17.3. Externality Valuation

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In promoting a healthy Polycentric Region with healthy Public Space System, it is necessary to create healthy financial feedback systems.


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Problem-statement: If we do not learn to value “externalities” — costs and benefits that are not normally included in economic transactions — we cannot have a sustainable future.


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Discussion: One of the most important lines in Jane Jacobs’ groundbreaking The Death and Life of Great American Cities — and also one of its least noted — was this one:


“In creating city success, we human beings have created marvels, but we left out feedback. What can we do with cities to make up for this omission?” 1


Jacobs was referring specifically to feedback mechanisms to create more geographic diversity, and avoid over-concentration and “the self-destruction of diversity” — as discussed for example in the pattern Urban Regeneration. But in a wider sense, Jacobs had her finger on a central problem of all economic processes. A given transaction will quite possibly include impacts in the future, or felt by others today, that are not reflected in the transaction itself. A new suburb might damage the water quality of the surrounding ecosystem, or a new town center might improve the walkability, exercise and quality of life of residents. The former case is an example of a “negative externality” and the latter of a “positive externality.”


Of course, it is difficult to know what these externalities are in advance, or how they should be valued in the simple scale of a single currency. But governments and companies already do try to value externalities, when governments impose taxes (or use Tax-Increment Financing, 17.1) and when companies bring externality costs (like, say, lost employee time) into transactions through contractual agreements (say, requiring payments for the lost time).


We need to do this kind of externality valuation more explicitly, so that we can identify future costs and benefits, and so that we can incentivize and disincentivize the transactions today that will most likely bring them about. This is an imprecise process. But many imprecise processes are made more precise through the pooling of transactions, and through the phenomenon known as “the wisdom of crowds.”


Various mechanisms have been developed to take advantage of these dynamics. For example, so-called “Tradable Energy Quotas” function as a way to reduce energy use and greenhouse gas emissions (a major negative externality generated by many energy systems). In effect this is a way of valuing the negative future externality in the present as a cost to be reduced by traders. Tax-Increment Financing is a way of valuing the positive externality of a new development and redirecting it as an incentive to finance the development. Other mechanisms and tools are in development along similar lines.


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Therefore:

Work to create mechanisms that provide externality valuation for both positive and negative impacts.


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Enhance Economies Of Place And Differentiation

Use taxation mechanisms where needed, including Speculation Tax, but also other mechanisms of value transfer such as Tax-Increment Financing. …




¹ Jacobs, J. (1961). The Death and Life of Great American Cities. New York: Random House.



Mehaffy, M. et al. (2020). EXTERNALITY VALUATION (pattern). In A New Pattern Language for Growing Regions. The Dalles: Sustasis Press. Available at https://pattern-language.wiki/.../Externality_Valuation



SECTION I:

