Land use reform is the set of interventions aimed at improving regulation of dense housing construction in urban areas.
Laws at the local level in the United States and many other countries impose strict limits on how much total floor area can be built on a plot of land. Such zoning laws constitute a major obstacle to the construction of dense housing. The resulting increase in housing prices reduces economic efficiency by creating significant deadweight loss; increases inequality by transferring wealth from renters to landowners; and reduces both wages and total economic output by preventing workers from relocating where they can be most productive.
The effects of zoning laws on housing prices can be estimated by comparing the sale price of housing to the associated costs of land and construction. Open Philanthropy has combined these estimates with rent data and some additional assumptions to conclude that the aggregate "tax" on renters in five large metropolitan areas amounts to over $100 billion in deadweight loss per year.
A study by economists Chang-Tai Hsieh and Enrico Moretti examines the costs resulting from the reduced flow of workers to more productive regions within the United States due to rising housing prices. The authors conclude that land use restrictions depress annual U.S. wages by $1.27 trillion and output by $1.95 trillion.
If land use restrictions create these problems, why do they persist? In part, the costs of restricting land use in a given location are incurred by workers who would benefit from moving to that location, and who as such do not yet live there. Since restrictions are created at the local level, they are insensitive to the interests of these workers, who do not vote in those jurisdictions. Other costs of restricting land use—such as reduced economic output—are dispersed across society as a whole. Public choice theory explains why governments neglect these costs and instead focus on the concentrated benefits to landowners—even if, in the aggregate, the costs vastly outweigh the benefits.
Open Philanthropy and 80,000 Hours have proposed a number of solutions to the problems caused by land use restrictions, which are quoted below.
Promising options open to policymakers include the following:
Promising options open to funders include the following:
Open Philanthropy has explored some of these and other funding options; as of August 2022, it has granted over $12 million to organizations working on land use reform.
Promising career options include the following:
Promising direct work options include the following: