Two potentially-important problems with our current specification should be addressed in future work. The first relates to possible endogeneity in the relationship between CO2 emissions and mass transit investments. The second concerns joint determination of CO2 emissions and income per capita. Our results are consistent with the EKC hypothesis, but we recognize the need for more work on the problem. In a related vein, future research should explore the directions and sources of change in the emissions/income relationship. For example, the recent priority given to CO2 reduction in wealthier countries may already be changing the position or shape of the relationship at high income levels. Research on this issue should also investigate the intervening relationship between income and climate policies, which are now being registered in sources like the LSE’s climate policy database (LSE/Grantham 2021).

# **7.3 Non-Pigouvian Policies**

This paper has focused on subways because we have been able to use a large subway data set constructed by Turner and Gonzalez-Navarro (2018). However, we readily acknowledge that other mass transit systems may also have important effects on CO2 emissions (e.g., regional rail and bus rapid transit systems). As global data sets expand to include these systems, they should be incorporated into the analysis.

Explicit incorporation of mass transit investments into the econometric model will provide another avenue for future research. As previously noted, the possible joint determinacy of subway investments and CO2 emissions may warrant the use of instrumental variables in the expanded model. In addition, future research should investigate the contribution of subways and other mass transit investments to synergies between Pigouvian and non-Pigouvian policies. For example, a dynamic modeling exercise for the Paris urban area by Avner, Rentschler and Hallegatte (2014) suggests that the fuel price elasticity of carbon emissions can be much higher in cities with robust public transport options. An extension of the current econometric research would incorporate relevant price variables (e.g., fuel prices), as well as their interactions with transit investment variables to test the effects on price elasticities.

# **8.  Summary and Conclusions**

In this paper, we have estimated an urban CO2 emissions model using satellite-measured CO2 concentrations from 2014 to 2020, for 1,236 cities in 138 countries. The model incorporates the global trend in CO2 concentration, seasonal fluctuations by hemisphere, and a large set of georeferenced variables that incorporate CO2-intensive industry structure, emissions from agricultural and forest fires in neighboring areas, demography, the component of income that is uncorrelated with industry structure, and relevant geographic conditions. We resample all model variables to a 10 km global grid, and capture CO2 diffusion from discrete emissions sources via inverse-distance weighting to a grid cell centroid distance of 100 km.

In four econometric estimation exercises, we assign grid cells to cities if they lie within 20, 40 and 60 km of city centroids, or within the boundaries of UN-defined Functional Urban Areas. The results are very similar and robust in all four cases, with the expected signs and generally high levels of significance. We find that economic development has a significant effect on the direction of the 34