Applied Energy xxx (2016) xxx–xxx

Contents lists available at ScienceDirect

Applied Energy
journal homepage: www.elsevier.com/locate/apenergy

Reducing CO2 emissions from drinking water treatment plants: A

shadow price approach
María Molinos-Senante a,b,c,⇑, Catalina Guzmán a,c
a
Departamento de Ingeniería Hidráulica y Ambiental, Pontificia Universidad Católica de Chile, Av. Vicuña Mackenna 4860, Santiago, Chile
b
Facultad de Arquitectura e Instituto de Estudios Urbanos, Pontificia Universidad Católica de Chile, El Comendador 1916, Santiago, Chile
c
Centro de Desarrollo Urbano Sustentable CONICYT/FONDAP/15110020, Av. Vicuña Mackenna 4860, Santiago, Chile

h i g h l i g h t s

The shadow price of CO2 for drinking water treatment plants is estimated.

The average shadow price of CO2 is 5.7% of the price of the drinking water.

Factors affecting shadow price of CO2 are examined.

a r t i c l e i n f o a b s t r a c t

Article history: The water industry is currently facing the challenge to reduce its carbon footprint. Although the majority
Received 29 July 2016 of previous studies have focused on wastewater treatment energy issues, a non-negligible quantity of
Received in revised form 13 September energy is consumed in drinking water treatment plants (DWTPs). To develop environmental policies
2016
aimed to reduce CO2 emissions, it is essential to estimate the shadow price of CO2 because this can pro-
Accepted 24 September 2016
Available online xxxx
vide information about the marginal abatement cost of CO2. This paper computes the shadow price of CO2
for a sample of Chilean DWTPs using directional distance function estimation. The potential reduction of
CO2 emissions for each DWTP is also calculated. Finally, applying a non-parametric hypothesis test, fac-
Keywords:
Drinking water treatment
tors that affect CO2 shadow prices are investigated. The results indicated that the Chilean DWTPs evalu-
Shadow price ated have notable room to reduce CO2 emissions. Moreover, the average shadow price of CO2 for DWTPs
Directional distance function is 5.7% of the drinking water price. The methodology and results of this study are of great interest for
Greenhouse gas emissions water companies and policy makers to introduce incentives for promoting the transition towards an
Marginal abatement cost urban water cycle with a low carbon footprint.
Ó 2016 Elsevier Ltd. All rights reserved.

1. Introduction grow and environmental requirements become more stringent,

Water and energy resources are intrinsically linked through a
co-dependent and complex relation that is often referred to as
the water-energy nexus [1]. Water is used for many processes in
electricity generation, and energy is required in the urban water
sector [2]. In developed countries, the water sector is one major
contributor to municipal energy use; water and wastewater treat-
ment and transport are responsible for up to 44% of a city’s energy
cost [3]. This use of energy by water utilities contributes signifi-
cantly to an increased carbon footprint with an estimated 45 mil-
lion tons of greenhouse gases (GHGs) annually emitted into the
atmosphere in the United States [4]. Moreover, as populations
⇑ Corresponding author at: Departamento de Ingeniería Hidráulica y Ambiental,
Pontificia Universidad Católica de Chile, Av. Vicuña Mackenna 4860, Santiago, Chile.
E-mail address: mmolinos@uc.cl (M. Molinos-Senante).
demand for electricity by drinking water and wastewater treat-
ment facilities is expected to grow substantially [5].
The urban water cycle involves several activities that might be
split into two main services, namely, drinking water supply and
wastewater treatment collection and treatment. A literature
review has demonstrated that most of the previous studies on
the topics of energy use, energy efficiency and development of
low carbon technologies have focused mainly on wastewater treat-
ment, while energy issues related to drinking water have been
much less investigated [6]. Nevertheless, some papers have
assessed the environmental life cycle of the urban water cycle
involving both water supply and wastewater treatment services.
A review conducted by Loubet et al. [7] demonstrated that the elec-
tricity consumed in wastewater treatment plants (WWTPs) is lar-
ger than that consumed in drinking water treatment plants
(DWTPs); however, the electricity consumed in DWTPs is not neg-

http://dx.doi.org/10.1016/j.apenergy.2016.09.065
0306-2619/Ó 2016 Elsevier Ltd. All rights reserved.

