Agglomeration, Urban Growth and Infrastructure in Global Climate Policy: A Dynamic CGE Approach

53 Pages Posted: 27 Jun 2015

See all articles by Fabio Grazi

Fabio Grazi

Centre International de Recherche sur l'Environnement et le Développement ; School for Advanced Studies in Venice (SSAV)

Henri Waisman

Centre International de Recherche sur l’ l'Environnement et le Développement

Date Written: June 26, 2015

Abstract

This paper presents an integrated model of urban agglomeration economies within a computable general equilibrium (CGE) model of global economic activity, energy use and carbon emissions to explore the theoretical and empirical nature of the interdependence of cities and the world economy in a climate policy context. Based on calibration data for 74 major OECD agglomerations, the integrated model is used to gauge the long-term impact of: i) global carbon pricing on urban systems and the economic activity; ii) urban infrastructure development on the economic costs of curbing carbon emissions. Importantly, it is found that combining urban infrastructure and carbon pricing allows for stringent emissions reduction targets, while still avoiding the economic and welfare costs of the carbon price only.

Keywords: Calibration, Cities, Hybrid Energy-Economy Modeling, New Economic Geography, Trade and Transport, Urban Infrastructure, Welfare

JEL Classification: C68, R12, Q54

Suggested Citation

Grazi, Fabio and Waisman, Henri, Agglomeration, Urban Growth and Infrastructure in Global Climate Policy: A Dynamic CGE Approach (June 26, 2015). FEEM Working Paper No. 061.2015. Available at SSRN: https://ssrn.com/abstract=2623495 or http://dx.doi.org/10.2139/ssrn.2623495

Fabio Grazi (Contact Author)

Centre International de Recherche sur l'Environnement et le Développement ( email )

45bis, avenue de la Belle Gabrielle
Nogent sur Marne CEDEX, 94736
France

School for Advanced Studies in Venice (SSAV) ( email )

Island of San Servolo
Venice, 30100
Italy

Henri Waisman

Centre International de Recherche sur l’ l'Environnement et le Développement ( email )

Campus du Jardin Tropical
45 bis avenue de la Belle Gabrielle
F94736 Nogent sur Marne Cedex
France

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