Terraform Earth

The Credit Crisis, Insurance and Sprawl

As we face this financial crisis, we can watch for at least one positive effect from an environmental standpoint: less sprawl.

Both the lending mechanisms and the insurance industry have been hurt badly. This will result in more caution on the part of developers, their investors, and their customers. They will build fewer developments due to the comparative lack of available funds. And where they do build, they will find less demand from home buyers whose agenda coincides more and more with the sustainable development movement:

– High gas prices discourage too long a commute.
– The migration of population away from remote suburbs towards more dense urban centers will mean the jobs will follow.
– If there’s too much of a threat from floods, forest fires, hurricanes, or coastal erosion, then insurance will either be too expensive or totally unavailable.

So as the population moves from owning to renting, the units closer to jobs will be in higher demand. The developers will build denser neighborhoods with shorter commutes and less insurance risks from climate change effects. And the wise home-buyer will be seeking out more sustainable homes, giving the green developer a market advantage.

And with enough of a sustainability sentiment in government, we might even see additional market incentives through a carbon market or tax breaks for LEED homes.

There will be personal hardship for many, and I don’t mean to minimize or dismiss the impending struggles of those who will suffer (probably including myself). But I am pleased that some of the market mechanisms seem to be making the more sustainable choices coincide with financial wisdom.



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