Please cite this article in press as: Molinos-Senante M, Guzmán C. Reducing CO2 emissions from drinking water treatment plants: A shadow price
approach. Appl Energy (2016), http://dx.doi.org/10.1016/j.apenergy.2016.09.065
2 M. Molinos-Senante, C. Guzmán / Applied Energy xxx (2016) xxx–xxx
ligible. Thus, according to the 10 studies reviewed by Loubet et al.
[7], DWTPs consumed an average of 0.26 kWh/m3 with a maxi-
mum value of 0.64 kWh/m3 reported by Lemos et al. [8]. These fig-
ures show that energy issues in DWTPs deserve to be investigated.
Recent studies have evidenced that the nexus between energy
and water provides cross-cutting opportunities to mitigate urban
energy and water demand pressure [9,10]. Moreover, synergistic
approaches are critical for helping decision makers better under-
stand the interrelationships between energy and water [11]. From
a policy perspective, some governments have already realized the
important role that the urban water industry might play in the
reduction of GHG emissions. For example, in Quebec and British
Columbia, the water industry is already subject to a carbon tax
[12]. The United Kingdom (UK) Environmental Agency, in its report
‘‘Evidence. A low carbon water industry in 2050” (UKEA, 2009), sta-
ted that the price of carbon needs to be internalized in every aspect
of the water industry’s activities. In this context, the estimation of
the shadow price of CO2 plays an essential role given that it reflects
the opportunity costs for pollution abatement, which can be used
for measuring the difficulty level of reducing CO2 emissions [13].
Based on the pioneering methodological approach developed by
Färe et al. [14], several applications have been carried out to esti-
mate the shadow price of a variety of pollutants such as NOx,
SO2, CO2, BOD, SS, N and P that result from several industries. A
summary of the existing studies on this topic is provided by Zhou
et al. [15]. The water industry has not ignored this area of research.
Thus, since the pioneering paper by Hernández-Sancho et al. [16],
several empirical applications have been developed to estimate the
shadow price of pollutants removed from wastewater [17,18]. In
the framework of CO2 emissions, Molinos-Senante et al. [12] com-
puted the shadow price of CO2 for a sample of 25 Spanish WWTPs.
However, as was reported previously, within the urban water
cycle, the electricity consumption and therefore CO2 emissions of
DWTPs are not negligible.
Against this background, the objectives of this paper are three-
fold. The first one is to estimate the shadow price of CO2 associated
with electricity consumption in DWTPs. To do so, the methodolog-
ical approach proposed by Färe et al. [19] based on the directional
output distance function was applied. The second objective is to
calculate potential reduction of CO2 emissions. This information
is essential for identify best managerial practices and for improve
the environmental sustainability of DWTPs. The third objective of
this paper is to explore factors that might affect CO2 shadow prices.
This issue is fundamental for planning new DWTPs or updating the
existing ones. The empirical application focused on a sample of 36
Chilean DWTPs. Chile presents an interesting case within the con-
text of this research since it is a middle income country which has
achieved almost universal access to urban water services. Given
that Latin America could be described as being situated at a med-
ium level in terms of coverage and quality of water services,
including environmental issues, water authorities in other low
and middle income countries can learn some lessons from the Chi-
lean case.
This paper contributes to the current strand of literatures by
estimating, for the first time, the shadow prices of CO2 emissions
associated with energy consumption in DWTPs. In the framework
of the urban water industry, the water-energy nexus should be
addressed from a multidisciplinary point of view. However, to
the best of our knowledge, only Molinos-Senante et al. [12] com-
puted the shadow price of CO2 emissions from WWTPs. It should
be noted that urban water cycle involves two services namely,
drinking water supply and wastewater treatment. Actually, in
many countries both services are provided by different types of
water companies namely, water only companies and water and
sewerage companies. Hence, the shadow prices of CO2 estimated
by Molinos-Senante et al. [12], who focused on wastewater, are
Please cite this article in press as: Molinos-Senante M, Guzmán C. Reducing CO2 emissions from drinking water treatment plants: A shadow price
approach. Appl Energy (2016), http://dx.doi.org/10.1016/j.apenergy.2016.09.065
not useful to develop energy and environmental policies to regu-
late drinking water supply service. This study introduces a pioneer-
ing and novel approach in the framework of drinking water supply
service to link energy and water policies. Moreover, this study
identifies factors affecting the shadow price of CO2 emissions from
DWTPs. This issue is relevant for many low and middle income
countries where the access to drinking water supply is not univer-
sal. Unicef and WHO [20] reported that in 2015, 663 million people
still lack improved drinking water services. Hence, in order to meet
the Sustainable Millennium Development Goals, new DWTPs
should be constructed. In this context, this paper contributes to
support the decision making for implementing new and sustain-
able DWTPs.
From a policy perspective, the results of this study are expected
to be pertinent to water managers and policy makers because the
estimation of the shadow price of CO2 and reduction potential is
fundamental to support environmental policy issues. In this con-
text, it should be noted that the water industry is regulated in
many countries, and therefore, policy makers (i.e., water regula-
tors) have the capacity to introduce efficient incentives to reduce
the carbon footprint of the water industry. Given that the shadow
prices can be interpreted as the marginal abatement costs [21],
these costs can be used to fix carbon tax rates and to ascertain
an initial market price to reduce GHG emissions in the water
industry. Hence, economic incentives for reducing CO2 emissions
in the water industry, such as carbon tax or trading system, can
be implemented by water regulators.
2. Methodology
2.1. Directional output distance function
A literature review conducted by Zhou et al. [15] indicated that
the shadow price of undesirable or bad outputs can be estimated
using two alternative distance functions, namely, radial output/
input distance functions [14] and directional output distance func-
tions [19]. While both approaches have been widely applied, the
directional distance function provides a more useful and flexible
approach to assess the environmental performance of productive
processes [22]. Hence, in this study, shadow prices of CO2 were
estimated using the directional distance function.
First, the directional distance function is introduced; then, the
function is used to derive shadow prices. Suppose that a produc-
tion process employs a vector of inputs x ¼ ðx1 ; . . . ; xN Þ 2 RNþ to pro-
duce a vector of desirable outputs denoted by y ¼ ðy1 ; . . . ; yM Þ 2 RM
þ
and a vector of undesirable outputs denoted by b ¼ ðb1 ; . . . ; bJ Þ
2 RJþ . Eq. (1) describes the production technology [23]:
PðxÞ ¼ fðy; bÞ : x can produceðy; bÞg ð1Þ
In addition to the standard assumptions of convex, compact,
and freely disposal inputs, the following assumptions should be
imposed on the output set. First, it is assumed that the undesirable
outputs are produced jointly with the desirable outputs. Second,
desirable and undesirable outputs are assumed to be weakly dis-
posable. Third, it is assumed that desirable outputs by themselves
are freely disposable [24].
Taking into account the above assumptions, the directional out-
put distance function is formally defined as [19]
!

