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 ontrary to popular belief, buyers of new homes should
know that the costs of supporting environmental protection don't
boost the prices of new houses, a Cornell University housing
expert concludes. Higher prices seem to be much more likely the
result of larger homes and more amenities.
 The
average cost of a new home in the United States shot up 32 percent
in the past decade, and some people blame much of this increase
on environmental regulations. But a new Cornell study finds no
empirical evidence to support these claims.
"We find
that the costs of complying with the regulations have only a
negligible impact on the average price of a new house,"
says Joseph Laquatra, associate professor of design and environmental
analysis at Cornell. "Rather, we conclude from strong evidence
that higher prices are much more likely the result of building
bigger homes with more amenities."
Builders and
developers must comply with federal regulations that include
the Clean Water Act, Federal Water Pollution Control Act and
the Endangered Species Act. They and others have long assumed
that these environmental regulations, which seek to improve air
and water quality and protect biodiversity, have thwarted development
and driven the costs of new homes beyond what first-time buyers
can afford.
"While
the goals of most protection programs enjoy broad support, the
implementation of these initiatives is all too often unduly cumbersome,"
said H. Daniel Pincus, the 1997 president of the National Association
of Home Builders, in the NAHB publication Building the American
Dream. "Unnecessary and redundant regulations add more
than 20 percent to the cost of building a home in many areas,"
he said.
"There
are certainly anecdotal horror stories in which environmental
protection has been used to stop particular developments,"
says Laquatra. "But we couldn't find evidence in the numerous
studies on this issue that demonstrate a direct relationship
between environmental regulations and house prices."
Laquatra and
independent scholar Gregory Potter conducted a comprehensive
review of more than 100 studies that looked at housing affordability
and environmental regulations; they also analyzed transcripts
from two focus groups Laquatra conducted in Seattle and in Gainesville,
FL. Their report was published in the (April) Earth Day 2000
issue of the Electronic Green Journal (Issue 12).
In the focus
groups, Laquatra moderated discussions about loss of species,
housing affordability, equity, property rights, regulatory burdens
and similar issues with builders, developers, environmental regulators,
affordable-housing and environmental advocates, congressional
staffers, students of construction management and faculty in
academic construction-management programs.
"Interestingly,
housing affordability was not a primary concern in the focus
groups. And in the literature review, we found no evidence that
higher housing prices are due to the costs of complying with
environmental regulations. Rather, strong evidence points to
a drop in home ownership rates during the 1980s being due to
changes in tastes and lifestyles and not economic hardship,"
says Laquatra.
Home ownership,
which is now at the highest rate in US history, includes almost
68 percent of American households. Yet the median price of a
typical new home tripled between 1977 and 1997. In 1989, for
example, the average price of a new home was 148,800. By 1999,
it was $195,700.
"We also
found evidence that the public is overwhelmingly in favor of
environmental protection and thinks the government should be
spending even more on protecting the environment," Laquatra
says. "Although builders may incur some costs in complying
with the codes, on a national basis these costs do not significantly
affect the cost of a new house."
In related
work, Laquatra is now leading a study funded by the Cornell Community
and Rural Development Institute on "Building a Balance:
Housing Affordability, Environmental Protection, and Smart Land
Use Decisions." In collaboration with faculty from Cornell's
College of Agriculture and Life Sciences, Laquatra is conducting
focus groups in four communities across New York state to find
out how the communities feel about growth issues. 
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