March 9, 2018

Effects on Locational Choices Could Enhance Emission Reducing Power of a Carbon Tax

Environmentalists have long been critical of “suburban sprawl.” A study of carbon emissions in Salt Lake City and surrounding areas, published recently in the Proceedings of the National Academy of Sciences, provides new reasons to question excessive suburban growth. Although the study itself does not make policy recommendations, its findings bolster the case for a carbon tax.

The study was authored by Logan Mitchell of the University of Utah, together with twelve colleagues from various institutions. The authors note that although urban areas account for some 70 percent of global carbon emissions, gaps remain in the understanding of the spatial distribution of those emissions, in part because many monitoring stations are located far from cities. In this case, however, long-term observations were available from five urban and suburban sites in the Salt Lake Valley, plus a reference site in the nearby Wasatch Mountains.

The study found that although increases in urban and suburban population were approximately equal over the ten-year study period, emissions increased in suburban areas but remained steady in the urban core. The study, which controlled for natural emissions, atmospheric mixing, and seasonal effects, found that fossil fuel use was the main driver of increased emissions.

A carbon tax could incentivize greater urban population growth and less suburban expansion in two ways. First, it would increase the cost per mile of driving, thereby raising the relative cost of a suburban lifestyle. Second, since urban residential buildings are more energy efficient than those in the suburbs, a carbon tax would increase the relative cost of heating and air conditioning in less densely populated areas.

In contrast, command-and-control environmental regulations would have less effect, or even perverse effects, on locational choices. For example, performance standards for furnaces and air conditioners raise the cost of building suburban homes but lower the cost of occupying in them, often actually reducing the long-run cost of suburban living. Similarly, CAFE standards for automobiles increase the cost of new cars, but lower the cost per mile of driving, thereby decreasing the opportunity cost of longer commutes.