Do We Need A National Zoning Code?

Untrammelled real estate development is unpopular throughout the world. People tend to dislike “too much building” though it is not entirely clear why they hate real estate development so much. But, the most obvious reason is anti-market bias. Tall buildings are seen as an offshoot of market capitalism. People generally dislike the market and think that nothing good can come out of it.

NIMByism (Not in My Backyard) is another reason. They also hate, say, single-family homes in their neighbourhood being replaced by housing projects. There may be legitimate reasons to hate tall residential buildings — a tall building can block sunlight to your home. But, this does not prove that your preference for sunlight should take precedence over the need for more housing. People are also predisposed to think that the world was good and beautiful in the past when buildings were uniformly low-rise.

Moreover, if NIMBY activists have a point, it is difficult to build highrises and skyscrapers in any part of the world where there is a huge demand for residential real estate. So, many people already live in areas where the demand for residential real estate is huge. If NIMBY activists always get their way, tall buildings will not be built anywhere where population density is high. But, tall buildings are necessary precisely to build housing in areas where population density is very high. Should developers build skyscrapers in sparsely populated villages in Himachal Pradesh?

NIMBY activists have so much power because decisions are usually taken on a city-level. It is easier for activists to pressurise city governments. As such activists are everywhere, building housing in large cities is inherently difficult. But, in Japan, where the zoning code is national, NIMBY activists do not easily get their way. If decision makers are far away, and local activists can do nothing much about, it is easier to build more housing. So, after adjusting for inflation, housing prices in even major cities like Tokyo have not risen in the past two decades. It is also easy to get permission to build, so much so that Tokyo has issued nearly twice as many permits as the entire state of California though it has thrice as many people. So, even though local activists have less power in Japan, housing prices are not rising much. This is fair because lowering housing prices matter more than appeasing envy.

This, however, does not prove that national level zoning codes are obviously better. Many problems city governments handle need context-specific knowledge, and urban local authorities are more likely to have such context-specific knowledge. Moreover, Indian cities like Mumbai are unable to implement market-oriented reforms, because state and central government play a large role in policymaking. Voters from rural areas are usually against market-oriented reforms. So, as rural voters have a huge role in policy making, cities are unable to do much about it.

At the same time, most Indian cities do not have the expertise to formulate sensible zoning codes. For example, it is plausible that a city like Delhi or Mumbai has economists and urban planners who are competent enough to come up with zoning laws that do not cause much harm. But it is not plausible that Tier I or Tier II cities have the expertise to formulate zoning laws. Most small Indian cities may not have the expertise to handle complex urban planning issues.

It may be better if national government handles aspects of the law which are applicable everywhere, regardless of the context. It is also possible for the national government to come up with building laws that can be tailored to various different contexts. In Japan, for example, city governments are free to decide the local application of national laws. City governments are free to make many choices, but they have to work within the guidelines provided by the national government. This might prevent more progressive cities like Mumbai from experimenting with better forms of governance. Policies that cities like Mumbai adopt are usually emulated by smaller cities. So, having a national zoning code certainly impedes innovation in some ways.