Municipalities can play an important role in promoting sustainable development by pricing services correctly. How we pay for municipal services has an impact on our behaviour: how much water we consume, how much waste we generate, whether we drive to work or take transit, and other economic decisions. How we pay for services and infrastructure also affects the nature, location, and density of development. Correct pricing will improve the efficiency with which resources are used to provide the services that residents and businesses want. Moreover, if cities are interested in pursuing compact development, they need to consider the impact of other financial tools (such as property taxes and development charges) on how cities grow and develop.