Expensive Citiesand Cheap Ones
A third approach to measuring environmental quality uses differences in housing prices across cities to measure differences in urban quality of life. People are used to the fact that a Mercedes costs more than a Toyota due to differences in perceived quality. Economists apply the same intuition to urban real estate markets. High real estate prices indicate that an area is a desirable place to live, in part because of its environmental quality. Suppose that a city has earned a reputation as a...
Fighting Sprawl with Smart Growth
Some cities have sought to fight sprawl and its environmental consequences by implementing smart growth policies. Kent Portney has summarized these efforts by constructing green policy indicators covering thirty areas.44 These indicators measure, for example, whether cities redevelop brownfields, use zoning to delineate environmentally sensitive growth areas, provide tax incentives for environmentally friendly transportation, limit downtown parking spaces, and purchase or lease alternatively...
Nonmarket Forces Governments Role
Like green technologies, government action also helps explain both the shape and location of the EKC. Some economists argue that as income rises, the typical voter becomes more willing to support spending on regulation.22 A related hypothesis suggests that a nation is more likely to enact environmental regulation when its economy is growing and income inequality is falling. Under these conditions voters are more likely to agree on policy priorities, and the government has the resources...
Conclusion
Over the past thirty years, national and local regulation has played a major role in improving urban environmental quality in U.S. cities. In addition to voter support, such measures often require significant resources, which helps explain the shape of the urban EKC. Effective regulation is costly. Most firms and individuals will only alter their behavior if they believe that there are credible probabilities of being caught ille 60. Greenstone and Gallagher 2005 examine home price growth in the...
Two Examples of the Urban EKC
Noise pollution is a leading example of the urban EKC. Almost all forms of urban economic activity generate noise, and as the scale of such activity increases, noise pollution rises. In a growing city, there will be more driving as motorcycles and cars replace bicycles, more manufacturing, and more construction activity. If antinoise laws are not enforced, then noise levels will grow. Eventually, however, richer consumers are likely to upgrade the quality of the products they buy or press...