PATTERNS OF SCALE


1. REGIONAL PATTERNS

Define the large-scale spatial organization…

1.1. POLYCENTRIC REGION

1.2. BLUE-GREEN NETWORK

1.3. MOBILITY CORRIDOR

1.4. 400M THROUGH STREET NETWORK

2. URBAN PATTERNS

Establish essential urban characteristics…

2.1. WALKABLE MULTI-MOBILITY

2.2. LEVEL CITY

2.3. PUBLIC SPACE SYSTEM

2.4. BIOPHILIC URBANISM

3. STREET PATTERNS

Identify and allocate street types…

3.1. URBAN GREENWAY

3.2. MULTI-WAY BOULEVARD

3.3. AVENUE

3.4. SHARED SPACE LANE

4. NEIGHBORHOOD PATTERNS

Define neighborhood-scale elements…

4.1. STREET AS CENTER

4.2. PEDESTRIAN SANCTUARY

4.3. NEIGHBORHOOD SQUARE

4.4. NEIGHBORHOOD PARK

5. SPECIAL USE PATTERNS

Integrate unique urban elements with care…

5.1. SCHOOL CAMPUS

5.2. MARKET CENTER

5.3. INDUSTRIAL AREA

5.4. HOSPITAL

6. PUBLIC SPACE PATTERNS

Establish the character of the crucial public realm…

6.1. PLACE NETWORK

6.2. WALKABLE STREETSCAPE

6.3. MOVABLE SEATING

6.4. CAPILLARY PATHWAY

7. BLOCK AND PLOT PATTERNS

Lay out the detailed structure of property lines…

7.1. SMALL BLOCKS

7.2. PERIMETER BLOCK

7.3. SMALL PLOTS

7.4. MID-BLOCK ALLEY

8. STREETSCAPE PATTERNS

Configure the street as a welcoming place…

8.1. STREET AS ROOM

8.2. TERMINATED VISTA

8.3. STREET TREES

8.4. STREET FURNISHINGS

9. BUILDING PATTERNS

Lay out appropriate urban buildings…

9.1. PERIMETER BUILDING

9.2. ARCADE BUILDING

9.3. COURTYARD BUILDING

9.4. ROW BUILDING

10. BUILDING EDGE PATTERNS

Create interior and exterior connectivity…

10.1. INDOOR-OUTDOOR AMBIGUITY

10.2. CIRCULATION NETWORK

10.3. LAYERED ZONES

10.4. PASSAGEWAY VIEW



SECTION II:

PATTERNS OF MULTIPLE SCALE


11. GEOMETRIC PATTERNS

Build in coherent geometries at all scales…

11.1. LOCAL SYMMETRY

11.2. SMALL GROUPS OF ELEMENTS

11.3. FRACTAL PATTERN

11.4. FRAMING

12. AFFORDANCE PATTERNS

Build in user capacity to shape the environment…

12.1. HANDLES

12.2. CO-PRODUCTION

12.3. FRIENDLY SURFACES

12.4. MALLEABILITY

13. RETROFIT PATTERNS

Revitalize and improve existing urban assets …

13.1. SLUM UPGRADE

13.2. SPRAWL RETROFIT

13.3. URBAN REGENERATION

13.4. URBAN CONSOLIDATION

14. INFORMAL GROWTH PATTERNS

Accommodate “bottom-up” urban growth…

14.1. LAND TENURE

14.2. UTILITIES FIRST

14.3. DATA WITH THE PEOPLE

14.4. INCREMENTAL SELF-BUILD

15. CONSTRUCTION PATTERNS

Use the building process to enrich the result…

15.1. DESIGN-BUILD ADAPTATION

15.2. HUMAN-SCALE DETAIL

15.3. CONSTRUCTION ORNAMENT

15.4. COMPLEX MATERIALS



SECTION III:

PATTERNS OF PROCESS


16. IMPLEMENTATION TOOL PATTERNS

Use tools to achieve successful results…

16.1. FORM-BASED CODE

16.2. ENTITLEMENT STREAMLINING

16.3. NEIGHBORHOOD PLANNING CENTER

16.4. COMMUNITY MOCKUP

17. PROJECT ECONOMICS PATTERNS

Create flows of money that support urban quality…

17.1. TAX-INCREMENT FINANCING

17.2. LAND VALUE CAPTURE

17.3. EXTERNALITY VALUATION

17.4. ECONOMIES OF PLACE AND DIFFERENTIATION

18. PLACE GOVERNANCE PATTERNS

Processes for making and managing places…

18.1. SUBSIDIARITY

18.2. POLYCENTRIC GOVERNANCE

18.3. PUBLIC-PRIVATE PLACE MANAGEMENT

18.4. INFORMAL STEWARDSHIP

19. AFFORDABILITY PATTERNS

Build in affordability for all incomes…

19.1. INTEGRATED AFFORDABILITY

19.2. COMMUNITY LAND TRUST

19.3. MULTI-FAMILY INFILL

19.4. SPECULATION TAX

20. NEW TECHNOLOGY PATTERNS

Integrate new systems without damaging old ones…

20.1. SMART AV SYSTEM

20.2. RESPONSIVE TRANSPORTATION NETWORK COMPANY

20.3. AUGMENTED REALITY DESIGN

20.4. CITIZEN DATA