This study advocates a multi-dimensional urban planning strategy to help combat climate change under local—and not national—policies. However, the literature does not provide adequate guidance to local governments seeking to enhance urbanization and in turn reduce vehicular carbon dioxide (CO2) emissions. Therefore, this study sheds light on the effects of the following four urban planning instruments on vehicular CO2 emissions: urbanization promoting areas, urbanization control areas, urban planning taxes and property taxes. Using Japanese city-level data from 1990 to 2010, we find that the two urbanization area planning instruments and the urban planning taxes help lower emissions by increasing population density in low-density cities and that property taxes help reduce emissions in high-density cities. However, the increased population density associated with these instruments can lead to other negative outcomes, including increased traffic accidents, increased crime and a decrease in the facility condition index. City governments should consider complementary policies to mitigate such negative outcomes when employing planning instruments aiming to increase population density.
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