Do ðx; y; b; g y ; g b Þ ¼ max b : ðy þ bg y ; b  bg b Þ 2 PðxÞ ð2Þ
where g ¼ ðg y ; g b Þ 2 RM J
þ XRþ is a directional vector that specifies the
direction of the output vector. The directional distance function
describes the simultaneous maximum expansion of desirable out-
puts and contraction of undesirable outputs that is feasible for
 M. Molinos-Senante, C. Guzmán / Applied Energy xxx (2016) xxx–xxx 3

any given production technology. Given the production technology Given the market price of the mth desirable output denoted by
PðxÞ and g ¼ ðg y ; g b Þ > 0, the directional output distance function pm , the shadow price of the jth undesirable output is
expands the desirable output y and contracts the undesirable out- 0 ! , !
1
put b along the g direction until it reaches the production frontier. @Do ðx; y; b; gÞ @Do ðx; y; b; gÞA
Moreover, the directional output distance function describes qj ¼ pm  @ ð10Þ
@bj @ym
inefficiency. b ¼ 0 means that the producer is located on the fron-
tier and is therefore efficient. By contrast, b > 0 means that the
producer is inefficient. 2.3. Empirical specifications
According to Färe et al. [25], the directional output distance
!
function has the following properties: (i) Do is concave and non- There are two methodological approaches to estimate the direc-
! tional distance function, namely, non-parametric and parametric
negative for feasible output vectors; (ii) Do is monotonic and freely methods. However, in the framework of shadow price estimation,
!
disposable in desirable outputs and inputs; (iii) Do is weakly dis- the main drawback of non-parametric methods is that the distance
! function is not differentiable, and therefore, it is not well-suited to
posable in undesirable outputs and; (iv) Do satisfies the translation
derive shadow prices [25]. By contrast, parametric estimation pre-
property:
assumes a specific functional form for the directional distance
! !
function, and then unknown parameters are estimated using linear
Do ðx; y þ ag y ; b  ag b ; gÞ ¼ Do ðx; y; b; gÞ  a ð3Þ
programming [26]. As was illustrated by Zhou et al. [15], to ease
where a is a scalar. This property indicates that if an undesirable the theoretical restrictions imposed on the estimation, the para-
output is contracted by ag b and a desirable output is expanded by metric approach is the most widely used in empirical applications
ag y , the resulting value of the directional distance function will be to estimate the shadow price of undesirable outputs. Following
more efficient by the amount a [25]. previous studies, the directional distance function was estimated
parametrically.
2.2. Shadow price of undesirable output The quadratic form was used to parameterize the directional
output because it satisfies the translation property and is twice dif-
To derive the shadow price of an undesirable output, the duality ferentiable [27,21]. Following Färe et al. [19], the directional vector
relationship between the directional output distance function and g ¼ ð1; 1Þ was chosen, where the first M components are equal to
the revenue function is employed. According to Färe et al. [19], the one and the next J components are also equal to one to make the
revenue function is defined as parameterization parsimonious.
Assuming that there are k ¼ 1; . . . ; K producers (DWTPs in this
Rðx; p; qÞ ¼ maxfpy  qb : ðy; bÞ 2 PðxÞg ð4Þ
y;b case study), n ¼ 1; . . . ; N inputs, m ¼ 1; . . . ; M desirable outputs
and j ¼ 1; . . . ; J undesirable outputs, then the quadratic
where p ¼ ðp1 ; . . . ; pM Þ 2 RM
þ represents desirable output prices and directional-distance function for the k-th producer is as follows:
q ¼ ðq1 ; . . . ; qJ Þ 2 RJþ represents undesirable output prices. The rev-
!
enue function describes the largest feasible revenue obtainable rep- Do ¼ ðxk ; yk ; bk ; 1; 1Þ
resented as the sum of the positive revenue generated by desirable
X
N X
M X
J
1X N X N
outputs and negative revenue produced by undesirable outputs. ¼ a0 þ an xnk þ bm ymk þ cj bjk þ ann0 xnk xn0 k
Given a feasible directional vector g ¼ ðg y ; g b Þ, the revenue function n¼1 m¼1 j¼1
2 n¼1 n0 ¼1
(Eq. (4)) can be written as 1X M X
1 XX XN X
M J J M

! ! þ bmm0 ymk ym0 k þ cjj0 bjk bj0 k þ dnm xnk ymk

2 m¼1m0 ¼1 2 j¼1 0
Rðx; p; qÞ P ðpy  qbÞ þ p  Do ðx; y; b; gÞ  g y þ q  Do ðx; y; b; gÞ  g b j ¼1 n¼1 m¼1

ð5Þ X
N X
J X
M X
J
þ gnj xnk bjk þ lmj ymk bjk ð11Þ
The left side of Eq. (5) determines the maximal feasible revenue, n¼1 j¼1 m¼1 j¼1
while the right side equals observer revenue plus the revenue
gained by technical efficiency improvement. By rearranging Eq. To calculate the parameters a, b, c, d, g and l of the quadratic
(5), the following is obtained: function, the following linear program was solved (Eq. (12)), where
! Rðx; p; qÞ  ðpy  qbÞ the objective was to minimize the sum of deviations of the
Do ðx; y; b; gÞ 6 ð6Þ directional-distance function value from the frontier of the produc-
pg y þ qg b
tion technology:
The directional distance function in terms of maximal revenue
function is related, as shown in Eq. (7): X
K !
Minimise ½ Do ðxk ; yk ; bk ; 1; 1Þ  0
! Rðx; p; qÞ  ðpy  qbÞ k¼1
Do ðx; y; b; gÞ 6 minp;q ð7Þ
pg y þ qg b
s:t:
Assuming that directional distance function and the revenue
!
function are both differentiable, the first-order condition with
ðiÞ Do ðxk ; yk ; bk ; 1; 1Þ P 0; k ¼ 1; . . . ; K
respect to desirable and undesirable outputs is shown in Eqs. (8)
and (9): !
@ Do ðxk ; yk ; bk ; 1; 1Þ
! p ðiiÞ P 0; j ¼ 1; . . . ; J; k ¼ 1; . . . ; K
ry Do ðx; y; b; gÞ ¼ ð8Þ @bj
pg y  qg b
!
! q @ Do ðxk ; yk ; bk ; 1; 1Þ
rb Do ðx; y; b; gÞ ¼ ð9Þ ðiiiÞ 6 0; m ¼ 1; . . . ; M; k ¼ 1; . . . ; K
pg y  qg b @ym

