This article introduces an urban sustainability index that is based on a theoretically consistent, empirical measure of quality of life.
The growing importance of nonmarket assets such as the environment, combined with the unprecedented availability of high-resolution data, has renewed broad interest in quantifying sustainability at different spatial levels. Policy-related decision making requires that potential sustainability measures meet three key requirements: (i) sustainability metrics need to be comprehensive so that they reflect the experience of representative households, (ii) sustainability indices need to be comparable across different geographic scales, and (iii) measures of sustainability need to be economically meaningful, ideally tying into the larger system of national accounts. However, conventional sustainability indices do not tend to meet these criteria, which renders them inappropriate for public-policy efforts. The subjectivity and theoretical inconsistency of common sustainability indices presents the biggest obstacle for their adoption as valid public policy targets. This article introduces an urban sustainability index that is based on a theoretically consistent, empirical measure of quality of life. Specifically, this article shows that greenness of cities has a strong positive correlation with urban quality of life, suggesting that the greener the city, the nicer a place to live it is. This is largely because energy efficiency is capitalized into economic activity and ultimately into urban quality of life. This relationship appears to hold across cities of all sizes, clearly emphasizing the direct link between progressive environmental policy and locational desirability. The takeaway message is straightforward: More “greenness” correlates to higher quality of life in urban areas.