Pricing to the Rescue

With Sustainable Prosperity’s report “Suburban Sprawl” released last October and our upcoming forum on sprawl in Vancouver on January 20th (link to registration here), a recent paper by researchers from the University of California, Berkeley on the carbon footprint of US households by zip code is well timed.

In this new study, Christopher Jones and Daniel Kammen explore the factors that can contribute to a city’s household carbon footprint, looking beyond the usual explanation of private vehicle use. While the use of private vehicles is a major factor in carbon intensity, other factors included in the paper are: household income, vehicle ownership, home size (all of which are on average higher in suburbs), population density, mode of electricity production, energy prices and weather.

The paper suggests that while population-dense city cores have low carbon footprints, the carbon footprints of the same cities’ suburbs can “cancel out” the low emissions from city cores.

The study also found a surprising extension of this pattern – while the most populous metropolitan areas are associated with the lowest downtown carbon footprints, they also tend to include the highest carbon footprints suburbs. This implies that on average in the US, larger metropolitan areas are more GHG intensive than smaller ones.

A finding that would be counterintuitive to most people is that denser suburbs have higher carbon footprints than less dense suburbs. This finding is important because it highlights the key issue that population density not a sufficient condition for the sustainability of cities. Proximity to goods, services, work and leisure and/or access to efficient transportation are also necessary conditions. Thus understanding the specific context of each city is essential to tailoring solutions that will truly reduce carbon footprints.

One key tool to increase the sustainability of our communities is accurate pricing. As outlined in our “Suburban Sprawl” report, pricing structures of development charges and municipal taxes and services that fail to account for the real direct costs to municipalities, let alone significant environmental costs, will encourage sprawl. For example, the higher vehicle GHG emissions associated with suburban sprawl are encouraged by large subsidies from general tax revenue for roads, and from free parking. Removing these subsidies by charging the real costs of infrastructure and environmental damage would cause consumers and municipalities to make better-informed decisions. Including the higher costs of municipal services for low density neighbourhoods in development charges, utility pricing, and property taxes is a simple way to encourage higher density developments.

Hence prices, or here the lack of price, helps explaining why we see such high GHG intensity in suburbs. A meaningful carbon price and/or changes in municipal fee structures would signal the true costs of suburban living and hopefully shape firms’ and individuals’ decision making. If we strive to do this in a way that is flexible and tailored to each municipality, taking into account the larger context of other factors and policies too, we can help build cities with lower carbon footprints in all their zip codes – or postal codes!