Please cite this article in press as: Molinos-Senante M, Guzmán C. Reducing CO2 emissions from drinking water treatment plants: A shadow price
approach. Appl Energy (2016), http://dx.doi.org/10.1016/j.apenergy.2016.09.065
4 M. Molinos-Senante, C. Guzmán / Applied Energy xxx (2016) xxx–xxx

!
@ Do ðx; yk ; bk ; 1; 1Þ among the groups of DWTPs. The facilities were grouped based on
ðivÞ P 0; n ¼ 1; . . . ; N the different factors investigated, i.e., on factors that might affect
@xn
CO2eq shadow prices. Intuitively, the Mann-Whitney test is similar
to the traditional one-way analysis of variance (ANOVA). However,
X
M X
J X
M X
J
ðvÞ bm  cj ¼ 1; bmm0  lmj ¼ 0; m ¼ 1; . . . ; M it does not assume a normal distribution, unlike ANOVA. Therefore,
m¼1 j¼1 m0 ¼1 j¼1 for our case study, the Mann-Whitney test was more suitable. If the
p-value of the non-parametric test is smaller than 0.05, the null
X
J X
M hypothesis can be rejected, which means that the shadow price
cjj0  lmj ¼ 0; j ¼ 1; . . . ; J of CO2eq for the groups of DWTPs is significantly different with
j0 ¼1 m¼1 the usual level of confidence of 95%.

X
M X
J
dnm  gnj ¼ 0; n ¼ 1; . . . ; N
m¼1 j¼1
0 0
ðviÞann0 ¼ an0 n n – n ; bmm0 ¼ bm0 m m – m ; cjj0 ¼ cj0 j j – j
The restriction (i) imposes feasibility, which means that each
producer is located either on or below the boundary. Restrictions
(ii) and (iii) impose the monotonicity requirement in undesirable
and desirable outputs. Positive monotonicity constraints were also
imposed on the inputs for the mean level of input usage (iv). This
means that at the mean level of inputs, an increase in input usage
holding desirable and undesirable outputs constant causes the
directional output distance function to increase [19]. The restric-
tions in (v) are due to the translation property. The restrictions
in (vi) ensure symmetry conditions.
It should be noted that to compute the shadow price of CO2eq
data were normalized by dividing the input and outputs by their
average values, as suggested by Färe et al. [19]. Hence, the conver-
gence problem was overcome.
2.4. Potential reduction of CO2 emissions
The estimation of the directional distance function enables
measuring the feasible reduction potentials of CO2eq emissions
[13]:
Dbi ¼ bi  ðbi  bi g b Þ
where bi is the quantity of CO2eq emissions by the DWTP i, bi is the
estimated technical inefficiency score of the DWTP i and g b is the
directional vector for the undesirable output. Dbi describes the
maximum attainable amount of CO2eq emissions for the DWTP i
when production is fully efficient.
Given that the volume of drinking water produced by the
DWTPs evaluated is relatively heterogeneous (Table 1), the scale
of CO2eq emissions is also considerably heterogeneous. This makes
it difficult to compare each DWTP’s relative ability to reduce CO2eq
emissions based on its desirable output. To overcome such a diffi-
culty, the scale of potential CO2eq emissions should be divided by
the real observed emissions for each DWTP. This gives the percent-
age of potential CO2eq savings for each DWTP that can be used to
compare across DWTPS.
2.5. Factors affecting the shadow price of CO2 emissions
According to previous studies, there are two main methodolog-
ical approaches to determine factors that affect shadow prices,
namely, regression analysis [28] and hypothesis testing [12]. In
our case study, most of the potential factors investigated are qual-
itative; therefore, it is not feasible to introduce all of them as
dummy variables. Hence, the hypothesis test approach was applied
to identify factors that affect the shadow price of CO2eq. In doing so,
non-parametric tests (Mann-Whitney or Kruskal-Wallis test for
three groups of more) were performed to test the following null
hypothesis: there are no differences in the shadow prices of CO2eq
3. Data and variables
This section provides the definitions of inputs, desirable and
0 undesirable outputs and the DWTPs used in this study. Analo-
ð12Þ
gously to WWTPs, which have been widely studied, DWTPs can
be considered as carrying out a productive process in which a
desirable output (drinking water with a certain quality) is obtained
from inputs (operational and maintenance costs), and GHGs are
also emitted. Accordingly, in this study, the input considered is
the operational and maintenance cost of each DWTP expressed in
CLP1 per year. Ideally, it would be desirable to have this cost disag-
gregated in several cost items, such as staff costs, material costs and
waste management costs. Unfortunately, this information was not
available. Nevertheless, given that the aim of this paper is to esti-
mate the shadow prices of CO2 and not an efficiency score for each
variable, it is not relevant to have all cost items as total operational
and maintenance costs.
Regarding the selection of the desirable output, intuitively, it
should be the volume of drinking water generated in the DWTPs.
However, the operational and maintenance costs and the emission
of GHGs from the DWTPs depend on the drinking water quality. In
this context, previous studies [29,30] defined a quality-adjusted
variable as the desirable output. The construction of this quality-
adjusted output is defined as follows. The Chilean water industry
regulator, the ‘‘Superintendencia de Servicios Sanitarios (SISS)”,
defines and measures an indicator of drinking water quality based
ð13Þ
on a series of parameters regulated by the Chilean norm NCh 409
for drinking water. This norm is based on the guidelines for drink-
ing water quality published periodically by the World Health Orga-
nization. Moreover, it takes into account the special conditions of
the raw water in some Chilean regions [31]. Considering the degree
of compliance of the Chilean norm for drinking water, the SISS
develops a synthetic indicator of drinking water quality, which
integrates the following parameters: bacteriology, turbidity, free
residual chlorine and critical and non-critical parameters. Critical
and non-critical parameters depend on the source of raw water
and are not the same for all DWTPs. The synthetic indicator esti-
mated by the SISS ranges between 0% and 100%. A value of 100%
indicates that the drinking water fulfils the drinking water quality
norm for all parameters.
In this study, the desirable quality-adjusted desirable output
ðQADOÞ for each DWTP is defined using Eq. (13), where V is the vol-
ume of drinking water produced (m3/year) adjusted by the syn-
thetic indicator of drinking water quality ðSIDWQ Þ.
QADO ¼ V  SIDWQ ð14Þ
The undesirable output considered is the indirect emission of
GHG expressed in kg of CO2 equivalents (CO2eq) per year. GHG
emissions are categorized as direct and indirect GHG emissions.
Direct emissions are the emissions released to the atmosphere as
a direct result of an activity or a series of activities at a facility level.
Indirect GHG emissions are the ones released to the atmosphere
1
On 1st June, US$1 was CLP689.81 and €1 was CLP768.25.

