Haste makes waste: On the implications of rapid planning in Israel

Abstract

Planning reforms have been advanced under the premise that streamlining planning will expedite development and growth, arguing that regulatory planning is a binding constraint on development. Yet, the veracity of this premise has not been substantiated empirically. In this study we analyze the effects of two reforms that were advanced under this premise in Israel during the last decade: a supra-commission that can bypass all others to approve large-scale housing plans and a strategic housing plan (SHP) that stipulates how many residential units should be approved each year in different parts of the country until 2040. We find that the planning of residences has indeed been expedited, and the SHP planning goals were exceeded. Yet, housing starts did not go up and thus the reforms had no appreciable effect on housing prices. Thus, we find that the premise underlying these reforms does not stand up to scrutiny. Concurrently the resulting excessive planning has adverse effects on agriculture and open spaces. Moreover, the resulting plans are likely to remain unbuilt for a long period of time, resulting in them being dated by the time they may be built. The SHP has reverted the Israeli planning system to silo planning undermining the comprehensive planning doctrine advanced since the 1990s. Thus, while the reforms do not seem to advance their purported benefits they do generate long-term negative externalities.