On a Monday morning in late August 2005 Hurricane Katrina made landfall along the Gulf Coast. While the storm had weakened significantly in the Gulf of Mexico, its storm surge was responsible for most of the lives lost and damaged property. The confirmed death toll topped 1,800. Property damage exceeded $80 billion. A month later, Hurricane Rita struck the still-submerged Gulf Coast, killing 100 more people and causing another $10 billion in property damage.
Much of New Orleans and many coastal communities in Louisiana and Mississippi remained under water for weeks. Approximately 240,000 evacuees fled to the nearest largely unscathed major city: Houston. Fortunately for the refugees, Houston lacks many of the zoning and land-use regulations common in most other urban areas. This peculiarity greatly assisted Houston’s ability to absorb the thousands of Gulf Coast evacuees.
Thanks to the city’s liberal land-use policies, Houston enjoys lower real estate prices, increased availability of affordable housing, lower population concentration and more opportunities for entrepreneurs. If not for these conditions, displaced Gulf Coast residents would have faced even tougher—and likely more deadly—challenges following the disaster.
Zoning laws had put up artificial roadblocks to the construction of affordable rental units during the preceding decades in communities along the Gulf Coast. This made homelessness even worse for low- to moderate-income residents after Katrina and Rita made landfall.
In Louisiana and Mississippi, emergency temporary housing was zoned out of many of the worst-hit areas, even as local politicians accused the Federal Emergency Management Agency (FEMA) of mismanagement. FEMA deserves plenty of blame, but so do the local officials who refused to ease existing restrictions—and even ratcheted up land-use and building regulations.
Supporters of these stronger measures claimed that they would help prevent the same level of destruction in the future, but the short-term consequences were dire for those hardest hit.
Particularly perverse was the rise in interest of so-called “smart growth” policies such as form-based codes, in which government incentivizes, regulates, and subsidizes high-density, “sustainable,” “livable,” mixed-use developments. These policies have little to do with improving the lives of ordinary citizens given that most Americans prefer to live in the less dense suburbs. Rather, they primarily serve to validate the urban utopian ideologies held by planners and environmental activists.
A 2008 analysis by the Federal Reserve Bank of Atlanta found that new restrictions on construction and land use drastically increased the costs of rebuilding, and many former homeowners and entrepreneurs were priced out of the market altogether.
Houston was better prepared than many cities to deal with hundreds of thousands of impoverished evacuees, but many native residents were pessimistic. Among other concerns, they worried that crime would increase in the city and the media was filled with scare stories on the supposed “Katrina crime wave.” While crime did increase, research published in the Journal of Criminal Justice found that the increase was very slight and surprisingly low for a city that saw its population increase by nearly 10% almost overnight.
Houstonians were also worried that the influx of evacuees would depress employment and wages. But according to a study published in the American Economic Review, migrants from the Gulf Coast disaster zone “caused little harm to the native Houstonian labor market,” a finding consistent with the wider literature on migration and labor. Again, Houston’s liberal land-use regulations and thus its enhanced ability to absorb new residents helped mitigate many of the problems often associated with a massive influx of refugees.
While Houston’s unemployment rate is currently above-average when compared to Texas as a whole, joblessness is still significantly lower than the national average, and many economists predict Texas—including Houston—will be among the first states to recover from the recession.
Houston’s unusually lax land-use policies should serve as a model for the rest of the nation. Many of the alleged problems “fixed” by rigid zoning regulations are in reality made worse. Decisions about how to use private property are best left to the open market, which is immune from manipulation by politicians and special interests. A laissez-faire attitude toward land use is justified not only economically, but on humanitarian grounds as well.