Interview of Matthew Kahn

Matthew Kahn is an environment economist and teaches at UCLA. There is a very good interview of Kahn in Cleveland Fed publication. I liked the interview quite a bit.

Richter: We will start with your work on green cities. To begin with, what types of cities would you say have boomed over the past 35 years?

Kahn: Let me point to three big facts. In the United States, urban economists have noted—and everyone else has as well —that people seek out warm-weather cities. This is behind the boom of Phoenix, Las Vegas, and Dallas. Warm weather is one exogenous factor that people want. Second is a coastal city. Jordan Rappaport and Jeffrey Sachs have done some nice work documenting that the U.S. population wants to be on the coast rather than in “flyover” country. I was born in Chicago and I guess that’s part of the country they’re flying over. And finally, booming cities have been the skilled cities, those having more educated residents. Skill is usually measured by what percentage of adults are college graduates, and those cities with a lot of college graduates have greater wage growth and population growth than other cities.

Richter: And how do so-called green cities fare? How would you even define green cities?

Kahn: An example of a green city would be San Francisco, where a large chunk of its livability is from its climate. No government policy can get rid of humidity or cold winter temperatures. What goes right in San Francisco is that it has a feel of new urbanism, of having a walkable, outdoor life.

On local environmental criteria, San Francisco has clean air, clean water, no public health outbreaks. And then on global environmental criteria, while the United States has the largest carbon footprint per capita of any nation, San Francisco is one of our greener cities in terms of carbon dioxide per capita because people don’t use a lot of air conditioning there. The electricity they use is generated from natural gas-powered plants, which are cleaner than coal-fired plants. And people do use public transit there more than in other cities. So to finally answer your question, a green city scores high on local and global environmental criteria. But a mayor would really only care about the local criteria in terms of pleasing his or her constituents.

That said, green cities are not a free lunch. What happens in many cases, such as in Marin County in San Francisco, with open space initiatives—you’re taking that land out of the housing supply. So from a simple supply and demand angle, you’re going to get higher home prices in these communities. That’s because the community has become more desirable and also you’re making it harder to build on this chunk of desirable land. Homeowners become richer but renters (and minority households are often renters) get punished by gentrification and may not be able to afford to live in their old community. Some urban economists are studying this churning—getting priced out of your own neighborhood. This has been documented in Harlem as crime has fallen in Manhattan.

Read the whole thing. Very good insights.

It is just amazing to find so many economists doing such insightful work. He also writes a blog which has become a part of must read list already.  His voxeu columns are here.

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