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Carbon Emission Values in Cost Benefit Analyses

Author

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  • Mandell, Svante

    (vti – Swedish National Road and Transport Research Institute)

Abstract
New infrastructure projects may affect CO2 emissions and, thus, cost benefit analyses for these projects require a value to apply for CO2. The value may be based on the marginal social cost associated with emissions or on the shadow price resulting from present and future policies geared towards CO2 emissions. In the present paper it is argued that the social cost approach should be seen as preceding the shadow price approach. Both are thus necessary, but for cost benefit analysis of infrastructure projects we argue for the shadow price approach as the primary tool. There is a series of complications involved when applying this principle in practice. Several of these are discussed in the paper, including non-marginal projects that affect permit prices, non-transparent permit markets, different instruments capturing different aspects of a CO2-value, multiple policies present simultaneously etc.

Suggested Citation

  • Mandell, Svante, 2010. "Carbon Emission Values in Cost Benefit Analyses," Working Papers 2010:4, Swedish National Road & Transport Research Institute (VTI).
    • Handle: RePEc:hhs:vtiwps:2010_004
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Cristian Huse & Claudio Lucinda, 2014. "The Market Impact and the Cost of Environmental Policy: Evidence from the Swedish Green Car Rebate," Economic Journal, Royal Economic Society, vol. 124(578), pages 393-419, August.
    2. Wang, Ke & Yang, Kexin & Wei, Yi-Ming & Zhang, Chi, 2018. "Shadow prices of direct and overall carbon emissions in China’s construction industry: A parametric directional distance function-based sensitive estimation," Structural Change and Economic Dynamics, Elsevier, vol. 47(C), pages 180-193.
    3. Federica Cucchiella & Idiano D’Adamo & Paolo Rosa, 2015. "Industrial Photovoltaic Systems: An Economic Analysis in Non-Subsidized Electricity Markets," Energies, MDPI, vol. 8(11), pages 1-16, November.
    4. Mandell, Svante & Nilsson , Jan-Eric & Vierth , Inge, 2014. "Freight transport, policy instruments and climate," Working papers in Transport Economics 2014:5, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    5. Molinos-Senante, María & Hanley, Nick & Sala-Garrido, Ramón, 2015. "Measuring the CO2 shadow price for wastewater treatment: A directional distance function approach," Applied Energy, Elsevier, vol. 144(C), pages 241-249.
    6. Nel, A.J.H. & Vosloo, J.C. & Mathews, M.J., 2018. "Financial model for energy efficiency projects in the mining industry," Energy, Elsevier, vol. 163(C), pages 546-554.
    7. Yu-Ling Chen & Yi-Hsuan Shih & Chao-Heng Tseng & Sy-Yuan Kang & Huang-Chin Wang, 2013. "Economic and health benefits of the co-reduction of air pollutants and greenhouse gases," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 18(8), pages 1125-1139, December.
    8. Mouter, Niek & Annema, Jan Anne & van Wee, Bert, 2013. "Ranking the substantive problems in the Dutch Cost–Benefit Analysis practice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 49(C), pages 241-255.
    9. Torres-Brito, David Israel & Cruz-Aké, Salvador & Venegas-Martínez, Francisco, 2023. "Impacto de los contaminantes por gases de efecto invernadero en el crecimiento económico en 86 países (1990-2019): Sobre la curva inversa de Kuznets [Impact of the Effect of Greenhouse Gas Pollutan," MPRA Paper 119031, University Library of Munich, Germany.
    10. Feijoo, Felipe & Das, Tapas K., 2014. "Design of Pareto optimal CO2 cap-and-trade policies for deregulated electricity networks," Applied Energy, Elsevier, vol. 119(C), pages 371-383.
    11. Changbing Jiang & Jiaming Xu & Shufang Li & Xiang Zhang & Yao Wu, 2022. "The Order Allocation Problem and the Algorithm of Network Freight Platform under the Constraint of Carbon Tax Policy," IJERPH, MDPI, vol. 19(17), pages 1-27, September.

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    More about this item

    Keywords

    Climate change; policy; cost-benefit analysis; carbon value;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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