Cividend: A Democratic Urban Planning Mechanism

“Cities have the capability of providing something for everybody, only because, and only when, they are created by everybody.”

Jane Jacobs, The Death and Life of Great American Cities

Introduction

Urban planning as a professional discipline is implicitly flawed in its approach to the design of cities. The term “urban planning” is a category error—it is a mistake to view urban environments as something that can be planned.

This stems from our modern desire to make messy systems ‘legible’ through maps, plans, strategies, and grids. It temporarily suppresses the underlying messiness without ever solving it.

The dominant urban planning philosophy of today assumes two contradictory stances.

On one hand, it assumes people know what is best for their life and can faithfully express it via the virtues of the free market. “If people want single family homes with yards, far from the activity of the city centre, then by rights the market has provided!” (Ignoring the five-decade legacy of race-driven zoning policies, loss-making municipal infrastructure subsidies, and hidden costs to health and wellbeing.)

On the other hand, contemporary urban planning assumes that people have no idea what is best for their life and must be saved from their follies by the maternal hand of strict zoning policies, design guidelines, and municipal bylaws. “If we do not intervene, neighborhoods will devolve into chaos; trust the experts to masterplan your streets and buildings!” (Ignoring the irony of assuming a central bureaucrat can decide what is best for a neighborhood that they do not live in, work in, or worship in. And the repeated failures of historically master-planned cities and the prevalence of bylaw exemptions.)

There is a better way to think about cities, how they evolve and our role in the process.

It helps to start with two fundamental truths:

1. Incredibly complex systems arise from a set of very simple rules
2. We cannot predict the future, but we can invent it.

By thinking about the city differently, we can reframe “the kind of problem a city is” as Jane Jacobs said, one that is better suited to our 21st century challenges and opportunities.

We need to redefine our thinking about cities as collections of interactions, rather than just physical spaces. We should think about cities as market-based, and socially-driven systems.

Michael Batty defines cities as “…aggregates of multiple decision-making processes that generate designs and decisions pertaining to the way we organize our social and economic activities in space and time,” and this is the way they will be approached here. To invent future cities, we must create a system of “radically innovative political economies and social technologies that are truer to the richness of our diversely shared lives” per RadicalxChange’s mission.

By looking at 10,000 years of urban living, comparing case studies from cities around the world (Houston, Toronto, Brasilia, Slotervaart, Asheville and others), and using the lens of Radical Market principles, my team distilled a set of rules to reimagine how urban development might create thriving cities and citizens. The rules point to a system that must:

1. Operate on human-to-human market interactions, with regular resets.
2. Create dynamic flows and interactions.
3. Self-adapt to find and keep equilibrium.
4. Be hyper-local and small-scale.
5. Prioritize psychology over technology.
6. Decentralize governance.
7. Measure a broad spectrum of specific metrics of human flourishing.
8. Give access and information to all.
9. Encourage active participation and personal development.
10. Use strategic human intervention with respect to infrastructure to support the above.

We can call the set of rules the Cividend. Civic and dividend together act as a social currency and interaction system people can use to build the communities they want to live in.

If we take all the rules and run them in sequence, the process might look something like this:

At the beginning of each year, citizens are allotted a certain amount of cividends (the “civic” part of cividend.) One cividend equals one vote towards or against a development. The amount of cividends given is based on earlier votes (the “dividend” part of cividend).

• If a person votes for a development, YIMBY, their future allocation of cividends is tied to the success of that development, along to-be-defined metrics, but yield eudemonia and productivity per acre. This incentivizes citizens to not only vote for projects which will make a positive contribution, but also incentivizes them to patronize projects and support local businesses.
• If a person votes against a development, NIMBY, and the project still goes ahead, they get no cividends from the project. This ensures people are truly invested in their votes and share in the downsides as well as the upsides of progress. It builds on the rule of making greed good for the system, rather than pretending people are altruistic.

