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In developed countries, more than 70% of the people lives in urbanized areas. This causes the fact that low population density urban areas are expanding resulting from promotion of motor vehicle transportation, and hollowing out in centers of cities with more energy consuming structure. These phenomenon increase discharges of carbon dioxide, waste, and other pollutants, thus a new city structure should be explored. Among others, environmentally friendly city has been drawing attention. The concept of environmentally friendly city refers to less environmental load and higher amenity. This article focuses on an environmentally friendly city. From this point, the authors have already developed static computable general equilibrium (CGE) models of Obihiro metropolitan area in Hokkaido prefecture, Japan. However, the environmentally friendly city has a dynamic nature. Therefore this paper aims to extend the authors' previous models into an intertemporal framework, maximizing the sum of discounted household utility function under a scenario of future decreasing population that reflects the current trend of population growth in Japan. And then the intertemporal economic impacts of promotion of waste recycling are numerically analyzed by applying the new model. Finally cases of decreasing and increasing populations of the study area are compared with showing the economic implication of decreasing population.

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