Pricing upzoning: A reply to critics

We thank the four respondents to our article, who have provided a range of insights into the debate around upzoning. To organize this reply, we first restate our main arguments below, and then summarize our responses to the main criticisms advanced by the four respondents. In our article, we made the following arguments: a) Upzoning provides additional property rights to current property owners, akin to providing them with “airspace” rights. b) These rights have a market value that could be priced. c) Unpriced upzoning has a budgetary cost due to this foregone revenue. d) The initial allocation of residential property rights in most countries is highly unequal, and thus unpriced upzoning will accrue to current property owners, exacerbating inequality. e) The alleged housing benefits from upzoning rely primarily on the idea that it will significantly increase the rate of supply, and thereby lower house prices and rents for non-owners. However, this claim is questionable, and existing evidence suggests it will not occur. f) There are many effective policies to price upzoning or otherwise achieve public benefit from upzoning, and these should be undertaken. The respondents agreed with many main points. For example, there was broad agreement that the value of upzoning rights can be large and that this represents an opportunity to generate public value. All the respondents also recognized that policies exist that are feasible to capture this value, even if there is disagreement on which, if any, should be adopted.