A developer sends their proposal to the cividend system. A democratically-agreed-to algorithm assesses it along the Cividend rules, for example: is it in line with community values? (safe streets guidelines for example); does it maximize productivity per acre? (a measure of property tax generated per acre – where a dense downtown generates more than a Walmart on the edges of town); does it provide for what the community needs? (i.e. scores higher for providing rental and lower for providing condos, the further away from the desired range, the more incentivized/penalized the project is); does it increase flows of people, ideas, data, etc.?

The cividend score is sent to a human panel, made up of a local citizen, a professional infrastructure engineer and an urban economist. The local citizen is like worker representation on company boards – an advocate empowered to represent the masses. The infrastructure planner helps bridge the gap between short-term development and long-term infrastructure planning. Roads, sewers and cable need to be accounted for. And an urban economist (not urban planner) ensures market signals are respected, and to re-calibrate the system parameters if necessary.

The development proposal, now scored, is put to a community vote. The higher the proposal is ranked, the harder it is to vote against.

• For example, a 5-star proposal, which meets all the human, commercial and infrastructural needs of the community, the best score, would take 5x the number of votes to decline.
• Conversely, a 1-star proposal could be declined with few votes. This ensures the best projects, as defined by the rules of human-centric spatial living take on a momentum of their own.

Voting with cividends is quadratic. Five votes for a project would cost 64 cividends. However, value generated from the project also increases according to voting quantity, so a person with many cividends invested in supporting a project would get multiples of cividends returned to them, compared with someone who invested one cividend.

Citizens can use cividends to vote on any project in their city. To ensure interests are kept hyper-local, cividends are worth more on questions closer to your home. This is on a zip-code basis. As you radiate outward from the epicenter of development in concentric circles, cividends are worth less. Imagine a 2x multiplier on your vote if your neighbour wants to build something, and an 80% reduction in vote power for new tower 50 kilometers away. You can still vote for it if, but you will have to invest a lot more into the system to move the lever. This is an extension of the quadradic voting principle and way to keep ‘skin in the game.’ The result would be cities that look more like a patchwork of local flavours, vs. the hub-and-spoke model of dense downtown cores.

A small percentage of cividends are kept aside, paid for by a ‘system tax’ on each vote. They are collected into a pool and made available to be collectively voted on to decide what to do with them annually. This pool is set aside to fund community structures like waterparks, jungle gyms and so forth, that may not get built by the market.

All cividend activity is managed and tracked on an open source database. Cividends are tagged according to where they were used, which determines how they are allocated in the next year, and how the ‘tax’ portion is spent on community goodies as described above.

Citizens, wary of the time and energy involved in voting, may assign their votes to a trusted party to vote in solidarity, like proxy voting. They may also vote “with the system”, which automatically votes for the most beneficial projects. Beneficial projects are the ones that are the highest ranked by the system because they most closely meet the needs of the community, as dictated by actions of the community. If there is a dearth of parks, a park-heavy project will win. If there is a shortage of local retail, or 4-bedroom multi-generational apartments, then those will be what the systems defaults to, in accordance with the parameters and bands set out above.

Repeat until you have a thriving network of healthy communities.

How might we design a system modeled on natural ecosystems to create cities that support human flourishing in cities without any centralized human intervention?

Cividend is how.

reCividend aims to bridge the gap between two views: that individuals are the best judges of their own experience, and, with a little help from a well-designed system, individuals can faithfully express their preferences in a way that benefits everyone.

The mechanism engages people as they are, not as we wish them to be. It allows for the full expression of human emotion, where there are no wrong answers, only reasoned trade-offs. It is value-neutral, in a moral sense. It prioritizes the individual, with the understanding that improvement at one level will radiate outwards in concentric circles: first to the household, then to the block, then to the community and eventually to the city. Proposing to change a city by not directly changing it seems counterintuitive.

It empowers people to enact the change they want to see, where and how they want to see it, with skin in the game so they are invested in their decisions and their communities. It imbues everyone with a personal responsibility and agency to take ownership of the quality of their immediate surroundings.

