Planning in an environment without growth Invited essay for the Raad voor Infrastructuur en de Leefomgeving (rli), the Netherlands Leonie Janssen-Jansen (Universiteit van Amsterdam), Greg Lloyd

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Planning in an environment without growth

Invited essay for the Raad voor Infrastructuur en de Leefomgeving (RLI), the Netherlands

Leonie Janssen-Jansen (Universiteit van Amsterdam), Greg Lloyd (University of Ulster), Deborah Peel (University of Ulster) & Erwin van der Krabben (Radboud Universiteit Nijmegen / University of Ulster)

Revised version1

Date of publication: November 2013

  1. Planning in a Context of Discontinuous Change

1.1. Introduction

Dutch urban regions have recently entered a period of severe financial and economic turbulence and uncertainty. Current political ambitions to enhance the competitiveness and livability of cities and regions progressively diverge from financial-economic realities. Dysfunctional demand and supply conditions are rapidly changing the contexts in which state-market-civil relations are mediated, and in which governments are seeking to devise stability and then secure longer term economic recovery. In particular, in this uncertain inter-regnum urban land and property markets are being severely disrupted, reinforced by increasingly restricted and re-regulated public and private financial resources, and uneven planning responses (Janssen-Jansen, 2011a). As a consequence, the further development of many greenfield projects have become increasingly questioned and, at the least, face serious delays in development, while at the same time the financial feasibility of many urban transformation projects have come under pressure (Van der Krabben, 2011a).

There are related substantive questions associated with current and anticipated economic and industrial restructuring and dynamic demographic changes. Just like many other European countries, Dutch cities face particular demographic pressures, such as those relating to the stagnation of population growth, an aging population and - as a result - a decline in the available work force. These conditions are evident in those urban areas considered to have relatively better economic prospects (Janssen-Jansen, 2010). These foundational changes will inevitably make any post-crisis recovery an even lengthier process as demand and thus the potential for economic growth will continue to change on a likely non-linear basis.

It is becoming increasingly clear that the growth era that enabled many Dutch city governments to reap benefits from property development to remake and revitalize portions of the city, and to increase – and even inflate – the level of service provision and the quality of urban spaces through the available land revenues, not only has ended, but has reversed. Currently, many Dutch cities are experiencing severe financial consequences on top of budget cuts from national government as a result of their over-optimistic over-zoning in relation to direct development strategies and land acquisition programmes (Deloitte, 2011). In some cities the deficits on the municipal land bank are exacerbated by a reduced amount of money made available from general funds as a consequence of the austerity policies now prevailing with respect to public spending and expenditure for the provision of public services. This is putting a pressure on the quality of the environment. Recently these circumstances have resulted in certain Dutch municipalities accepting financial supervision from their provinces, due to the serious budgetary constraints they are facing (in particular those caused by issues associated with land banks). It is likely that other municipalities will follow and have to restrict their expenditures with further consequences for established levels of service provision and the quality of the built environment.

The current pressure on the quality of the urban space in relation to destabilized land and property markets is perceived as a major and an increasing problem in the Netherlands. An important starting point for this essay is that we believe that this problem is not a consequence of the financial-economic crisis, but is a consequence of the systemic weaknesses in the planning and development system itself. Due to this structural rather than cyclical problem, alternative solutions have to be considered. Many of the solutions currently being proposed do not recognize the fundamental questions which lie at the core of the problem.

1.2 The need for a longer-term perspective to maintain or increase spatial quality and quality of life

A foundational principle of land use planning is to plan for land use and development in the public interest. Yet, how this politically defined public interest is socially constructed and implemented changes over time. The new constrained context for planning demands a more fundamental discussion than has taken place to date – notwithstanding the dramatic shifts in conditions. This essay considers how the prevailing parameters for land use planning might operate in very changed conditions of zero or less growth. Indeed, one scenario is that advanced economies may have to deliberately plan for less growth as an operational objective – the so called de-growth possibility (Alexander, 2012). This would involve a politico-economic policy of planned economic contraction that seeks to sustain community well-being and ecological conditions. What happens if economic growth is absent? What is the capacity of the land use planning system to remain the appropriate form of state intervention to secure whatever is presented as the public interest? Land use planning would still be required in a de-growth context. Current arguments seem to be predicated on quick ‘fixes’ to stimulate markets and promulgate the political rhetoric of growth. Such (dogmatic) pragmatism, however, reflects a tendency to short termism and the pre-domination of non-strategic thinking and action. Incremental responses tend to be place-based and disjointed, lacking strategic direction and spatial cohesion. Piecemeal interventions may have differential impacts and adversely affect particular communities, weakening the capacity of planning to be efficient, effective and equitable. Vertical and horizontal integrated strategic planning is a pre-requisite to new state responses. Poor or limited integration of planning and development interventions may yet serve to further exacerbate what is essentially a flat lining economic landscape.

