Tuesday, March 11, 2008

The Value of Density

Two articles this morning brought to mind the the classic urban theory that the density of urban environments creates cross-pollination and agglomeration benefits. GreenBuildingsNYC had an article about four closely located green businesses in New York City's Lower East Side http://www.greenbuildingsnyc.com/2008/03/05/the-lower-east-side-nyc%e2%80%99s-emerging-green-retail-district/ and another about a proposed green industrial park http://www.greenbuildingsnyc.com/2008/02/29/new-york%e2%80%99s-first-green-industrial-park-breaks-ground-on-long-island/ .

Essentially, the argument goes like this--cities are places where people are densely packed together. As a result of the clustering of people and businesses, innovation increases and there is a benefit in human capital externalities (ie more businesses, more jobs, more money, etc.). If it all seems a bit esoteric, think about fashion. You can get a lot more ideas about what to wear to work on the subway in New York City than alone in your car on a suburban commute.

The same concept should work with green businesses and green building--the more of these entities grow up in a small geographic region, the better they will be able to feed off one another and innovate. This is a good argument for local government incentives to stimulate green building and businesses. One green building is good, but a cluster of greeen buildings with workers in green businesses will foster more carpools, more sharing of ideas, more emulation--in short more innovation which will lead to the afforementioned human capital externalities. With the growing concerns over a faltering economy, fostering dense clusters of green innovation is one way to combat the tide.