The Role of Housing in Urban Carbon Emissions

Abstract

U.S. cities vary markedly in per capita rates of carbon dioxide emissions. This paper studies the impact of regional housing and land stock allocations on urban carbon emissions. It develops a dynamic spatial equilibrium model of housing stock evolution between connected, heterogenous markets and proposes a solution method for the model, which is otherwise intractable with a large number of locations. The model is used to measure the impact of housing policies on carbon emission rates. The main finding is that policies incentivizing an intensive use of housing have direct effects on carbon emission by increasing energy usage and creating lower density cities, and indirectly, these tilt population allocation across cities towards those offering high housing consumption, which have higher emission rates on average. The paper derives emission-equivalent values for the user cost of housing, land use regulations, and carbon taxes.

Keywords: land use, energy use, carbon emissions, housing supply dynamic spatial equilibrium

JEL Classification: R11, R52, Q54, R31