Green Cities - Economic Analysis

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The world is rapidly urbanizing. Cities are thought to be engines of growth and sources of structural change. But what does this "Triumph of the City" imply for our natural environment? In the face of global warming, the analysis of the effects of urbanization on the environment is of central sociopolitical relevance and one of the most pressing research questions in urban economics. Central questions are: Which factors are prone to decouple natural resource use and pollution from growing per capita incomes? What are the roles of markets and scarcity prices? Is this decoupling possible at all without policy intervention? What are appropriate economic policies in this framework? What is the nature of sustainable, green cities and city systems? Should we further increase the density of our cities and build more skyscrapers? Will some cities thrive to become "green" service cities while others end up as industrial "pollution havens"? Until now, there is just a slim economic literature concerning these questions which leaves large research gaps. The project should make a substantive contribution to the understanding of the key factors and processes which lead to the development of sustainable, green cities and city systems. We aim to develop a theoretical framework to analyze the market processes driving the interaction of urbanization and pollution, and which can be used to analyze potential environmental policies as well as the interaction of environmental and urban and regional policies: First, the theory should account for the development of city systems - the development of cities of different sizes, the interaction among cities and important inter-city relationships - as well as for relevant pollution sources within and between cities. The theory is meant to clarify potentials and limitations of market processes in relation to the avoidance of environmental damages. Second, the theory should be used for the analysis of (optimal) environmental policies for city systems and the clarification of potential conflicts between these policies and urban and regional policies. Third, special emphasis will be put on analyzing the role of population pressure in the relationship between urbanization and environmental problems. Fourth, the static framework shall be extended to a dynamic intertemporal context, in order to analyze the effects of investment and innovative decisions - which may be induced by policies ("directed technical change") - and to analyze dynamic (stock-pollution) problems, especially climate change. The results are to be published not only in first-rate international journals, but also in outlets for the general public and policy forums.