Developing countries are projected to gain 2.2 billion new urban residents between now and 2050. Governments and city leaders have a choice: they can develop cities that are sprawled and auto-dependent, or they can develop cities that are connected, compact, and coordinated. A new report for the New Climate Economy project outlines the massive economic, social, and environmental costs of urban sprawl in the United States.

While this research focuses on urban planning lessons and mistakes from the United States, it also contains compelling lessons for countries worldwide looking to avoid the steep costs of sprawl.

The costs of sprawling development

The economic costs of sprawl are huge. The new report, Analysis of Public Policies that Unintentionally Encourage and Subsidize Sprawl, finds that Americans living in sprawled communities directly bear an astounding $625 billion in extra costs, and that the public costs of this sprawl amount to an extra $400 billion each year. These stem from the health costs of air pollution and unnecessary spending on infrastructure, public services, and transportation, which could be avoided if cities were compact, connected, and people-oriented. Ultimately, everyone is affected, not just those who live in sprawled communities, because both urbanites and rural residents subsidize the extra costs of their suburban counterparts.

Sprawl increases the distance between homes, businesses, services, and jobs, raising the cost of infrastructure and public services in sprawled areas of the United States by anywhere from 10 to 40 percent. For example, a fire station in a low-density neighborhood with disconnected streets serves far fewer households at a much higher cost than an otherwise identical fire station in a more compact and connected neighborhood. In prior research, the New Climate Economy found that implementing smarter urban growth policies on a global scale could reduce urban infrastructure capital requirements by more than $3 trillion over the next 15 years.

In addition to being economically costly, sprawl has a negative impact on public health. The report finds air pollution from urban cars, exacerbated by sprawl, causes $582 in external health costs per capita each year. People who live in sprawled neighborhoods are two to five times more likely to be killed in car accidents than those in smarter growth communities. Sprawl also tends to increase sedentary living, and therefore obesity rates and associated health problems. Those in the least walkable neighborhoods are twice as likely to be overweight as those in more walkable neighborhoods.

The benefits of smart growth

Fortunately, there is another way. Smart growth is the opposite of urban sprawl. Smart growth cities and towns have well-defined boundaries, a range of housing options, a mix of residential and commercial buildings, and accessible sidewalks, bike lanes and public transportation. They focus on vibrant, competitive, and livable urban cores. By reducing per capita land consumption and infrastructure and transportation costs, smart growth policies can deliver significant economic, social, and environmental benefits.

People living in smart growth communities save money on transportation. Households in accessible areas spend on average $5,000 less per year on transportation expenses. Additionally, real estate located in smart growth communities tends to retain its value better than in sprawled communities during economic downturns, due to greater access to services.

Smart growth is more inclusive of people who are not able or cannot afford to drive. It offers easier access to schools, public services, and jobs, and encourages mixed-income communities, which have a powerful impact on economic mobility. With every 10 percent decrease in urban sprawl, Americans are 4.1 percent more likely to climb from the lowest to the highest income quintile.

Smart growth is also better for the climate. Cities are responsible for 70 percent of energy-related greenhouse gas emissions. According to New Climate Economy research, the adoption of compact, transit-oriented cities could reduce annual greenhouse gas emissions by about 600 million tons of carbon dioxide equivalent by 2030, rising to 1.8 billion tons of carbon dioxide equivalent by 2050—more than twice the annual emissions of Canada.

Critical lessons for global development

Ninety percent of urban growth between now and 2050 is projected to take place in emerging economies. Cities in the developing world can minimize urban infrastructure and transportation costs by learning from the challenges now faced by countries like the United States. By preventing urban sprawl, these cities can stimulate economic growth while avoiding climate risks.

Ahmedabad, for example, is India’s sixth-largest city, located in the western state of Gujarat. In the next 25 years, its population is expected to more than double, growing from 5.4 million in 2011 to 13.2 million in 2041. A city like Ahmedabad has two possible futures. On one hand, it could follow the example of the United States and pursue sprawling development that encourages and even necessitates car travel. On the other hand, it could follow a more sustainable path by investing in public transport and ensuring compact development through land use policy.

In the sustainable, smart growth scenario, the developed area of Ahmedabad would cover only half the amount of land it would in the car-centric, sprawled scenario. As shown in the graphic below, this would cut traffic deaths by more than four times the sprawled scenario and greenhouse gas emissions by more than six times.

For Ahmedabad and other world cities to avoid the high costs of sprawl now facing the United States is no small task. To do so, both federal and local governments must embrace diverse housing and transportation options, more neutral city planning processes, and location-based construction and utility fees so residents pay more for sprawled locations and save with smart growth.

Correcting the market forces that favor urban sprawl provides an opportunity for better growth and a better climate in cities worldwide.