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From Homeowners’ Assurance to Public Policy: Origins and Modern Applications of Zoning

 by Stephanie Xu Xu_Stephanie_2013_Literature_review_revised


From Homeowners’ Assurance to Public Policy: Origins and Modern Applications of Zoning


The practice of zoning as a method of urban planning and land use regulation has been surrounded by equity and segregation debates over the past few decades.  A wide body of literature about the topic exists, with a range of focuses, from its early implementation in the early 1900s to its efficiency to its effect upon race and class segregation.  This paper examines the history and progression of zoning practices and policies, as they are crucial to understanding the associated controversies.  We then look into the impact of zoning upon income distribution and equity, first through a more dated but resourceful paper by Fernandez and Rogerson (1997), and then through a 2006 paper by Calabrese, Epple, and Romano.  Lastly, we explore literature concerning the relationship between zoning laws and public health initiatives.


Fischel (2004) offered a comprehensive overview of zoning from its early 1900s origins to modern day policy reforms to address the exclusionary products of such regulations.  Fischel posited that zoning was not a necessary practice until the advent of buses and trucks that allowed businesses to locate farther from streetcar tracks and stations.  Until then, workers were able to buy houses in the suburbs without fear of encroaching business.  However, companies’ newfound capability to transport resources threatened the residential environment that workers found so valuable.  Thus, zoning was the only way to give homeowners security and assurance that their neighboring land wouldn’t become a noisy business district.  Several decades later, the problem was exacerbated by a sudden increase in highway construction in the 1960s.  Firms could now move out of high-density urban areas even more easily.  Failing or struggling cities and suburbs welcomed the influx of businesses for the accompanying fiscal benefits.  Meanwhile, only well-off communities could afford to keep businesses out.  Fischel argued that it was in this environment that income distribution began to play such a strong role.  In this paper, he sought to find a way to keep home values stable, as zoning was initially created to accomplish, without causing the exclusion with which we are faced today.  To resolve this, he proposed selective home equity insurance, despite his acknowledgement of the administrative problems and risks of moral hazard and adverse selection.

Fernandez and Rogerson (1997) and Calabrese et al. (2006) investigated the impact of zoning upon equity, but differed in their approaches in a critical way.  Both used a two-community model with two different income distributions.  Both also made a point of stratification as a natural occurrence, with or without zoning laws.  But the former required in their model that individuals committed to one community or another before any voting took place, and before they bought any property.  Calabrese et al., on the other hand, based their argument upon the Tiebout rationale that people could “vote with their feet” and choose to reside in towns that align with their personal preferences.


Thus they arrived at different conclusions.  Fernandez and Rogerson found that in general, zoning made the richest better off and the poorest worse off, but left a great deal of ambiguity about those in the middle.  Poor individuals who move from a more affluent community to a lesser one because of zoning policies tend to be better off, while individuals who move to a richer community tend to be worse off.  Calabrese et al. finds an overall increase in efficiency and welfare as a result of zoning, due to their assumptions under the Tiebout model.  They conclude that because residents can move after a community votes on tax rates and local public goods, “aggregate welfare gains arise from better Tiebout matching of preferences to levels of public-good provision” (Calabrese et al. 2006, 4).  Comparing these two scholarly works highlights a decisive factor in zoning theory: that the order in which individuals vote on taxes and public goods, buy property, and choose their community affects the predictions of the ensuing welfare gains or losses.


Finally, we examine more recent literature relating zoning codes and public health solutions.  Ransom, Greiner, Kochtitzky, and Major (2011) define the “built environment” as anything man-made or man-modified, from buildings to highways, that act as sources of pollution (94).  They draw linkages between the built environment and health, and cite the disproportionate cases of obesity in densely-packed urban areas as a prime example.


It follows that zoning codes should take public health considerations into their analysis, as the City of Baltimore did in its 2008 TransForm Baltimore campaign (Public Health Work Group 2008).  The planners endeavored to create an environment that allowed people to be healthy through such measures as increasing green spaces, establishing more mixed-use space, and controlling the locations of fast food stores and liquor stores, especially relative to schools and residences.   However, Ransom et al. did identify a number of obstacles to pursuing such zoning policy reform.  First, the research and evidence to support these reforms is complex, both to accumulate and to transform into actionable policies, as the precise causal effects of certain zoning layouts upon health problems is difficult to determine due to confounding factors, such as population demographics, the types of businesses occupying retail and office space, etc.  In other words, the effects of zoning are difficult to isolate from other characteristics of a neighborhood or community.  Second, using zoning to address public health issues is politically difficult, especially when other priorities exist, such as improving walkability and access to healthy food (Ransom et al. 2011, 96).  Third, efforts such as the TransForm Baltimore initiative lacks input from a variety of community members and leaders, which prevents policymakers from fully comprehending the context.  Lastly and perhaps most importantly, business leaders and neighborhood housing associations are well-organized constituency groups that often oppose things such as mixed-use land, mixed-income housing, and reduced parking requirements.


The existing research addresses several arguments in favor of and against zoning, and the diversity of the literature opens many doors for further research.  In the case of Durham, North Carolina, it may be worthy to investigate the impact of Duke Hospital upon the surrounding residential neighborhoods and efforts to preserve a certain environment despite increased traffic.  A similar analysis may look into zoning designations in the Warehouse district downtown, and who made the decisions to make one set of warehouses into the American Tobacco District and another into the West Village apartments.  Durham, as a growing city, stands to see more conflicts in the coming years as businesses grow and residents face the potential intrusion that people feared a century ago.






Calabrese, Stephen, Dennis Epple, and Richard Romano.  “On the Political Economy of Zoning.”  July 2006.


Fernandez, Raquel and Richard Rogerson.  “Keeping People Out: Income Distribution, Zoning, and the Quality of Public Education.”  International Economic Review 38:1 (1997), pp. 23-42.


Fischel, William A.  “An Economic History of Zoning and a Cure for its Exclusionary Effects.”  Urban Studies 41:2 (2004), pp. 317-340.


Public Health Work Group, “Zoning Recommendations.”  Transform Baltimore, City of Baltimore, 17 November 2008.


Ransom, Montrece McNeill, Amelia Greiner, Chris Kochtitzky, and Kristin S. Major.  “Pursuing Health Equity: Zoning Codes and Public Health.”  Journal of Law, Medicine & Ethics (2011), pp. 94-97.



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