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RESEARCH PRODUCT

Marginal abatement cost of carbon dioxide emissions in the provision of urban drinking water

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Abstract Reducing greenhouse gas emissions is a major challenge faced by cities seeking to improve their environmental sustainability. Doing so requires a good understanding of the costs associated with lowering emissions and factors that may influence this cost. This study estimated the marginal abatement cost of reducing both direct and indirect CO2 emissions in the provision of drinking water by several water companies in England and Wales. The results indicated that during the years 2013–2018, the average cost to the English and Welsh water industry to prevent 1 kg of CO2 emissions was 0.264₤ which was equivalent to 61% of the price of the delivered drinking water The results of the Morishima elasticity of substitution between water delivered and carbon emissions revealed that on average it was costly for the water companies to reduce CO2 emissions. Furthermore, a positive correlation existed between the marginal abatement cost of CO2 and a set of company's operational factors. These included: i) water taken from boreholes and reservoirs, ii) high levels of drinking water treatment, and iii) the need for pumping to abstract, treat, and distribute drinking water. Finally, policy implications were discussed based on these findings.