Please cite this article in press as: Molinos-Senante M, Guzmán C. Reducing CO2 emissions from drinking water treatment plants: A shadow price
approach. Appl Energy (2016), http://dx.doi.org/10.1016/j.apenergy.2016.09.065
 M. Molinos-Senante, C. Guzmán / Applied Energy xxx (2016) xxx–xxx
Table 1
Descriptive statistics of DWTPs assessed.
Energy consumption Volume of water SIDWQ
(kWh/m3) (103 m3/year) (%)
Average 0.1767 17,883 98.42
Std. Dev. 0.2137 62,199 2.85
Minimum 0.0048 31 88.54
Maximum 0.7178 359,455 100.00
from the indirect consumption of an energy commodity [32]. Based
on IPCC Guidelines [33], direct emissions have not been considered
in this empirical application. Hence, GHG emissions were quanti-
fied based on the energy consumed by the DWTPs and the Chilean
national electrical production mixes. In this sense, in Chile, there
are two main national electrical production mixes, namely, SIC
and SING. The SIC is the Central Interconnected System, which
serves the central part of the country and represents approxi-
mately 75% of the total installed capacity and 93% of the popula-
tion. The SING is the Large North Interconnected System and
serves the north of the country (I and II regions); it represents
approximately 23% of the total capacity (Central [34]). Given that
both systems have different energy production mixtures, their
GHG emissions expressed as CO2eq per kWh of produced electricity
is also different. Specifically, for 2014, the average value for the SIC
was 0.360 tCO2eq/MWh, while it was 0.790 tCO2eq/MWh for the
SING [35]. Hence, based on the localization of the DWTPs, the CO2eq
emission associated to the SIC or SING was applied.
The sample used in this case study consists of 36 Chilean
DWTPs located across the country. The volume of water treated
in each of these DWTPs varies between 31,000 m3/year and
359,500,000 m3/year. All facilities carry out water treatment using
conventional physical-chemical processes, i.e., none of the DWTPs
apply reverse osmosis to treat the water. Nevertheless, the specific
unitary processes in all DWTPs are not exactly the same. For exam-
ple, only some DWTPs use a coagulation-flocculation process, and
only some of the facilities have a catch basin.
The statistical information was supplied for the year 2014 by
the SISS through the transparency of information process, which
involves requesting certain information from the SISS, which has
the legal duty to provide it. Table 1 describes statistics for the vari-
ables used in this empirical application.
4. Results and discussion
4.1. Shadow prices of CO2eq emissions
The parameter estimates for the quadratic form of the direc-
tional distance function (Eq. (11)) were obtained by solving the lin-
ear programming (Eq. (12)) using GAMS (General Algebraic
Modeling System with CPLEX solver). According Eq. (10), to com-
pute the shadow price of CO2eq for each DWTP, it is required to
ascribe a reference price for the desirable output, i.e., the drinking
water produced by each DWTP. Following Molinos-Senante et al.
[36], water-billing data taken from SISS’s webpage was used as a
reference price of the drinking water, which ranges between
0.44 €/m3 and 1.82 €/m3. Moreover, the shadow price of CO2eq
can be expressed as a percentage of the price of the drinking water.
The shadow price of CO2eq for each of the 36 DWTPs was com-
puted using the previously described methodology. Table 2 shows
that the shadow price of the CO2eq emitted by the DWTPs is rela-
tively constant because the minimum value is 5.54% of the price
of the drinking water, while the maximum value is 8.56%. The aver-
age value, i.e. the shadow price of CO2eq for the drinking water
industry, is 5.71%, and the standard deviation is 0.51%. This
Please cite this article in press as: Molinos-Senante M, Guzmán C. Reducing CO2 emissions from drinking water treatment plants: A shadow price
approach. Appl Energy (2016), http://dx.doi.org/10.1016/j.apenergy.2016.09.065
5
Input Desirable Output Undesirable Output
Operational and maintenance costs Volume of water ⁄ SIDWQ GHG emissions
(103 CLP/year) (103 m3/year) (kgCO2eq/year)
179,166 17,600 109,004
296,324 1775 165,263
15 27 2986
1,333,152 359,455 806,782
demonstrates the low variability of the shadow price of the CO2eq
among DWTPs when it is expressed as a percentage of the price of
the drinking water. The value of 5.71% means that if the water reg-
ulator introduces a carbon tax to the water industry and therefore,
water companies have to pay for the emission of GHG, they would
have to pay in average the 5.71% of the sales value of one cubic meter
of drinking water for each kg of CO2eq emitted in DWTPs.
By considering the price of drinking water, the variability of the
shadow price of CO2eq increases notably because the minimum
value is 0.025 €/kg, while the maximum value is 0.104 €/kg. The
average value for the 36 DWTPs assessed is 0.040 €/kg with a stan-
dard deviation of 0.020 €/kg. This divergence in the shadow prices
is due to the large variability in the water prices for the Chilean
cities.
The shadow price of an undesirable output is interpreted as the
opportunity cost of reducing the desirable output by one unit once
inefficiencies in the production have been eliminated [37]. How-
ever, in the framework of water utilities, the UK Environmental
Agency [38] and Hernández-Sancho et al. [16], among others, con-
sidered that if the current pollution levels are optimal, then the
shadow price of CO2eq is interpreted as the environmental costs
of using energy to treat the water. According to this approach,
the shadow price of CO2eq of 0.040 €/kg means that on average,
each kg of CO2eq emitted as a result of treating raw water involves
an environmental cost of 0.040 € (5.7% of the price of the drinking
water).
The UK Environmental Agency [38] estimated the shadow price
of GHGs, expressed as CO2eq, associated with the urban water
cycle. According to their methodology, the shadow price depends
on the year that the carbon is emitted. It was reported that for
2007, the shadow price of CO2eq was 25.5 £/tCO2eq (0.033 €/
KgCO2eq), and for 2014, it should be 29.4 £/tCO2eq (0.038 €/
KgCO2eq). In the framework of WWTPs, Molinos-Senante et al.
[12] estimated that the average shadow price of CO2eq for a sample
of 25 Spanish WWTPs was 0.88 €/KgCO2eq. Hence, the results of
this study are consistent (are of the same order of magnitude) with
previous research on this topic because the mean value for the 36
DWTPs analysed was computed as 0.040 €/m3.
4.2. Potential reduction of CO2 emissions
Fig. 1 shows the potential reduction ratio of CO2eq emissions for
the 36 DWTPs evaluated. A large divergence across DWTPs was
found. Thus, there are three facilities that are efficient and act as
references for the other DWTPs; therefore, they do not have the
potential to reduce CO2eq emissions. By contrast, 15 of the 36
DWTPs (42%) could reduce more than 75% of CO2eq emissions if
they produced at this most efficient level.
4.3. Factors affecting the shadow price of CO2 emissions
From a policy and managerial perspectives, identifying the fac-
tors affecting the shadow price of CO2eq emissions is essential for
support decision-making in order to promote the transition
towards sustainable and low-carbon-footprint drinking water
6 M. Molinos-Senante, C. Guzmán / Applied Energy xxx (2016) xxx–xxx

