For the case of pollution, many economists recommend policies to get the prices right. Whether or not this puts them in good standing with Greens, many of whom want to change the world in more profound ways, remains an open question.
Last year, Parry, Walls and Harrington surveyed the literature and found that a charge of ten cents per mile would get the price of driving right. To what extent would such a tax change our cities and the way we live? No one knows. In a soon to be released paper, Alex Anas and David Pines ("Anti-sprawl Policies in a System of Congested Cities", Regional Science and Urban Economics), suggest some surprising results based on a theoretical model.
The "carbon footprints" people take another approach. They compare the carbon cost of alternate developments and see if exposing this will change the world.
Yesterday's NY Times included "Don't Let the Green Grass Fool You ... Some suburbanites are grappling with their enormous carbon footprint." But these approaches say little about trade-offs and the fact that all resources are scarce. The article includes a reference to a study by Reid Ewing, Lawrence Frank and James Chapman that shows "suburbanites use more energy and produce more carbon dioxide than city dwellers." To get this result, the authors study energy consumption by three household types in metropolitan Atlanta.
The trouble is that the Atlanta economy performs the way it does as a result of the interaction of all of its parts. Some analysts are fond of approvingly citing commuting habits of Manhattanites. So what? Manhattan is what it is because it is served by a vast hinterland and the aggregate accounts for the longest (solo auto) commutes in the U.S. This simple fact severly undermines what it is that Greens want to take away from the story.