Housing affordability in Canada is a critical policy issue. Polling indicates it is a top issue this federal election, with 78 per cent of Canadians saying they would look favourably on federal parties with a concrete plan to improve housing affordability.
Beyond improving access to the housing market and decreasing the cost of living, policies to grow housing supply and improve affordability are actually part of the necessary changes to drive an economic recovery, support cleaner economic growth, scale up Canadian clean technology companies and meet our climate targets, as previous work from Smart Prosperity has explained.
In other words: Good housing policy is climate policy. Having an affordable place to live is a necessary precondition to supporting economic growth and recovery, and enables the economic dynamism we need to build and install the climate solutions of the future.
As the debate around housing continues, here are three reasons why improving housing affordability is good for combating climate change and growing the clean economy:
Reason 1: Building more housing near cities makes it easier for skilled workers to live closer to where clean technology and low-carbon jobs will be needed in the coming years.
As Canada looks to grow its clean economy and meet its climate targets in the coming decades, we will need to support companies and invest in low-carbon projects that create high-paying jobs decarbonizing our economy. However, doing much of this clean innovation work requires specialized, industry-specific talent to build, sell and maintain products and solutions. Without access to this talent, companies will have difficulty meeting orders and growing their operations. Industries trying to install emissions-reducing technologies will also struggle to grow their operations to levels needed to meet climate targets.
This uncertainty around future labour, in a country where 41 per cent of small businesses in June identified skilled labour shortages as a challenge to growing their operations, can push companies to make investments elsewhere, creating jobs outside Canada or moving their headquarters entirely.
Climate action could stall in the face of unaffordable costs of living if existing labour shortages are worsened. Climate policy requires greater efforts to build more housing closer to where jobs will be needed.
One reason for skilled labour shortages is a lack of affordable housing in cities. Our upcoming research — which will be released this fall and which was undertaken with the Toronto Region Board of Trade — shows that average costs of living for housing in the Greater Toronto and Hamilton Area (GTHA) often exceed affordability thresholds for what clean technology companies offer in terms of salaries. This makes it less attractive to grow a company in the GTHA.
This is not an issue isolated to the GTHA, as housing shortages and unaffordable housing prices are occurring in many of Canada’s mid-sized and larger cities. Nor is it unique to Canada: one in five firms in Sweden report difficulty in attracting labour due to a shortage of housing. Large numbers of jobs are being created in Canadian cities, posing a huge challenge for ensuring people can live where their jobs are, which makes it difficult to support economic growth.
Unaffordable housing hurts not only the growth of our clean economy companies, but our ability to build low-carbon projects in general. This puts our chances of meeting our international climate commitments at serious risk. We have argued that climate action could stall in the face of unaffordable costs of living if existing labour shortages are worsened. Climate policy requires greater efforts to build more housing closer to where jobs will be needed.
Reason 2: Building denser infill housing in cities reduces the growth of suburban sprawl, which can lead to increases in greenhouse gas emissions.
Improving housing supply and affordability in and around Canada’s largest cities, which serve as the country’s hubs of economic activity, can help grow companies and attract workers. However, if that housing also supports densification of housing units within cities, then it can serve the dual purpose of avoiding suburban and exurban sprawl. Sprawl is characterized by greenfield development of low-density communities centred around the use of cars and leads to suburb-dominated municipalities.
Sprawl has a larger negative environmental impact than urban living for two reasons. First, low-density, car-centred neighbourhoods use more resources and consume more energy. A 2013 report from Smart Prosperity found that suburban households drive three times more than households close to city centres, leading to an increase in emissions in transportation.
Creating more walkable neighbourhoods for more of the population has the potential to reduce carbon emissions in Vancouver by 153 kilotonnes, which is equivalent to one-sixth of the city’s 2030 emissions-reduction target.
Second, sprawl can occur on natural lands and ecosystems within and surrounding municipalities. Beyond the immediate destruction of habitat or degradation of watersheds, this land conversion can also eat up valuable or productive farmland. Construction of suburbs in the Greater Golden Horseshoe saw an equivalent average of five family farms worth of agricultural land developed each week between 1996-2016. Given the potential of the agricultural sector to contribute to combating climate change, the conversion of habitat and farmland to low-density developments has an additional negative impact.
For these reasons and others, plans to build more dense infill housing in cities and downtown cores have been recognized by the City of Vancouver as a strong climate policy. Creating more walkable neighbourhoods for more of the population has the potential to reduce carbon emissions in Vancouver by 153 kilotonnes, which is equivalent to one-sixth of the city’s 2030 emissions-reduction target.
Reason 3: Building housing in a lower-carbon, more materially efficient way drives clean innovation, and creates new products and services we can export.
Where we build housing matters, but so does how we build that housing and what we use to build it. Lower-carbon, more resource-efficient building materials and construction techniques are key sources of clean innovation that can reduce greenhouse gas emissions and create Made-In-Canada products to be exported elsewhere. Designing solutions that survive the extremes of Canadian weather offers the potential to export products and technologies to markets facing similar technical design challenges.
Exporting clean solutions to these prospective markets can help further grow Canada’s clean economy and support job creation. In 2014, Canada’s green building sector generated $23.45 billion in GDP and employed nearly 300,000 people, making it a powerful economic sector. Given the worldwide need to reduce greenhouse gas emissions from commercial and residential buildings, supporting Canadian innovations in this space can help the country capture a greater share of the growing global market in the coming years.
Housing policy is climate policy — period
For these three reasons, it’s important to remember that policies around housing supply and affordability have a direct impact on our ability to address climate change. We need more affordable housing to ensure workers can afford to live near clean technology jobs, and where we need to reduce greenhouse gas emissions. We need dense housing in cities to avoid sprawl that increases greenhouse gas emissions. And we can use policy to drive innovation in low-carbon building materials to help export Canadian clean technology to the world.
Housing policy is critical to our environmental ambitions and supporting an economic recovery. Solving the affordability crisis is necessary to grow the clean economy Canada deserves.
John McNally is a Research Associate at Smart Prosperity Institute.
