In places where the land is expensive, yes. But that's also largely where the people are, so it's helpful to build there too. You don't end up with a giant surface parking lot, because you get taxed the same whether you have a parking lot, or a 5-story parking structure.

> Environment wise, isn't that an incentive to build every last square meter?

In places where land values are very high, yes. Presumably leading to denser cities and less suburban sprawl, which would be a nice benefit for the environment.