System Archetypes

If cividend is one answer to the question:

• How might we design a market-based, socially-conscious mechanism to replace centralized urban planning?

Then two more questions naturally arise:

• How might we validate Cividend in the real world?
• And how might Cividend fare against mainstream urban planning tools, i.e. the things we already have?

To answer these questions, the framework of systemic leverage points is needed. Cities are one of the most complex systems-of-systems. Any single intervention has unintended consequences and counterintuitive effects. A systems lens is the only lens big enough to approach this problem.
There have been many ideas aimed at fixing cities. They tend to fall into one of 4 archetypes, borrowed from Daniel H. Kim and Donella Meadows. We selected the most representative or prevalent example of urban planning tools in each archetype for the competitive set.

Fixes that Fail

• “In a ‘fixes that fail’ situation, a problem symptom cries out for resolution. A solution is quickly implemented to alleviate that symptom, but the unintended consequence of the ‘fix’ exacerbates the problem. Over time, the problem symptom returns to its previous level or becomes worse”

Urban planning example: rent controls

• As more people move into a city, demand outstrips supply of housing and the cost of living increases. Facing an outcry from citizens for more affordable housing, politicians try to override the market, to impose rent controls on certain buildings. While this benefits people currently in affordable housing, it harms those on the outside looking in. Developers of residential rentals can no longer make the math work on new buildings. Future projections of rental income do not cover their internal return on investment and they shelve development plans. This causes even less supply of new housing, causing the cost of living to increase even higher. And so on…

Tragedy of the Commons

• “In ‘tragedy of the commons’ structure, each person pursues actions which are individually beneficial. If the amount of activity grows too large for the system to support, however, the ‘commons’ experiences diminishing benefits”

Urban planning example: property tax and undeveloped property.

• Property tax is based on the value of built structures on a given piece of land but does not value the land itself. An undeveloped piece of land is worth significantly less than the same piece of land with a structure. As property prices rise in an area, owners of undeveloped land share in the increase in value, without having to pay any extra tax. There is an incentive to let everyone else build, while they hold out on building. The more individual developers wait, the more the value of the land increases because the supply of new stock is so low. Thus, developers make money while nothing gets built and the cost of living continues to increase.

Rule Beating

• “Rules to govern a system can lead to rule-beating: perverse behavior that gives the appearance of obeying the rules or achieving the goals but actually distorts the system”

Urban planning example: Zoning variances

• A study by OCAD University’s Visual Analytics Lab showed exceptions to recent large Toronto developments outweighed those within the height envelopes. The exceptions are the rule. The ‘rules’ of zoning are mere suggestions to those with the legal resources to navigate the system. Beating the rules becomes the norm, and a gap widens between what gets talked about and what gets built.

Seeking the Wrong Goal

• “System behavior is particularly sensitive to the goals of feedback loops. If the goals⁠ — the indicators of rules satisfaction⁠ —are defined inaccurately or incompletely, the system may obediently work to produce a result that is not really intended or wanted”

Urban planning example: growth mindset

• City development plans and a general obsession with growth rate, GDP and increased productivity has us chasing numbers at the expense of metrics that matter. The singular pursuit of growth has cities expanding into greenbelts, building suburban sprawl and forcing people into unlivable communities all to pad the stats in a claim to be the fastest growing city.

Give me a lever long enough…

By Meadows’ account, most of the common tools in the urban planning toolkit are low-leverage at best. Cividend offers us a more powerful vantage point from which to change our cities.

How can we turn the idea into a testable, real-world prototype?

How can we ‘experience the future’ of this concept before it happened? Testing the concept in real life can be done in several iterative stages. On a small scale, the principles could be turned into ‘rules’ for a board game. Each use would propose a development, and the others would strategically vote on it. Actual mini city centres would then get built with additive block pieces, like Lego. This first step would uncover any obvious glaring flaws and loopholes. The game could be played several times with several distinct types of players and see what types of neighbourhoods emerge. This “boardgame” development would be a beta testing of the Cividend protocols, principles, and rules that then could be implemented into an application.

