Are Compact Cities Environmentally Friendly?

GATE (Groupe D'Analyse et de Théorie Èconomique) Working Paper No. 1001

36 Pages Posted: 18 Feb 2010 Last revised: 10 Oct 2013

See all articles by Carl Gaigne

Carl Gaigne

French National Institute for Agricultural Research (INRA) - UMR 1302 SMART

Stephane Riou

GATE Lyon-Saint-Etienne

Jacques-François Thisse

Catholic University of Louvain (UCL); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: January 24, 2010

Abstract

There is a large consensus among international institutions and national governments to favor urban-containment policies - the compact city - as a way to reduce the ecological footprint of cities. This approach overlooks the following basic trade-off: the concentration of activities decreases the ecological footprint stemming from commodity shipping between cities, but it increases emissions of greenhouse gas by inducing longer worktrips. What matters for the ecological footprint of cities is the mix between urban density and the global pattern of activities. As expected, when both the intercity and intraurban distributions of activities are given, a higher urban density makes cities more environmentally friendly and raises global welfare. However, once we account for the fact that cities may be either monocentric or polycentric as well as for the relocation of activities between cities, the relationship between density and the ecological footprints appears to be much more involved. Indeed, because changes in urban density affect land rents and wages, firms are incited to relocate, thus leading to new commuting patterns. We show policies that favor the decentralization of jobs in big cities may reduce global pollution and improve global welfare.

Keywords: greenhouse gas, commuting costs, transport costs, cities, urban-containment policy

JEL Classification: D61, F12, Q54, Q58, R12

Suggested Citation

Gaigne, Carl and Riou, Stephane and Thisse, Jacques-François, Are Compact Cities Environmentally Friendly? (January 24, 2010). GATE (Groupe D'Analyse et de Théorie Èconomique) Working Paper No. 1001. Available at SSRN: https://ssrn.com/abstract=1553776 or http://dx.doi.org/10.2139/ssrn.1553776

Carl Gaigne (Contact Author)

French National Institute for Agricultural Research (INRA) - UMR 1302 SMART ( email )

4 allée Adolphe Bobierre
CS 61103
Rennes Cedex, 35011
France

Stephane Riou

GATE Lyon-Saint-Etienne ( email )

34, rue Francis Baulier
Saint-Etienne, 42023
France

Jacques-François Thisse

Catholic University of Louvain (UCL) ( email )

Place des Doyens 1
Louvain-la-Neuve, 1348
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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