Land-use planning influences the way cities are constructed and will develop further over time. It defines the "5Ds" of a city, of which the first three are the most studied in terms of impact on travel behavior: Density (of population and/or jobs), Diversity (mix of uses), Design (pedestrian quality, street network density, etc), Distance to transit and Destination. Public authorities can choose to promote different types of local development, the two extremes being urban sprawl (whereby density, diversity, design for walkable environments, transit access and destination access are low) and compact city development (whereby all the criteria are high). Compact city developments are in favour of low carbon transport.

Land use planning will have different environmental impacts depending on the urban form and the dynamics of the metropolitan area the subject city finds itself in. Compact city developments are generally thought to reduce urban transport-related emissions by decreasing travel distances and car dependency, while increasing the use of active travel modes (walking and cycling) and public transport. While evidence supports this in many cases (e.g. in Barcelona), the effectiveness of land-use planning policies that increase urban density in order to decrease CO2 emissions depends on the characteristics of the urban area in question. Studies analysing the relationships between a main city and its sub-urban centres, such as Paris and the Val-de-Marne agglomeration, have found that increasing the density in the sub-urban centers is not necessarily the most effective way of reducing GHG emissions from commuting in this area. Rather, improving the public transport connectivity of this centre so that it is easier for commuters to access, can be more effective as a measure to decrease GHG emissions (Aguilera & Voisin, 2014). In all cases, land-use planning policies should complement transport policies, as is the case with Transit Oriented Development (TOD), which aims to densify urban areas and produce mixed-used developments built around public transport stops. Attention should, however, be given to the possible equity effects of these measures, as TODs in other scenarios have also been associated with increased land values around stations, which make impacted areas less suitable for low-income residents to live in.