Next, the refined principles could be taken to a game developer/programmer in hopes of converting the principles into an algorithm. At this stage we would turn principles into yes/no, if/then, and/or logic. We would also face decision points where we need to choose to prioritize one principle over another. Once a sturdy algorithm is built, we might again run the simulation hundreds or thousands of times in a virtual space and witness the types of cities that emerge. Decentraland could be a fertile testing ground, as could a SimCity engine. The cost of renting computing power has come down dramatically, allowing us to virtually test the framework several magnitudes more often than we could in reality.

Once these two phases of extensive testing are complete and improvements have been made, the logical step is to build the prototype at scale.

Building on the principle that the suburbs are the one key to fixing our cities, given the symbiotic relationships between them, their flows of people, information and currency, we could start in a rust belt town (marked by declining industry and falling population).

Completely speculative at this point, but it is reasonable to think we could pitch towns on the idea and lobby for a special zoning exemption to test this. A team would raise funds to buy a) a forlorn strip mall or b) most of a downtrodden main street downtown in a small town. Developers could be tapped for financing, viewing it as a way to innovate and generate positive press. The Cividend Company (B Corp) could incent developers and citizens to start building and see what happens. The ideal scenario is that it works well enough to be adopted by other small towns, and eventually in certain forward-thinking cities.

What might be the major opponents and barriers to implementation?

There are plenty of skeptics. To list a few:

• Urban planners: in disagreement that urban planning as a profession has caused many of the problems it has tried to solve.
• Social activists: worried for poor, uneducated, or marginalized groups being taken advantage of.
• Developers: concerned that the development approval process becomes even more opaque and unworkable.
• Homeowners: confused over how the system works and nervous of an ambitious 4-story renovation next door.
• Municipalities: opposed to ceding control over their city/region/town to an algorithm, while keeping accountability to voters.

Each of these stakeholders holds valid and valuable concerns. The answer to the next question applies to how we might bring them along the journey with us.

How do we get cities and private property owners onboard?

Success of the system is not guaranteed without the ability of its citizens, users, to understand and the responsibility of citizens to use the system.

Our openness to change is the true uncertainty here. Without it, even the most well-designed system will be circumvented and hijacked by a powerful few. Only when all participants are truly invested in its success will it balance checks on power with demonstrable progress. Therefore, we emphasized value-free decision making and strong governance in the system. But even this is not enough.

For Cividend to work, people must be given the chance to ‘experience the future’ before it happens. They need to live in the desired city, experience the process of making decisions, feel the tradeoffs and see the fruits of their actions. They need to be rewarded for their time, effort and existence. All of this is necessary to getting Cividend⁠—an idea with some serious ‘conceptual overhead’ to manage⁠—off the ground. The experiential future’s work needed for this to happen is outside the scope of this post, but worthy of a talented practitioner’s time. Toronto’s Laneway Housing project would be a good candidate to test this in the real world, even if hypothetically, to help make the ideas real and concrete.

Can we account for unintended consequences?

An advisor to this project asked this question another way: “In this world, how does this system completely blow up?” A fitting answer would be like Mark Twain’s answer on how people go bankrupt: “slowly at first, and then all at once.”

Luckily, we can learn from other’s mistakes. A promising field is cryptoeconomics. Cryptoeconomics sits at the intersection between game theory, behavioural psychology, software programming, logic, classic economics, philosophy, rhetoric and governance, and much more.

If we are to replace central city planning with some new solution, we need to replace all the committees, policies, and zoning documents with a set of principles and incentives to govern it. Savvy design is crucial in designing procedural governance mechanisms, otherwise, groups can vote themselves into a black hole with poorly designed voting structures, contracts, and mechanisms.

RadicalxChange is the right community to carry the torch into the next phase of radically reimagining the type of problems our cities are – and the type of new tool we need to create to solve them.