Population Density and Efficiency in Energy Consumption: An empirical analysis of service establishments

Author Name MORIKAWA Masayuki  (Vice Chairman & Vice President, RIETI)
Creation Date/NO. July 2011 11-E-058
Research Project Research on Productivity Growth in Service Sector
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This paper is the English version of the Japanese Discussion Paper (11-J-062).

The achievement of both sustainable economic growth and reductions in CO₂ emissions has been an important policy agenda in recent years. This study, using novel establishment-level microdata from the Energy Consumption Statistics, empirically analyzes the effect of urban density on energy intensity in the service sector. According to the analysis, the efficiency of energy consumption in service establishments is higher for densely populated cities. Quantitatively, after controlling for differences among industries, energy efficiency increases by approximately 12% when the density in a municipality population doubles. This result suggests that, given a structural transformation toward the service economy, deregulation of excessive restrictions hindering urban agglomeration, and investment in infrastructure in city centers would contribute to environmentally friendly economic growth.

Published: Masayuki Morikawa, 2012. "Population Density and Efficiency in Energy Consumption: An Empirical Analysis of Service Establishments," Energy Economics, Vol. 34(5), pp. 1617-1622