In this essay we argue that there is a case for more assertive longer term and strategic thinking about planning for the future. There is an associated need to critically reflect and deliberate on how planning strategies and instruments could contribute beneficially to a situation of ‘less or even no growth’. This cannot be a passive discussion but must be a dynamic narrative to reflect a continuously changing context often with unrealistic societal and political expectations. This might include, for example, stimulating a specific economic development, rather than seeking to secure a broader economic growth agenda; preparing for the development associated with particular demographic changes; explicitly redistributing social wealth; and addressing the overall quality of life issues facing society. Reference may be made her to Scotland, where an alternative economic instrument – enterprise areas – is being explored which is based on identified industrial sectors perceived as having growth potential rather than the more conventional geographical zoning of planning and state support. This represents a new way of seeking to understand the realities of the structural composition of the Scottish economy to set the context for appropriate planning. Older ideas are being contested and newer approaches seeking to address prevailing economic conditions.

The nature of identifying various possible new scenarios is very complex – involving different understandings of the role, purpose and form of land use planning. In conditions of long term zero growth relations may yet continue to change. Spatial differentiation may also prompt further changes to the planning arrangements. What are the implications for the architecture and delivery mechanism of the land use planning system? What will the planning system be able to secure with zero growth, limited redistributive powers and possibly a continuing resistance to the very idea of state intervention? What kind of fundamental (institutional) changes are needed to provide an appropriate technocratic and democratic decision making framework? What happens if the growth based planning system loses its legitimacy to intervene and influence the management of change? What happens if the public interest is rejected in favour of short term profits? How are future strategic and place-based developments to be sustainably financed in a period without growth and reduced public expenditure? What opportunities are offered by current trends? What can the Netherlands learn from experiences elsewhere? Many other countries are dealing with comparable challenges and are searching for responses in adapting their land use planning frameworks. In this essay the focus draws on selected comparative planning experiences from the devolved UK (England, Scotland, Wales and Northern Ireland) and the Republic of Ireland. We will also use some planning experiences from Germany.

1.3 Goal of the essay

Dutch planners, policy makers and decision-makers have tended to lack a broader comprehensive assessment of post-crisis urban planning and development in order to conceptualise, problematise, analyse and deliberately address present challenges (Janssen-Jansen, 2011a; 2012a). In this essay we will rethink, in the context of a planning horizon with reduced demographic and economic growth (and in some regions zero growth), the rationale for planning in the Netherlands and the need for a pro-active approach to be taken. This line of reasoning will refer to planning debates elsewhere in a context of ‘flat-lining growth’. In particularly we will reflect on ideas how to maintain and improve standards and provision of urban spaces in the future. We will discuss some proposed options. The essay advocates the adoption of a new, more resilient post-crisis urban planning approach will be based on three coherent lines of reasoning: a review of the debate in the academic literature with regard to the consequences of neoliberalism in economic thinking for planning, a selective international comparison of planning debates in the context of a changing economic conditions and demographic patterns; and an examination of what may be called the ‘systematic weaknesses’ in the Dutch system of land and property planning and development.

Structure of the essay

The structure of the essay is as follows. Chapter 2 elaborates from a structural perspective the current systemic challenges underlying planning and the implementation of urban development projects in Dutch cities. Our focus is on planning in the Netherlands, but we will put the Dutch experiences in a broader international perspective. Chapter 3 elaborates on the context of neoliberalism in economics and its impact on planning and development. We will identify some problems that necessitate us to rethink the spirit and purpose of planning in modern society. Chapter 4 provides a more detailed evaluation of Dutch planning and urban development strategies and of what we see as the key ‘systemic weaknesses’ in Dutch planning. Finally, Chapter 5 puts forward some thoughts on what planning without growth could look like in the Netherlands.

Research methodology

The content of this essay is primarily the result of discussions within the author team, discussions between individual authors, research performed by the authors individually and collectively on other projects and discussion with the members of the RLI Commission ‘Leefomgeving zonder groei’ over the course of two specific meetings. The authors carried out a review of the recent literature on planning and development. This essay is not a formal research report. We are aware that many of the thoughts and expressions in the essay are not based on extensive scientific research and need further examination. The thoughts and expressions presented here must be seen as the author team’s opinions concerning present challenges for Dutch planning and urban development.

