Chapter 7. Cities and the Environment

This chapter surveys recent literature examining the relationship between environmental amenities and urban growth. In this survey, we focus on the role of both exogenous attributes such as climate and coastal access and endogenous attributes such as local air pollution and green space. A city's greenness is a function of its natural beauty and is an emergent property of the types of households and firms that locate within its borders and the types of local and national regulations enacted by voters. We explore four main issues related to sustainability and environmental quality in cities. First, we introduce a household locational choice model to highlight the role that environmental amenities play in shaping where households locate within a city. We then analyze how ongoing suburbanization affects the carbon footprint of cities. Third, we explore how the system of cities is affected by urban environmental amenity dynamics and we explore the causes of these dynamics. Fourth, we review the recent literature on the private costs and benefits of investing in “green” buildings. Throughout this survey, we pay careful attention to empirical research approaches and highlight what are open research questions. While much of the literature focuses on cities in the developed world, we anticipate that similar issues will be of increased interest in developing nation's cities.