Table 2
Shadow price of CO2eq expressed in % of the drinking water price and expressed in €/kg.

DWTP Shadow price (%) Shadow price (€/kg) Energy consumption (kWh/m3) Volume of drinking water (m3/year)
1 8.56 0.0379 0.006 359,454,940
2 6.45 0.0285 0.010 124,580,137
3 5.56 0.0246 0.053 1,861,988
4 5.59 0.0248 0.011 8,007,871
5 5.66 0.1029 0.032 7,718,164
6 5.70 0.1037 0.033 10,116,219
7 5.68 0.1032 0.014 14,387,527
8 5.58 0.0312 0.022 4,805,179
9 5.65 0.0316 0.028 11,932,496
10 5.59 0.0313 0.016 6,623,541
11 5.64 0.0316 0.011 14,990,813
12 5.70 0.0319 0.005 28,038,677
13 5.56 0.0312 0.010 3,846,102
14 5.65 0.0438 0.005 19,640,674
15 5.60 0.0483 0.013 9,290,835
16 5.55 0.0478 0.029 662,313
17 5.74 0.0472 0.298 3,541,785
18 5.61 0.0263 0.532 723,461
19 5.54 0.0397 0.044 198,612
20 5.56 0.0398 0.154 757,673
21 5.56 0.0398 0.068 988,509
22 5.55 0.0397 0.068 452,662
23 5.55 0.0397 0.131 261,838
24 5.55 0.0397 0.222 200,998
25 5.56 0.0398 0.156 609,702
26 5.56 0.0398 0.085 988,561
27 5.55 0.0315 0.642 133,702
28 5.63 0.0320 0.653 787,667
29 5.66 0.0322 0.267 2,437,155
30 5.75 0.0327 0.244 4,580,542
31 5.56 0.0316 0.340 358,271
32 5.55 0.0315 0.718 92,782
33 5.55 0.0315 0.415 163,667
34 5.54 0.0284 0.282 30,624
35 5.58 0.0286 0.573 410,717
36 5.54 0.0284 0.171 113,641

100
90
80
Potenal Reducon (%)

70
60
50
40
30
20
10
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
DWTP

Fig. 1. Potential reduction of CO2eq emissions for each DWTP.