  1. Current challenges to urban planning and development

2.1 Definition of the problem

Until now, it has predominantly been the reconfiguring global financial economic crisis that has been blamed for the “disruption” of real estate markets and the financial concerns for urban planning and property development (see, for example, Deloitte, 2011; Nicis Institute, 2011; Ministry I&M, 2012a, etc.). The current property development problem is basically framed as a result of a lack of demand for land and property development due to dysfunctional financial circumstances, austerity policies and the economic recession. An analytical cyclical perspective suggests that stalled - or even cancelled - urban development projects are seen as a consequence of this multi-faced crisis. Consequently, this analytical frame–has encouraged debates about solving the problem by devising ways of reviving stalled development projects and get development processes going again2. In other words, it seeks to replicate the previously existing conditions of the earlier economic boom and buoyant land and property development boom. This line of thinking involves a search for the so-called ‘new income models’3 for urban development to replace the ‘old income models’. The approach is the same but adapted to the new circumstances of financial markets, land and property development sectors and market conditions. The emphasis is – as is to be expected from the very concept of an income model – on the finance side. Many of the emerging proposals do acknowledge that any such ‘new income models’ involve a structural change from the ‘old models’, but these tend to be accompanied with a strong belief in economic recovery4 and new patterns of growth that will enable the economy to stabilize, recover and then sustain current levels of the quality of the built environment.

Many reports and presentations on these ‘new income models of urban/area development’ have been published since the beginning of the global financial crisis (Van Rooy, 2001; Praktijkleerstoel Gebiedsontwikkeling et al, 2011; Nicis Institute, 2011; Ministry I&M, 2012a). Most acknowledge there might be a need for some structural change in future urban and area development processes and that it is likely that the old system will not – or even should not – return in an identical form. The proposed ‘new income models’ suggest a structural change in the system, yet continue to assume it will be possible to arrive at comparable outcomes. This is a consequence of their embedded assumptions of achieving new growth. This new income reasoning essentially searches for a structural shift within a pre-established context that takes a basic cyclical perspective of the very causes of the problem.

From a perspective on an environment without growth or less growth this may be contested. What if there is zero growth? What if there are very evident differentiated and uncertain patterns of new growth? What happens if the spatial social, economic, environmental and political tensions involved in this possibility prove too onerous for community stability? What if there is de-growth? These are important considerations. Moreover, the cyclical and optimistic perspective neglects the possibility that it was the weaknesses in the old system that caused it to implode. The systemic conditions in the original land and property development context are neglected in this line of argument. In contrast, what if the problem of current dysfunctional real estate markets was not caused solely by a lack of demand arising from the financial collapse, the recession and austerity but was intrinsically property-led from the start?

This structuralist perspective would assert that the economic boom of the mid 2000s was principally driven by speculative land and property development activities fed on the buoyant economic circumstances with an overabundance of available and cheap finance, busy land and property development markets and relatively poor controls. Evidence from the Republic of Ireland shows how such circumstances combined to create an inflationary spiral of property prices, speculative land trading, and intense rates of building activity at large – which was particularly evident in the commercial and retail property sectors (O’Toole, 2009). This was subsequently shown to be unsustainable but points to the behaviour within the land and property development sector itself bringing the process to its inevitable conclusion (McDonald & Sheridan, 2008). The material over-supply of property – evident in ‘haunted landscapes’ and ‘ghost estates’ demonstrates the intrinsic problem of the land and property development sector itself, compounded by relatively lax land use planning (Kitchen et al, 2010). This structural perspective provides an alternative view of the realities of land and real estate development and the ‘toxic’ link between real estate and finance which served to subvert the public interest. We assume then that the economic boom and property bubble was not consumer-led but supply driven from within.

This line of reasoning suggests that the concern with urban development projects that have been are stalled or cancelled is misplaced as the problem is how they came into existence. Following this argument, the current level of the quality of the built environment and the level of service provision were inflated as a result on the overabundance of land revenues realized in the past decade from existing actions in land and property development sectors. In effect, the ‘old income model’ created a bubble in service provision with unfortunate attendant unrealistic expectations. Some evidence is to be found in the available reports on how Dutch municipalities have been budgeting over the past decade and the financial problems in municipalities under ‘financial supervision’: Apeldoorn and Beuningen (Tweede Kamer 2009, Ministry of BZK & Province of Gelderland, 2012a; 2012b). The financial problems in Apeldoorn and Beuningen have resulted in other municipalities rethinking their own spending behaviors as they realize they also might have over extended their spending and used – incidental - land development income inappropriately for structural expenditures (such as the salaries of municipal employees). In effect, this course of action confused the management of capital assets with current budgeting arrangements.

