Road project opportunity costs subject to a regional constraint on greenhouse gas emissions

Abstract

France has constrained the Aquitaine region to set up a climate plan to avoid an emission of 2883 ktCO(2)eq for the period 2007-2013. In parallel, the region has decided to carry out the construction of road infrastructures in order to avoid very high congestion costs. Those road projects will involve an increase in greenhouse gas (GHG) emissions during that period. In the present context of strong sustainability, all emissions (direct and indirect) generated by those projects should be offset. At the regional level, the offsetting of GHG emissions is usually carried out by implementing carbon sequestration projects or projects that reduce energy demand. This paper aims at determining the maximum budget for financing GHG emissions offsetting projects, with computation being based on the opportunity costs of projects, the minimum cost of economic activity reduction required to offset emissions from those projects. The maximum budget devoted to GHG emissions offsetting projects should not exceed €(2001) 1920 M to €(2001) 3592 M, according to low/high traffic growth assumptions.