treatment. To investigate the determinants of the CO2eq shadow
prices of DWTPs, potential explanatory variables were selected
taking into account the available statistical information and the
features of the DWTPs [39]. Hence, we explored the possibility that
the shadow prices of CO2eq may be affected by the following fac-
tors: (i) size of the DWTP; (ii) year of construction of the DWTP;
(iii) source of raw water; (iv) company managing the DWTP; (v)
presence of catch basin; and (vi) use of coagulation-flocculation
process.
The size or capacity of the DWTP was expressed as the volume
of drinking water produced annually. This variable informs about
potential economies of scale in the shadow price of CO2eq. To inves-
tigate whether the size of DWTPs affects its CO2eq shadow price,
the facilities were categorized into five groups: (i) less than
500,000 m3/year; (ii) between 500,000 m3/year and 1,000,000 m3/
year; (iii) between 1,000,000 m3/year and 10,000,000 m3/year;
(iv) between 10,000,000 m3/year and 100,000,000 m3/year; and
(v) more than 100,000,000 m3/year. Fig. 2 shows that as the capac-
ity of the DWTPs increases, its shadow price of CO2eq also rises.
This means that the opportunity costs of CO2eq emissions are
higher for the largest DWTPs than for the smallest facilities. Thus,
the group of DWTPs with the largest size present an average sha-
dow price of CO2eq of 7.51%, while for the group of smallest DWTPs
the average shadow price is 5.55%. Moreover, the Kruskal-Wallis
test led us to confirm that the differences between the DWTP
groups are statistically significant (Table 3).

Please cite this article in press as: Molinos-Senante M, Guzmán C. Reducing CO2 emissions from drinking water treatment plants: A shadow price
approach. Appl Energy (2016), http://dx.doi.org/10.1016/j.apenergy.2016.09.065
 M. Molinos-Senante, C. Guzmán / Applied Energy xxx (2016) xxx–xxx 7

8.0 6.6

Average shadow price of CO2eq (%)

6.4
Average shadow price of CO2eq (%)

7.0

6.0 6.2

Y<=1990
10*106 <V<=100*106

1990<Y<=2000
1*106 <V<=10*106

Y>=2000

Surface
6.0

Groundwater

Mixed
5.0
5*105 <V<=1*106
V<= 5*105

V>100*106 5.8
4.0
5.6
3.0
5.4
2.0
5.2
1.0
5.0
0.0 1 2 3 4 5 6 7 8 9 10
Capacity (m3/year) Year of built Source of water Water companies

Fig. 2. Average shadow price of CO2eq expressed as % of the drinking water price for Fig. 3. Average shadow price of CO2eq expressed as % of the drinking water price for
DWTPs grouped based on the capacity, year built and main source of raw water. DWTPs grouped based on the managing water company.

The next explanatory factor investigated is the year in which 6.1

the DWTP was built as a measure of the age of the facility. It should
be noted that 1990 and 2000 were two significant milestones for 6.0

Average shadow price (%)

the Chilean water industry. On the one hand, in 1990 the Chilean 5.9
Government created the water and sewerage industry regulator

Yes
5.8
(Chilean Law 18902). Hence, before 1990 the DWTPs in Chile were
operated by public companies without any regulation. On the other 5.7
hand, based on the Strategic Plan developed by the SISS from 1998

Yes
5.6
to 2000 and Law 19549, the organization of the SISS was modified
5.5
to its current state. Moreover, from 1998 to 2000, a significant part
of the capital of the main Chilean water companies was privatized 5.4
[40]. Hence, DWTPs were categorized into three groups: (i) plants
5.3

No
No
built before 1990; (ii) plants built between 1990 and 2000; and (iii)
plants built after 2000. Fig. 2 and Table 3 show that the age of the 5.2
Catch basin Coagulaon-Flocculaon
DWTPs does not affect the shadow price of CO2eq.
In Chile, DWTPs are supplied by groundwater, surface water, Fig. 4. Average shadow price of CO2eq expressed as % of the drinking water price for
and both simultaneously. Hence, eight of the 36 facilities evaluated DWTPs grouped based on the presence or absence of catch basins and coagulation-
flocculation process.
treat exclusively groundwater, 10 of the 36 facilities use exclu-
sively surface water, while half of the DWTPs assessed use mixed
raw water (groundwater and surface water in different percent-
age). Accordingly, the DWTPs were classified into three groups: while the minimum value corresponding to another water com-
(i) groundwater; (ii) surface water; and (iii) mixed water. Fig. 2 pany is 5.55%. The differences in the average shadow price of CO2eq
illustrates that on average, the shadow price of CO2eq emissions among water companies are statistically significant (Table 3).
from DWTP treatment of surface water is the largest. However, In the framework of WWTPs, Molinos-Senante et al. [12] con-
the p-value of the Kruskal-Wallis test is larger than 0.05, which cluded that the shadow price of CO2eq is affected by the sewage
means that the differences among the three groups are not statis- sludge treatment technology. In other words, the shadow price of
tically significant. In other words, the source of raw water does not CO2eq is influenced by the technology of the facility. In the context
affect the shadow price of CO2eq emissions from the analysed of DWTPs, the quantity of sludge produced might be considered
DWTPs. negligible. However, there are two ‘‘technological” factors that vary
The management of DWTPs is essential for establishing their across the DWTPs and that might affect to the shadow price of
performance. Hence, it was investigated whether the shadow price CO2eq, namely, the presence or absence of one or more catch basins
of CO2eq is affected by the company that manages the DWTP. The in the DWTPs and the existence of a coagulation-flocculation pro-
36 facilities evaluated in this paper are operated by 10 different cess for treating the raw water. Table 3 illustrates that both the
water companies. DWTPs were grouped according to the water presence of catch basin(s) and the coagulation-flocculation process
company that operates them. Hence, 10 groups of DWTPs were significantly affect the shadow price of CO2eq.
composed. Fig. 3 shows the average shadow price of CO2eq for each Fig. 4 shows that the average shadow price of CO2eq is larger for
group of DWTPs. It is illustrated that there is one water company the DWTPs that have catch basins and carry out a coagulation-
for which its average shadow price of CO2eq is notably larger than flocculation process.
for the other water companies. Thus, for this water company, the The assessment carried out in this second-stage analysis allows
average shadow price of CO2eq is 6.54% of the drinking water price, water regulators and company managers to identify the factors

Table 3
p-value of the Mann-Whitney and Kruskal-Wallis hypothesis tests.

