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Are Compact Cities Environmentally (and Socially) Desirable ?

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  • Carl Gaigné
  • Stéphane Riou
  • Jacques-François Thisse

Abstract

There is a wide consensus among international institutions and national governments in favor of compact (i.e. densely populated) cities as a way to improve the ecological performance of the transport system. Indeed, when both the intercity and intra-urban distributions of activities are given, a higher population density makes cities more environmentally friendly as the average commuting length is reduced. However, when we account for the possible relocation of activities within and between cities in response to a higher population density, the latter may cease to hold. Because changes in population density affect land rents and wages, firms and workers re-optimize and choose new locations. We show that this may reshape the urban system in a way that generates both a higher level of pollution and welfare losses. As cities become more compact, agglomeration occurs and, eventually, the secondary business centers vanish. By increasing the average commuting length, these changes in the size and structure of cities may be detrimental to both the ecological and welfare objectives even if intercity trade flows decrease. This means that compact is not always desirable, and thus an increasing-density policy should be supplemented with instruments that impact the intra- and inter-urban distributions of activities. We argue that a policy promoting the creation of secondary business centers can raise welfare and decrease emissions.

Suggested Citation

  • Carl Gaigné & Stéphane Riou & Jacques-François Thisse, 2012. "Are Compact Cities Environmentally (and Socially) Desirable ?," Cahiers de recherche CREATE 2012-4, CREATE.
  • Handle: RePEc:lvl:creacr:2012-4
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    File URL: https://www.create.ulaval.ca/sites/create.ulaval.ca/files/Publications/create2012-4.pdf
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    References listed on IDEAS

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    Cited by:

    1. Legras, Sophie, 2015. "Correlated environmental impacts of wastewater management in a spatial context," Regional Science and Urban Economics, Elsevier, vol. 52(C), pages 83-92.
    2. Larson, William & Yezer, Anthony, 2015. "The energy implications of city size and density," Journal of Urban Economics, Elsevier, vol. 90(C), pages 35-49.
    3. Laurent Denant-Boèmont & Carl Gaigné & Romain Gaté, 2016. "Urban spatial structure, transport-related emissions and welfare," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 2016-18, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    4. Stéphane De Cara & Anne Fournier & Carl Gaigné, 2011. "Feeding the cities and greenhouse gas emissions: a new economic geography approach," Working Papers 1109, Chaire Economie du climat.
    5. Legras, Sophie & Cavailhès, Jean, 2016. "Environmental performance of the urban form," Regional Science and Urban Economics, Elsevier, vol. 59(C), pages 1-11.
    6. Borck, Rainald, 2014. "Will skyscrapers save the planet?," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100566, Verein für Socialpolitik / German Economic Association.
    7. Kahn, Matthew E. & Walsh, Randall, 2015. "Cities and the Environment," Handbook of Regional and Urban Economics, Elsevier.
    8. Christian Hilber & Charles Palmer, 2014. "Urban development and air pollution: Evidence from a global panel of cities," GRI Working Papers 175, Grantham Research Institute on Climate Change and the Environment.
    9. Borck, Rainald & Tabuchi, Takatoshi, 2015. "Pollution and city size: can cities be too small?," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113124, Verein für Socialpolitik / German Economic Association.
    10. Rainald Borck & Jan K. Brueckner, 2016. "Optimal Energy Taxation in Cities," CESifo Working Paper Series 5711, CESifo Group Munich.
    11. Borck, Rainald, 2016. "Will skyscrapers save the planet? Building height limits and urban greenhouse gas emissions," Regional Science and Urban Economics, Elsevier, vol. 58(C), pages 13-25.
    12. Kim, Jinwon, 2016. "Vehicle fuel-efficiency choices, emission externalities, and urban sprawl," Economics of Transportation, Elsevier, vol. 5(C), pages 24-36.
    13. Rémy Le Boennec, 2014. "Nouvelles centralités, choix modal et politiques de déplacements "2.0" : le cas nantais," Post-Print hal-01657242, HAL.
    14. Carl Gaigné & Jacques-François Thisse, 2013. "New Economic Geography and the City," Working Papers SMART - LERECO 13-02, INRA UMR SMART-LERECO.
    15. Rémy Le Boennec & Florent Sari, 2015. "Nouvelles centralités, choix modal et politiques de déplacements : le cas nantais," Post-Print hal-01657128, HAL.
    16. Anderson, John E. & Wulfhorst, Gebhard & Lang, Werner, 2015. "Energy analysis of the built environment—A review and outlook," Renewable and Sustainable Energy Reviews, Elsevier, vol. 44(C), pages 149-158.
    17. Schindler, Mirjam & Caruso, Geoffrey & Picard, Pierre, 2017. "Equilibrium and first-best city with endogenous exposure to local air pollution from traffic," Regional Science and Urban Economics, Elsevier, vol. 62(C), pages 12-23.
    18. Ma, Jun & Cheng, Jack C.P., 2016. "Estimation of the building energy use intensity in the urban scale by integrating GIS and big data technology," Applied Energy, Elsevier, vol. 183(C), pages 182-192.
    19. Pflüger, Michael P., 2018. "City Size, Pollution and Emission Policies," IZA Discussion Papers 11354, Institute for the Study of Labor (IZA).
    20. Cárdenas Rodríguez, Miguel & Dupont-Courtade, Laura & Oueslati, Walid, 2016. "Air pollution and urban structure linkages: Evidence from European cities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 1-9.
    21. Fremstad, Anders & Underwood, Anthony & Zahran, Sammy, 2018. "The Environmental Impact of Sharing: Household and Urban Economies in CO2 Emissions," Ecological Economics, Elsevier, vol. 145(C), pages 137-147.
    22. Nora Ruth Libertun de Duren & Roberto Guerrero Compeán, 2015. "Growing Resources for Growing Cities: Density and the Cost of Municipal Public Services in Brazil, Chile, Ecuador, and Mexico," IDB Publications (Working Papers) 7332, Inter-American Development Bank.
    23. Borck, Rainald & Pflüger, Michael, 2013. "Green cities? Urbanization, trade and the environment," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79763, Verein für Socialpolitik / German Economic Association.
    24. Kristof Dascher, 2013. "Climate Change and Urban Contours: Why Countries with Denser City Centers Fight Climate Change Harder," ERSA conference papers ersa13p744, European Regional Science Association.

    More about this item

    Keywords

    Greenhouse gas; commuting costs; transport costs; cities;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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