CO2 emissions: Are land-use changes enough for California to reduce VMT? Specification of a two-part model with instrumental variables

With vehicle miles of travel increasing at a faster pace than population, one strategy being actively pursued by both state and local governments is compact development. California recently passed legislation that aggressively promotes sustainability by endorsing and rewarding compact development. Likewise, the California Air Resources Board has set a statewide reduction target of 5MMT of greenhouse gas reductions from land use, based largely on achieving compact development patterns. In this paper, we use a multivariate two-part model with instrumental variables, which corrects for residential location self-selection bias. We use a much larger and more geographically representative travel survey on household travel patterns and socio-economic characteristics than represented in previous California studies; this allows us to robustly consider other influences on travel. Our results indicate that, all else equal, a 10% in residential density would reduce VMT by 1.9%. This elasticity is larger than the reported in previous econometric studies for the US, and specifically for California. However, as we show, the magnitude of this impact is still low considering reasonable ranges for policies aimed to increase residential density.