The Role of Housing in Carbon Emissions

Abstract

This paper studies the impact of regional housing and land stock allocations on carbon emissions and the role for policy therein. It first measures the role of home sizes and population densities in determining differences between U.S. urban areas in carbon footprint of their residents, which the literature has shown to be large. Then it develops a dynamic spatial equilibrium model of housing stock evolution between connected, heterogenous markets to measure the impact of housing policies on aggregate emissions. The main finding is that policies incentivizing an intensive use of housing have direct effects on carbon emission by increasing energy usage and creating lower density cities, and indirectly, these tilt population allocation towards higher emissions cities, which offer more housing consumption on average. The paper derives emission-equivalent values for the user cost of housing, land use regulations, and carbon taxes.