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Todd BenDor, professor of City & Regional Planning at The University of North Carolina at Chapel Hill, talks about his research on transfer of development rights and water quality trading programs. BenDor is a CURS Faculty Fellow and former Scholar-in-Residence.

Learn more about BenDor’s research at:

Transcript from the video, Todd BenDor: Research on Market-Based Environmental Policies

My name is Todd BenDor. I’m a professor in city and regional planning here at UNC-Chapel Hill.

Tell us about your ongoing work examining transfer of development rights and water quality testing.

I’ve been studying water quality trading programs for a little over ten years and in that time it’s been very interesting to understand and contrast how economists understand these types of policies and how they actually operate in the real world. So, water quality training is a market-based environmental policy that’s aimed at giving regulatory flexibility to polluters. It essentially allows polluters to trade the right to pollute with other polluters in order to come to an efficient kind of distribution of costs. This, in theory, will allow polluters and regulators to both achieve goals cheaper, faster, easier and better. However, in reality, there’s actually very little water quality trading. In some areas such as North Carolina, these trading programs work very well and can be very successful, but in many areas and most situations they never really materialized. For example, programs may only exist on paper. They may never have staff allocated to manage them. It turns out that the same problems exist for another very well-known urban planning policy called transfer of development rights. Transfer of development rights is aimed at protecting natural areas, historic farmland, incentivizing affordable housing – all different kinds of aims of cities. The idea of transfer of development rights is that you can prohibit development in an area and allow landowners to still have that development rate and trade it to somebody else, and so you achieve the protection of an area and you increase density elsewhere. So this is another area that’s been widely touted by economists but a lot of these programs have had trouble getting off the ground. No one really wants to be an area that receives density. It’s this uncertainty issue that’s actually plagued both water quality trading and transfer of development rights programs and so what we want to do in this research is understand when and why these barriers actually kind of pop up. Why do some programs work in others don’t. What happens when these types of programs exist together? Do they kind of cross fertilize each other? Do regulators learn? Do polluters learn? Do developers learn? These types of questions will hopefully allow us to make these policies work a lot better in the future.

What has been most surprising about what you’ve found so far?

We’ve spent the last year or so collecting data in order to map every water quality trading program in the country, and it’s been surprising just how many of these programs there are and what a wide diversity of types of environmental outcomes that they’re trying to achieve. There’s also a big surprise as to how many of these programs aren’t actually operational. There’s been so much rhetoric about how this is the next generation of environmental policies, but they’re not really even operational in many cases. It’s also been very surprising and impressive to just see how ambitious some of these policies are. They’re trying to trade many different types of water pollution, for example, or they’ve got many different types of market designs, and so that’s actually made them fairly complex policies to implement.

What do you believe this research will tell us about current market-based environmental policies?

Our hope is that as we delve deeper into understanding where and when these policies succeed and fail, we’ll be able to understand how we can prevent some of these barriers from popping up. We want to better understand how communities can manage these programs and track them in the future to determine if they’re successful or not.

What are the next steps in this research?

Our next step is to complete the mapping process for all of these different water quality trading programs. We’re hoping to put this data on the US Environmental Protection Agency’s EnviroAtlas, which is a web-enabled database, so that anyone can find and better understand these programs. We’re also hoping to find funding for digging deeper into these policies, running statistical analyses, doing interviews and generally better understanding where and why programs fail or succeed. Eventually, we want to create a road map for communities to actually use to be able to draw on these policies and ensure that they are successful.

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