felipe Calderón, and co-chaired by renowned economist Lord Nicholas Stern, the Commission comprises 24 leaders from 19 countries, including former heads of government and finance ministers, leading business people, investors, city mayors and economists. It has been advised by a panel of world-leading economists chaired by Lord Nicholas Stern that includes two Nobel Laureates.

Research for the Commission has been carried out by a partnership of leading global economic and policy institutes, including the World Resources Institute (Managing Partner), the Climate Policy Initiative, the Ethiopian Development Research Institute, the Global Green Growth Institute, Indian Council for Research on International Economic Relations, LSE Cities at the London School of Economics and Political Science, the Stockholm Environment Institute and Tsinghua University.

About the Victoria Transport Policy Institute:

The Victoria Transport Policy Institute (VTPI) is an independent research organization dedicated to developing innovative solutions to transport problems. Its work helps expand the range of impacts and options considered in transportation decision-making, improve evaluation methods, and make specialized technical concepts accessible to a larger audience. VTPI’s research is used worldwide in transport planning and policy analysis.

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