Homo economicus, or economic man, is a classic assumption in economics. It denotes a rational human being who chases optimal results for himself. Is the urban development policy chasing optimal results for the city he lives in? At what geographical scale does one reconcile individual rationality vs what is rational for the city? A pure economics approach would prioritise a persons choice over place making. These need not be mutually exclusive. An approach blending the two can produce an economically optimal city.
Urbs economicus, or economic city, is one whose built form allows for economic vitality at different geographical scales.
It doesn’t compromise on place making, but enhances it. In reality though, we see lopsided urban development; massive economic activity in some pockets and urban decay in others.
Decentralised self governance is gaining popularity in populated countries, like India. This is because, the city administration is unable to deliver effective local governance in large urban agglomerations. By 2030, more than 40% of India’s population will be in cities. Any plans for a city’s future, should carve a path of opportunities at a more granular scale, and improve the quality of life. This provides choices for people to live in economically vibrant neighbourhoods. The policy of making land use masterplans, devoid of economic reasoning, has been a disaster for cities.
Bengaluru is a good case in point. The Bengaluru Development Authority prepared a Revised Masterplan for the city. Similar master plans exist for large metropolises in India. This Bengaluru masterplan document is a legal stipulation in force until 2031. A quick glance at three planning districts in the plan — 06, 07 & 08 — reveals this gap between economic growth and land use. Across more than 102 sq. kms., in these three contiguous planning districts, the commercial & industrial zones are down by an average of 53% & 14.3%. The land allocation for housing over the same area, is up by an average of 34.8%.
What does this mean to you and me? More people living in the planning districts, but lesser jobs and commerce in the same area. 102 Sq. Kms. is the size of a borough in most cities. In fact, the Bengaluru restructuring committee planned to divide the city into such manageable boroughs. Unfortunately they will have to violate land use plans to stay economically viable. The current policy on land use ensures some parts of the city will always be reliant on some other for economic vitality. In all this, mobility is the biggest casualty.
Everyone will have to make a trek across town to work or buy goods & services. This adds to the already chaotic traffic, spending more time on the road. This increases cost of transportation and reduces productivity. Not surprisingly, the plan is already projecting a two fold increase in population, and a three fold increase in the traffic for Bengaluru, by 2031. Intelligent mixed use in local planning, can create fiscal independence. The plan has instead incentivised housing and increased commute.
Open & green spaces are fundamental to a good quality of life. It will not only deliver social & health benefits, but improve the economic value of properties in the neighbourhood. Hence, its a rational choice for the city. The proportion of open areas to the total developed area should be between 20–25% in metropolitan cities (MOUD, 1996). Yet, planning district 07, for example, has only 2.5% of allocated open space and parks. Another 13.7% of green space, across the three planning districts, will be gone by 2031. This is the scenario repeated across the country. It is going to be disastrous to the quality of life in these neighbourhoods.
Across the country, a fundamental shift in the urban development policy is an urgent need. Per capita open/green spaces are reducing, because people are choosing to capitalise the open spaces for individual gain, over the collective benefits of retaining them (Mancur, 1965). To offset the individual opportunity cost, the state should provide economic incentives to built up units. These economic incentives could be in the form of official hike in valuation of the property or discounts on taxes. This is one way of converging individual rationality with what is rational for the city.
More commercial zones in the planning districts will increase economic activity. Proximity to customers, benefit a lot of businesses, especially services. Well planned mixed use neighbourhoods can catalyse economic activity. Increasing the floor space index will increase housing capacity without increasing sprawl and free up land for other purposes. Special funding under a “Responsible Neighbourhoods” scheme will nudge districts towards fiscal independence. Unless the sustainable outcomes are tied to economic incentives, homo economicus will push the city into urban decay. Urbs economicus, hence, is an optimal paradigm.