The Environmental Cost of Land Use Restrictions

Mark Colas and John M. Morehouse

No 20, Opportunity and Inclusive Growth Institute Working Papers from Federal Reserve Bank of Minneapolis

Abstract: Cities with cleaner power plants and lower energy demand have stricter land use restrictions; these restrictions increase housing prices and disincentivize living in these lower polluting cities. We use a spatial equilibrium model to quantify the effect of land use restrictions on household carbon emissions. Our model features heterogeneous households, cities that vary by power plant technology and the benefits of energy usage, as well as endogenous wages and rents. Relaxing restrictions in California to the national median leads to a 2.3% drop in national carbon emissions. The burden of a carbon tax differs substantially across locations.

Keywords: greenhouse gases; Local labor markets; Spatial equilibrium (search for similar items in EconPapers)
JEL-codes: Q4 R13 R31 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2019-06-25
New Economics Papers: this item is included in nep-ene, nep-env and nep-ure
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmoi:0020

DOI: 10.21034/iwp.20

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