Municipal Revenue Generation and Sprawl: Implications for the Calgary and Edmonton Metropolitan Regions Derived from an Extension of “Causes of Sprawl” (Technical Paper)

There are good reasons to expect that attributes of local public finance may impact urban land use and, specifically, sprawl. A detailed and novel investigation of U.S. metropolitan areas published in 20061 provides substantial insights into the causes of sprawl, but it overlooks the main characteristics of local public finance (taxes and user charges). Using a subset of the data matched to city public finance data, a parallel analysis gives insight into the impacts of local public finance on sprawl. There is evidence that greater reliance on local property taxes reduces sprawl. The evidence that user charges (primarily for water, sewerage and solid waste services) could have a similar effect is weak but suggestive. The combined effects of a high reliance on property taxes and user charges (compared to typical levels) might reduce sprawl by as much as one-third. For Calgary and Edmonton, this means that the current heavy reliance on property taxes in both cities reduces sprawl and that the adoption of alternative local taxes—that reduce reliance on property taxes—is expected to increase sprawl. Further analysis of the impacts of local public finance on urban sprawl is warranted.