A methodological framework for the economic evaluation of CO2 emissions from transport

As the main cause of the global warming, CO2 emissions are a relevant externality in the transport sector. However, feasibility assessments do not always take these effects into adequate account, because a number of scientific and economic uncertainties make it difficult to determine a reliable estimate for a unitary CO2 cost. This paper first analyses the methods generally used to determine the cost of CO2 emissions, showing that market-based prices are not always suitable for this aim. Avoidance and damage cost methods are then thoroughly discussed, evaluating their pros and cons, including an extensive review of previous studies of methods for comparing costs. To determine the most reliable values, a method based on both avoidance and damage costs is proposed here. This method is then applied to the case study of the Brenner Base Tunnel, comparing the outcomes of three different scenarios: ‘minimum’ suggests the maintenance of the ‘do-nothing’ option (no tunnel realisation), whereas ‘trend’ and ‘consensus’ both imply the construction of the tunnel with different political choices, namely, a complete market liberalisation in trend and sustainable interventions in consensus. Results up to 2035 reveal that, in comparison with the do-nothing option, the enlightened transport policy shown in consensus could bring about a CO2 economic saving of up to around €331m for the community, whereas a simple liberalisation (trend) increases the costs derived from global warming by about €228m