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Measuring the CO2 shadow price for wastewater treatment: A directional distance function approach

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  • Molinos-Senante, María
  • Hanley, Nick
  • Sala-Garrido, Ramón

Abstract

The estimation of the value of carbon emissions has become a major research and policy topic since the establishment of the Kyoto Protocol. The shadow price of CO2 provides information about the marginal abatement cost of this pollutant. It is an essential element in guiding environmental policy issues, since the CO2 shadow price can be used when fixing carbon tax rates, in environmental cost-benefit analysis and in ascertaining an initial market price for a trading system. The water industry could play an important role in the reduction of greenhouse gas (GHG) emissions. This paper estimates the shadow price of CO2 for a sample of wastewater treatment plants (WWTPs), using a parametric quadratic directional distance function. Following this, in a sensitivity analysis, the paper evaluates the impact of different settings of directional vectors on the shadow prices. Applying the Mann–Whitney and Kruskal–Wallis non-parametric tests, factors affecting CO2 prices are investigated. The variation of CO2 shadow prices across the WWTPs evaluated argues in favour of a market-based approach to CO2 mitigation as opposed to command-and-control regulation. The paper argues that the estimation of the shadow price of CO2 for non-power enterprises can provide incentives for reducing GHG emissions.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:appene:v:144:y:2015:i:c:p:241-249
    DOI: 10.1016/j.apenergy.2015.02.034
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Peihao Lai & Minzhe Du & Bing Wang & Ziyue Chen, 2016. "Assessment and Decomposition of Total Factor Energy Efficiency: An Evidence Based on Energy Shadow Price in China," Sustainability, MDPI, Open Access Journal, vol. 8(5), pages 1-23, April.
    2. Panepinto, Deborah & Fiore, Silvia & Zappone, Mariantonia & Genon, Giuseppe & Meucci, Lorenza, 2016. "Evaluation of the energy efficiency of a large wastewater treatment plant in Italy," Applied Energy, Elsevier, vol. 161(C), pages 404-411.
    3. repec:gam:jsusta:v:8:y:2016:i:5:p:408:d:68945 is not listed on IDEAS
    4. Boussemart, Jean-Philippe & Leleu, Hervé & Shen, Zhiyang, 2017. "Worldwide carbon shadow prices during 1990–2011," Energy Policy, Elsevier, vol. 109(C), pages 288-296.
    5. Kejia Yang & Yalin Lei, 2017. "The carbon dioxide marginal abatement cost calculation of Chinese provinces based on stochastic frontier analysis," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 85(1), pages 505-521, January.
    6. Bowen Xiao & Dongxiao Niu & Han Wu & Haichao Wang, 2017. "Marginal Abatement Cost of CO 2 in China Based on Directional Distance Function: An Industry Perspective," Sustainability, MDPI, Open Access Journal, vol. 9(1), pages 1-19, January.
    7. repec:eee:ecanpo:v:57:y:2018:i:c:p:111-121 is not listed on IDEAS
    8. repec:gam:jsusta:v:10:y:2018:i:3:p:753-:d:135478 is not listed on IDEAS
    9. Longo, Stefano & d’Antoni, Benedetto Mirko & Bongards, Michael & Chaparro, Antonio & Cronrath, Andreas & Fatone, Francesco & Lema, Juan M. & Mauricio-Iglesias, Miguel & Soares, Ana & Hospido, Almudena, 2016. "Monitoring and diagnosis of energy consumption in wastewater treatment plants. A state of the art and proposals for improvement," Applied Energy, Elsevier, vol. 179(C), pages 1251-1268.
    10. Ke Wang & Linan Che & Chunbo Ma & Yi-Ming Wei, 2017. "The Shadow Price of CO2 Emissions in China's Iron and Steel Industry," CEEP-BIT Working Papers 105, Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology.
    11. repec:eee:appene:v:210:y:2018:i:c:p:623-631 is not listed on IDEAS

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