Major new study estimates the costs of sprawl and practical ways to reduce these costs in developed and developing countries

19 March 2015. 

Urban sprawl costs the American economy more than US$1 trillion annually, according to a new study by the New Climate Economy. It estimates that Americans living in sprawled communities bear at least $625 billion in direct incremental costs and impose an extra $400 billion in external costs on governments, businesses and other households. It identifies planning and market distortions that foster sprawl, and describes policy reforms that can help correct these distortions. These smart growth policies can lead to healthier, safer and wealthier communities in both developed and developing countries. 

This report,Analysis of Public Policies that Unintentionally Encourage and Subsidize Sprawl“, was written by Todd Litman of the Victoria Transport Policy Institute, for the New Climate Economy in partnership with LSE Cities. It 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. Sprawled development increases per capita land consumption, and increases the distance between homes, businesses, services and jobs, which raises the cost of providing public infrastructure and services, and increases transportation costs. The study estimates that providing public infrastructure and services costs on average $750 annually per capita in the most sprawled quintile (fifth) American cities, 50% more than in the least sprawled quintile cities. This is consistent with previous research published in the New Climate Economy’s flagship report, “Better Growth, Better Climate,” which estimated smarter urban growth policies could reduce global infrastructure capital requirements by more than US$3 trillion over the next 15 years. By reducing per capita land consumption and infrastructure and transportation costs, smart urban growth policies can deliver significant economic, social and environmental benefits. 

This research also indicates that sprawl is bad for public safety and health. Americans who live in sprawled neighbourhoods are between two and five times more likely to be killed in car accidents, are twice as likely to be overweight as those in more walkable neighbourhoods, and research described in the report suggest that smart growth reduces per capita crime rates by increasing “eyes on the street” and economic opportunity for people at-risk for criminal activity. Residents of compact, connected communities save more money and have greater economic mobility 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.

Explains lead author Todd Litman of the Victoria Transport Policy Institute, “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.” 

Smart growth policies can also help reduce global climate change. Urban sprawl is a significant contributor to greenhouse gas emissions, according to “Better Growth, Better Climate.” 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. 

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.

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

Canada and US: Todd Litman, litman@vtpi.org250-360-1560

US: Blair Fitzgibbon,

UK: Alfonso Daniels, 

+447810311998, M +447437471087


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. 

Also see: 

“Study: Sprawl Costs the U.S. Economy $1 Trillion Annually” Planetizen ( ). 

Kitty Stapp (2015), “In Thrall to the Mall Crawl and Urban Sprawl,” IPS News ( 

Laura Kusisto (2015), “The Cost of Sprawl: More Than $1 Trillion Per Year, New Report Says,” Wall Street Journal ( ).