Urban land use and transportation planning for climate change mitigation: A theoretical framework

Cities account for 75% of global greenhouse gas (GHG) emissions from energy use, and their share is increasing due to rapid urbanization. While compact urban forms with public transit are viewed as important strategies for reducing emissions, environmental benefits must be weighed against the costs of public transit infrastructure, road improvements to alleviate congestion in dense urban space, and more expensive housing resulting from land use restrictions. The literature largely lacks a theoretical framework for assessing these tradeoffs. This paper derives analytical insights into urban land use and transportation planning for climate change mitigation by formulating a social planner’s utility maximization problem. The planner chooses the residential densities of urban zones as well as investments in road and public transit infrastructures that link these zones to the city center. Road travel is subject to congestion. Any feasible solution must accommodate a fixed total population and ensure that residents of all zones have the same maximum utility. GHG emissions associated with housing, road travel, and public transit generate damages. Analytical results show that incorporating GHG damages into urban planning always leads to an optimal solution with a more compact urban form, and reduces automobile travel in each zone if a specific condition involving the marginal congestion cost and the marginal effectiveness of road investment is satisfied. Numerical examples demonstrate that near-optimal emissions reductions and utility improvements can be achieved via public transit investment and mode shifting even if the planner inherits and cannot modify a suboptimal land use and road configuration.