How environmental regulations are affecting housing development across the world

The global housing sector is increasingly influenced by environmental regulations aimed at mitigating ecological degradation. While these policies are essential for sustainable development, they often present challenges for housing projects worldwide. A notable and an ongoing example is the Netherlands' nitrogen crisis, which has significantly impacted its construction industry, but that is just the tip of the iceberg, writes John Ridgeway.

Let’s start with the Netherlands, which has grappled with a nitrogen emissions crisis that threatens its housing sector for many years. The country emits more nitrogen compounds per hectare than any other EU nation, primarily due to intensive livestock farming and industrial activities. These emissions have led to soil and water pollution, adversely affecting biodiversity.

In 2019, the Dutch Council of State invalidated the Integrated Approach to Nitrogen (PAS), a programme that previously allowed construction projects to proceed under the assumption of future nitrogen reduction measures. This ruling resulted in the suspension of approximately 18,000 construction projects, exacerbating the nation's housing shortage.

As of March 2025, over one-third of the 631,000 homes planned for construction by 2030 are at risk due to stringent nitrogen emission standards. This equates to 244,000 homes, with investments totalling €138 billion – and now potentially in jeopardy.

The crisis underscores the complex interplay between environmental policies and housing development, highlighting the need for balanced approaches that address ecological concerns without stalling essential infrastructure projects.

Global perspectives

The challenges faced by the Netherlands are not isolated. Other countries worldwide are encountering similar dilemmas as they strive to balance environmental sustainability with housing needs.

In the UK, environmental regulations have significantly impacted housing development. The EU's Habitats Directive, retained post-Brexit, has been criticised for hindering infrastructure projects, including housing. These regulations aim to protect natural habitats, but have been perceived as obstacles to economic growth and housing expansion. The forthcoming Planning and Infrastructure Bill seeks to address these issues by simplifying regulatory processes and reducing legal challenges, aiming to expedite housing projects while maintaining environmental safeguards.

Additionally, Natural England has been granted powers to acquire green spaces to create nature reserves, funded by developers. This initiative allows construction projects to proceed while ensuring conservation efforts, reflecting a strategy to balance development with environmental preservation.

In the United States, shifts in energy infrastructure regulations and climate change impact assessments, have influenced housing developments. The Federal Energy Regulatory Commission (FERC) has adopted a case-by-case approach to assessing climate impacts of natural gas infrastructure projects, signalling a move towards fewer constraints on greenhouse gas considerations in project approvals. This shift aims to speed up the permitting process, reflecting a broader trend of balancing environmental considerations with infrastructure development needs.

Globally, there is a growing recognition of the need to integrate environmental sustainability with housing affordability. The World Green Building Council's "Sustainable and Affordable Housing" report challenges the perception that sustainable housing is not a mass-market solution. It emphasises that many solutions to the global housing crisis already exist and advocates for green building practices to reduce the environmental impact of new housing developments.

Furthermore, research indicates that residential land structure significantly impacts carbon emissions during urbanisation. Improving land use efficiency and rational planning of residential areas can reduce energy consumption and carbon emissions, thereby enhancing environmental quality and residential welfare.

Reconciling housing development

The intersection of housing development and environmental sustainability presents both challenges and opportunities. Governments can streamline environmental regulations to facilitate housing development without compromising ecological integrity. For instance, revising overly stringent policies that hinder construction projects can promote a more balanced approach.

Implementing sustainable construction methods can also reduce the environmental footprint of housing projects. This includes using eco-friendly materials, enhancing energy efficiency and incorporating renewable energy sources.

Coordinated efforts between urban planners, environmental agencies and developers can further ensure that housing projects align with environmental conservation goals. This holistic approach facilitates the development of communities that are both liveable and sustainable.

This is going to mean involving local communities in planning processes to ensure that development projects meet the needs of residents while respecting environmental constraints. This participatory approach fosters public support and enhances the social sustainability of housing initiatives.

New technology can also optimise construction processes and reduce environmental impacts. For example, advancements in building information modelling (BIM) and prefabrication techniques can lead to more efficient and sustainable construction practices.

We can see therefore, that the tension between environmental regulations and housing development is a global challenge that requires nuanced solutions. The Netherlands' nitrogen crisis exemplifies the complexities involved in balancing ecological preservation with the pressing need for housing. By adopting integrated strategies that encompass policy reforms, sustainable practices and community involvement, it is possible to harmonise housing development with environmental sustainability, ensuring that both human and ecological needs are met.