An innovative urban policy: the Payment for Insufficient Density

International audienceThe Payment for Insufficient Density (PID) which is a rough translation for the French term 'Versement pour Sous Densité' (VSD) is a measure that has made its entry into French law recently and is part of a larger reform of urbanism codes. Its aim is to mitigate urban sprawl by requiring that real estate developers settle a certain amount of money in the case where housing density upon construction does not meet a defined Minimum Density Threshold (MDT). In this study, we investigate the potential impacts of such a policy, and analyze how it can be best used to gain efficiency, while keeping social costs low. We carry out this study by using a dynamic urban model (NEDUM 2D) calibrated on Paris urban area. NEDUM 2D (Viguié and Hallegatte 2011) is a land-use transport interaction model, based on standard urban economic modeling (Alonso 1964; Mills 1967; Muth 1969). It provides a comprehensive framework which seeks to capture the variation in the real estate prices, in the rents, in housing and population density as well as in housing size across an urban area. Using this model we assess the spatial consequences of the implementation of the PID in 2040 in the Paris urban area relatively to an unconstrained baseline. It is found that the PID is a tax on construction that leads to an increase in built floor space area. If appropriately implemented, it limits urban sprawl and associated greenhouse gases emissions. It is also found to increase overall housing supply and contributes to decrease average rent levels. However, the choice of the MDT conditions the efficiency of the policy. If it is too low it can even have counter-productive effects such as an increase in urbanised area. The most efficient MDT depends on the criteria chosen. A political discussion must take place so as to decide which objective should be pursued in priority (housing costs reduction, GHG mitigation etc...). Our results however show that limiting urban sprawl through a tax on construction does not necessarily translate into higher housing costs