Carbon Price Efficiency : Lock-in and Path Dependence in Urban Forms and Transport Infrastructure

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.