12 November 2025
by Francesco Ramella
The long run is a misleading guide to current affairs. ‘In the long run we are all dead,’ wrote John Maynard Keynes in 1923. The statement seems well-suited to the environmental policies pursued by the European Union.
At the heart of the European Green Deal there is the goal of climate neutrality to be achieved by 2050. But this is not the only one set for the middle of the century. There is also a “zero pollution action plan”, with which the EU aims to reduce air, water and soil pollution to levels that have no impact on human health and ecosystems. Moreover, the EU has set the aim of no net land take by 2040. Land consumption measures the net conversion of natural, agricultural, or semi-natural land into artificial surfaces, such as urban areas, infrastructure, and buildings. This is considered a key indicator for environmental policy, as it contributes to habitat loss, soil sealing and subsequent run-off during floods; reduced biodiversity and food security; direct loss of natural areas for relaxation, regeneration and outdoor activities.
According to the latest data released by the European Environmental Agency land intake from 2012 to 2018 amounted to 576 km2 annually of which 78% in urban areas.
Someone who is not an expert in this field might think that we are running out of precious land and thus be very surprised to learn that the percentage of total area in the EU that is artificially covered is less than 5% (Figure 1). Malta is an outlier with more than a quarter of its territory that is urbanized. The range of the other countries is between 13% (The Netherlands) and 1.8% (Latvia).
Woodland covers by far the largest area, some 41.0% of the total, cropland around a quarter and grassland the 17%.
The Union has a total area of 4.2 million km2. The annual rate of land consumption is therefore equal to 0.013%. At this rate, it would take a century to increase the share of artificialized land from 4.4% to 5.4%, a barely perceptible difference.
Regarding the security of food supply, it can be noted that it was much weaker in the past than it is today. Famine episodes were not at all uncommon, while now they are unknown in Europe and much less frequent worldwide thanks to the increase in soil productivity, the reduction in transport costs, and the strong growth of international trade.
In Europe, paradoxically, there is not too little, but too much land dedicated to agriculture, which is heavily subsidized.
The case of the Netherlands is particularly interesting. As shown in the graph above, this is the country with the highest share of artificial land. But, at the same time, it is a net exporting country in terms of agriculture and presents the second largest surplus by value in the world after the United States.
And there is no evidence that the risk of flooding is greater than in other countries. Rather, the Netherlands is an example of how one can adapt to living well below sea level, provided adequate economic resources and technological knowledge are available and applied.
Biodiversity worsened between 1970 and 2010, globally, but the number of species increased by 36 percent in Western Europe.
Biodiversity loss for different world regions based on the Living Planet Index methodology and dataset
Source: OECD
All these things considered, it does not appear that there are such compelling reasons for zeroing out land consumption. However, and like any other policy that prohibits voluntary market transactions which bring benefits to the parties involved, this measure entails undesirable effects. By curbing greenfield development, the policy may force densification in existing urban areas, drive up property prices and thus exacerbate housing shortages and hinder infrastructure projects and industrial expansion.
The value of agricultural land rezoned for residential use often increases dramatically by one or even two orders of magnitude.
In a paper published in the American Economic Review in 2019 Chang-Tai Hsieh and Enrico Moretti estimate that the stringent restrictions to housing supply in high productivity cities like New York and the San Francisco Bay Area, limiting the number of workers who have access to these areas, have lowered the US aggregate growth by 36% from 1964 to 2009.
In European soil conservation policies, as well as in many other environmental regulations, there seems to be no consideration for these implications. The “logic” follows the whatever-it-takes mantra, and the cost appears to be the independent variable.
Taking into account the negative impacts generated by the artificial scarcity of buildable land, the ban on urban expansion should therefore be limited to cases of sites characterized by exceptional aesthetic and recreational value.
In the presence of externalities that cannot be resolved through private arrangements, regulation through taxation is preferable to bans. With this approach, when the benefit of an action in the market exceeds the harm caused to third parties, it will be carried out with a Pareto improvement. Preventing it, on the other hand, as often happens today, is equivalent to throwing out the baby with the bathwater. In response to this increased taxation to offset externalities, a reduction in other forms of taxation should be anticipated. Moreover, regarding car emissions, which would increase with urban sprawl and lower density, the high taxation of fuels already more than offsets the negative environmental impacts.