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Carbon price efficiency : lock-in and path dependence in urban forms and transport infrastructure

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  • Avner, Paolo
  • Rentschler, Jun
  • Hallegatte, Stephane

Abstract

This paper investigates the effect of carbon or gasoline taxes on commuting-related CO2 emissions in an urban context. To assess the impact of public transport on the efficiency of the tax, the paper investigates two exogenous scenarios using a dynamic urban model (NEDUM-2D) calibrated for the urban area of Paris: (i) a scenario with the current dense public transport infrastructure, and (ii) a scenario without. It is shown that the price elasticity of CO2 emissions is twice as high in the short run if public transport options exist. Reducing commuting-related emissions thus requires lower (and more acceptable) tax levels in the presence of dense public transportation. If the goal of a carbon or gasoline tax is to change behaviors and reduce energy consumption and CO2 emissions (not to raise revenues), then there is an incentive to increase the price elasticity through complementary policies such as public transport development. The emission elasticity also depends on the baseline scenario and is larger when population growth and income growth are high. In the longer run, elasticities are higher and similar in the scenarios with and without public transport, because of larger urban reconfiguration in the latter scenario. These results are policy relevant, especially for fast-growing cities in developing countries. Even for cities where emission reductions are not a priority today, there is an option value attached to a dense public transport network, since it makes it possible to reduce emissions at a lower cost in the future.

Suggested Citation

  • Avner, Paolo & Rentschler, Jun & Hallegatte, Stephane, 2014. "Carbon price efficiency : lock-in and path dependence in urban forms and transport infrastructure," Policy Research Working Paper Series 6941, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6941
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    2. Ryan Rafaty & Geoffroy Dolphin & Felix Pretis, 2020. "Carbon Pricing and the Elasticity of CO2 Emissions," Working Papers Series inetwp140, Institute for New Economic Thinking.
    3. Jun Rentschler & Morgan Bazilian, 2017. "Policy Monitor—Principles for Designing Effective Fossil Fuel Subsidy Reforms," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(1), pages 138-155.
    4. Saujot, Mathieu & Lefèvre, Benoit, 2016. "The next generation of urban MACCs. Reassessing the cost-effectiveness of urban mitigation options by integrating a systemic approach and social costs," Energy Policy, Elsevier, vol. 92(C), pages 124-138.
    5. Siegmeier, Jan, 2015. "Keeping Pigou on tracks: second-best carbon pricing and infrastructure provision," MPRA Paper 69046, University Library of Munich, Germany, revised 25 Jan 2016.
    6. Adrien Vogt‐Schilb & Stephane Hallegatte, 2017. "Climate policies and nationally determined contributions: reconciling the needed ambition with the political economy," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 6(6), November.
    7. Rode, Philipp & Floater, Graham & Thomopoulos, Nikolas & Docherty, James & Schwinger, Peter & Mahendra, Anjali & Fang, Wanli, 2014. "Accessibility in cities: transport and urban form," LSE Research Online Documents on Economics 60477, London School of Economics and Political Science, LSE Library.
    8. Avner,Paolo & Mehndiratta,Shomik Raj & Viguie,Vincent & Hallegatte,Stephane & Avner,Paolo & Mehndiratta,Shomik Raj & Viguie,Vincent & Hallegatte,Stephane, 2017. "Buses, houses or cash ? socio-economic, spatial and environmental consequences of reforming public transport subsidies in Buenos Aires," Policy Research Working Paper Series 8166, The World Bank.
    9. Jun Rentschler & Raimund Bleischwitz & Florian Flachenecker, 2018. "On imperfect competition and market distortions: the causes of corporate under-investment in energy and material efficiency," International Economics and Economic Policy, Springer, vol. 15(1), pages 159-183, January.
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    Keywords

    Transport Economics Policy&Planning; Climate Change Mitigation and Green House Gases; Climate Change Economics; Transport in Urban Areas; Transport and Environment;
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