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Getting Our Arms Around “Externalities”

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Externalities are increasingly in the news these days -- for example, in reports on health care reform and global warming -- though they're seldom identified as externalities.

Externalities are the consequences of a transaction or activity that are experienced by those who are not directly involved in the transaction or activity, including future generations. Externalities of smoking include breathing second-hand smoke. An externality of burning fossil fuels is carbon emissions. Within our realm of planning, externalities consist of the costs and benefits -- often unquantifiable -- imposed on a neighborhood or community as an indirect result of land use regulation, permitted or denied development, and other actions under our purview.

Externalities can be good as well as bad. A good, or positive, externality of smoking for some people is seeing it as sexy; think about men watching Lauren Bacall light up in films of the 1940s!

Entertainment aside, we planning commissioners aid in providing positive externalities, for example, when tourism gets a boost from designation of a historic district, or citizens enjoy the sight and activities of parks and other open space, or we help lessen damage to vehicles and reduce bothersome dust by requiring a developer to pave a previously gravel-surfaced road.

Knotty Complications

Externalities, by their nature, are tough to discern and weigh in planning decisions.

So we planners have been dealing with externalities from the moment we became commissioners -- though few of us realized it. Externalities, by their nature, are tough to discern and weigh in planning decisions. Here are a few of the knottiest complications of externalities we commonly face:

-- Externalities can be considered only to the extent they are known. Think of the dozens -- perhaps hundreds? -- of proven and suspected impacts of sprawl development that have been revealed by research of only the past 20 or so years. Objections may be voiced today to proposed "greenfield" exurban retail development, citing negative impacts of pollution and traffic congestion, where prior projects of the same type won approval with unchallenged acclaim for their favorable economic impacts. We are prisoners of our current times and knowledge, and have no choice but to base our decisions on today's best evidence.

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