The problem then for the future is not about determining ways of reviving stalled projects, but on defining what is considered to be acceptable levels of service provision and sustainable levels of quality in the built environment in relation to available funding. Many of the suggested 'new income models', for instance, could turn out to be 'models of loss' of provision in a broader context in this respect (see also section 5.2). The focus on ‘new income models’ ignores the quality of urban spaces and the maintenance thereof in places where no change/development is foreseen for the future. In a situation of no growth these areas will also be relatively more adversely affected due to the nature of the financial system.

In practice there has been relatively little discussion about what ‘acceptable levels’ of service provision and quality of the built environment are likely to mean in the transformed context. In current debates it is often assumed that current standards are ‘acceptable’ and should be kept at this level. This tends to overlook the fact that these levels are not even over time and space. That the levels might have been artificially inflated by the particular arrangements of the urban development system over the past decades has been largely ignored. Information about how the level of service provision relates to the quality of the built environment is lacking. Evidence as to what extent these levels are dependent on public investment is also constrained. Publicly financed services such as safety, arts, libraries, school buildings are often not seen as part of the quality of the built environment, being presented in provision terms, yet they directly influence living and working preferences. These services are predominantly funded through a grant from the national government (Gemeentefonds). For a proper discussion about how to find ways to maintain – or even improve – the level of the quality of Dutch urban spaces in an environment without growth, it is of the utmost importance to define what this level should be, and whether or not, an uneven level of this quality across the country is politically acceptable. Until now, there is only very limited debate about this. Yet, the prevailing policies of austerity are likely to increase attention for this debate in the very near future.

The framing of the ‘problem’ is extremely important prior to pursuing solutions and evaluating their potential. The framing of the scale of the problem matters is also important. Exploring the potential of the ‘new income models’ for urban development projects (in effect seeking to revive a project at a local level) is a very different question from investigating ways to sustain an acceptable level of service provision in all Dutch municipalities. What is called ‘smart’ and/or ‘sustainable’ from the first perspective might be considered immaterial or redundant from the second perspective. An acceptable quality level of the environment must be understood not only in self-referential and local terms, but in a wider metropolitan and national context as well. In searching for new financial models of urban development the aim of what they should deliver needs to be clear. This involves an explicit normative dimension. Further, there is a tension between short-term goals and long-term goals. Instruments are often proposed without attention being paid to the interdependencies and redistributive mechanisms involved (Janssen-Jansen, 2012d). Yet policies and instruments are not implemented in a vacuum. Implementation of solutions (to whatever problem) will inevitably have redistributive effects with regard to the provision and quality of urban spaces. We are not starting from an even place. There will be intended and unintended effects of these new policies and strategies. Some of these unintended effects might be politically deliberate (and – depending from the adopted viewpoint – even be perverse), others might be accidental and have both positive and negative effects. What is positive and what is negative is ultimately a political decision. Yet, before politicians will be able to decide they need to be provided with possible options and their practical alternatives.

    1. Selected Evidence of Contemporary Discontinuities in the Netherlands

In this section we provide contextual data on certain key discontinuities that Dutch planning is facing. First, the Netherlands will face a number of structural demographic hurdles in the near future. Although there will be limited population growth until about 2040, the growth rate will stagnate and the structural composition of the Dutch population will change. The demographic changes include an ageing population and - as a result - a decline in the available work force, even in those urban areas considered to have relatively better economic prospects. In Figure 1 the development of Dutch population growth is presented from 1970 till 2055. The 2015 and further figures are based the latest prognosis. The stagnation of growth, declining work force and ageing population are very evident.

Figure 1: Dutch population growth 1970-2010 (with prognosis till 2055)

Source: CBS Statline, 2012 (data from 2015 and further concern prognoses)

The volume development of gross domestic product (GDP) is often used as a measure
for economic growth. Figure 2 shows that growth rates over the past decade (2001-2011; average 1,4%) have been significantly lower than the period 1990-2000 (average 3,3%). The optimistic scenarios that have been used to substantiate much of the newly proposed development assumed a growth figure of 2,6% (Global Economy Scenario of the CPB, 2004).
Figure 2 Volume development of the Gross Domestic Product

Source: CBS Statline, 2012 (* data 2009-2011 are not yet final)

The Figures 3 – 6 demonstrate the reduction in the amount of sold private residential units, the drop in the construction of new residential units, the discontinuity in prices of residential units and the enormous growth of the Dutch mortgage debt, but also the flattening of this growth.
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