Building by numbers

As the law now stands, Boston faces an unfortunate choice between allowing construction, which brings benefits to developers and costs to neighbors, or restricting development, which pushes up prices and limits the region’s growth. A better process would allocate building permits through prices. Developers, in short, would pay for the right to build. For their part, cities and towns would be pushed to expedite permitting decisions.

New development always creates costs. If Chiofaro replaces a parking garage with a high-rise, then the new structure will separate the Greenway from the waterfront and cast a long shadow over precious public space. In leafy suburbs, which are far less open to new construction than the City of Boston, new construction annoys neighbors, creates more traffic, and may generate more public costs than tax revenues. Globe columnist Lawrence Harmon wrote last month that “NIMBYism is the official religion of Massachusetts.” If so, it is one of the most understandable of faiths.

But more building is the only way for Greater Boston to become more affordable. In 2009, the average sales price of a home in the Boston area was $333,000, almost double the national average. In the continental United States, more expensive areas are only found in greater New York, California, and Boulder, Colo., where NIMBYism is also fervently followed. My own research has found that prices were higher and housing production was lower in those Boston-area towns with more regulations, like limits on subdivision, and larger minimum lot sizes.

Restrictions on building have other undesirable consequences. If an area doesn’t build, then it won’t grow, which helps explain why Massachusetts’ population has increased by only 3.9 percent since 2000 — less than half the national average. And the building that does happen occurs in far-off locations, which means longer commutes and a larger carbon footprint.

Basic economics tells us that building should proceed when benefits outweigh the costs. But right now localities bear most of the costs of building and reap only a small amount of the benefits. The result is NIMBYism. We can move the debate away from platitudes and personalities — and toward a serious comparison of costs and benefits — by charging for the ability to build. In Downtown Boston, such a system would trade development rights for the cash that is badly needed to provide beautiful public structures on the Greenway.

Here is how a system might work: Developers could be offered a parallel track that offers a speedier process — with fewer hearings, a fixed deadline for a decision, and an environmental review that incorporates the carbon-reducing benefits of building downtown — in exchange for a building tax designated for use in the surrounding neighborhood. The process would be open, and adjudicated by a state-appointed board which would assess a fee for development. Such fees shouldn’t increase building costs; they should be an optional way to get speedier approval, which could hopefully reduce the courts’ qualms about such policies.

Cities and towns could then reject the deal and revert to the status quo, but everyone would be able to see the cash they are throwing away. If the locality decides to delay approval for months or years, then the developer’s payment would decline, and everyone could see the costs created by the enemies of growth.

The system would be purely optional in places that already allow new building. But in restrictive suburban enclaves, local aid could be tied to accepting the state’s pay-to-build system. If rich towns with abundant land refuse to permit construction even with building fees, then those towns are making the state less affordable and less economically dynamic. These restrictive areas can pay for their NIMBYism through a reduction in state aid, which can then be redirected towards areas, like Boston, that build more affordable homes with access to public transit.

The housing bust was only a brief respite in Massachusetts’ affordable housing crisis. Our prices have stabilized at a high level. Whatever the fate of Chiofaro’s tower, more home-building is the only way to make sure that younger, less prosperous people can afford to live in Greater Boston. The fairest way forward is for builders to pay for the social costs of their construction — and for suburban communities to pay for the costs of their restrictiveness.

Edward L. Glaeser, a professor of economics at Harvard University, is director of the Rappaport Institute for Greater Boston.