This paper investigates driving forces and structural conditions influencing urban development in four small and medium-sized urban areas in Norway, with a focus on environmental sustainability. Since 1990, more ecologically efficient spatial solutions have been implemented compared to the sprawling urban development that took place
prior to 1990. Indeed, we find that decision makers in 2020 are more positive towards many environmentally friendly urban development measures than was the case in 1991. Since the 1990s, urban densification and compaction has become a hegemonic planning ideal, and people increasingly prefer concentrated housing types that are compatible with the planning ideal. While such urban development strategies normally cause smaller environmental impacts than counterfactual sprawling urban development, they have only partially decoupled growth in the building stock from negative environmental consequences. The increase in building stock observed in our case studies is due to changes in demographic and socio-economic characteristics, a societal and political drive towards economic and material growth, and a pursuit of environmental policies that do not sufficiently address environmental problems related to urban development. We argue that eco-efficiency strategies are insufficient to address the dual crisis of nature and climate, which demands substantial and absolute reductions in environmental impacts instead of merely increasing the impacts more slowly than the growth in consumption.