Size Year of built Source of water Company Catch basin Coagulation-flocculation

p-value <0.001 0.249 0.168 0.028 0.040 <0.001

Please cite this article in press as: Molinos-Senante M, Guzmán C. Reducing CO2 emissions from drinking water treatment plants: A shadow price
approach. Appl Energy (2016), http://dx.doi.org/10.1016/j.apenergy.2016.09.065
8 M. Molinos-Senante, C. Guzmán / Applied Energy xxx (2016) xxx–xxx
affecting the shadow price of CO2 emissions from DWTPs. Hence, it
provides sound scientific baseline data to develop policies to
improve the environmental and economic performance of DWTPs.
In particular, our study illustrates that the size of the plants and
the presence of coagulation-flocculation process affects the sha-
dow price of CO2. Given than the largest DWTPs present the high-
est shadow prices of CO2, if the water regulator were to introduce a
trading system for the water industry, these plants should be the
first ones to be part of the market. The differences in shadow prices
of CO2 for DWTPs with and without coagulation-flocculation also
involve policy implications. Thus, the potential trading system
should take into account the different shadow price of CO2 for
DWTPs with coagulation-flocculation process when making its ini-
tial permit allocations.
5. Conclusions
The desire to promote the transition towards a sustainable
urban water cycle with a low carbon footprint has increased nota-
bly in recent years. In the framework of the water industry, most
previous studies have focused on wastewater treatment energy
issues. Nevertheless, the energy consumed by DWTPs is not negli-
gible; therefore, their energy issues deserve to be investigated.
To achieve the ambitious challenge of a low carbon urban water
cycle, policy makers should introduce efficient and effective poli-
cies. In this context, the estimation of the shadow price of CO2 is
essential to support environmental policy issues. Given that the
shadow price is interpreted as the marginal abatement cost, it
can be used to fix carbon tax rates and to ascertain an initial mar-
ket price for CO2 emissions. To contribute on this topic, this paper
computed for the first time the shadow price of CO2 for a sample of
DWTPs. In doing so, the directional distance function was esti-
mated, which also enabled us to calculate the potential reduction
of CO2 emissions at the DWTP level. Finally, by applying a non-
parametric hypothesis test, the factors affecting CO2 shadow prices
were investigated.
The empirical application developed for a sample of Chilean
DWTPs provided the following primary results. First, the average
shadow price of CO2 is 5.7% of the price of the drinking water,
which is approximately 0.040 €/kg of CO2. This result is consistent
with the values reported by the UK Environmental Agency [38] for
the whole urban water cycle. Second, the DWTPs that were evalu-
ated have notable room to reduce CO2 emissions because, on aver-
age, they could save 58.9% of current CO2 emissions. Third, there
are four factors that significantly affect the shadow price of CO2:
the size of the DWTP, the water company that operates the DWTP
and the presence of a catch basin and the use of a coagulation-
flocculation process.
From a policy perspective, the shadow price of CO2 emissions
from DWTPs can be interpreted as the economic value of the neg-
ative externalities associated to energy consumption. Hence, this
information is essential to compare the economic feasibility of a
set of technologies that consume different quantities of energy.
Usually, this information is ignored in the economic assessment,
which focuses on financial assessment without integrating the
value of negative externalities. Moreover, the results of this paper
illustrate that an important challenge for the Chilean water indus-
try is to reduce energy use in water treatment. To achieve this goal,
the water regulator should introduce incentives for water compa-
nies to promote energy efficiency improvements. The reduction of
the carbon footprint of DWTPs will have positive effects on water
companies that will reduce their energy bill. More importantly,
these reductions will impact society as a whole because carbon
reductions are needed to facilitate the transition towards a more
sustainable urban water cycle with a low carbon footprint.
Please cite this article in press as: Molinos-Senante M, Guzmán C. Reducing CO2 emissions from drinking water treatment plants: A shadow price
approach. Appl Energy (2016), http://dx.doi.org/10.1016/j.apenergy.2016.09.065
References
[1] Raucher RS, Cromwel JE. The energy-water nexus: Options for managing
energy and their potential risks and rewards. In: Water quality technology
conference and exposition 2006: taking water quality to new
heights. American Water Works Association; 2008. p. 1691–718.
[2] Miller LA, Ramaswami A, Ranjan R. Contribution of water and wastewater
infrastructures to urban energy metabolism and greenhouse gas emissions in
cities in India. J Environ Eng (US) 2013;139(5):738–45.
[3] Santana MVE, Zhang Q, Mihelcic JR. Influence of water quality on the embodied
energy of drinking water treatment. Environ Sci Technol 2014;48(5):3084–91.
[4] Cherchi C, Badruzzaman M, Oppenheimer J, Bros CM, Jacangelo JG. Energy and
water quality management systems for water utility’s operations: a review. J
Environ Manage 2015;153:108–20.
[5] Fang D, Chen B. Linkage analysis for the water–energy nexus of city. Appl
Energy 2016. In Press.
[6] Wakeel M, Chen B, Hayat T, Alsaedi A, Ahmad B. Energy consumption for water
use cycles in different countries: a review. Appl Energy 2016;178:868–85.
[7] Loubet P, Roux P, Loiseau E, Bellon-Maurel V. Life cycle assessments of urban
water systems: a comparative analysis of selected peer-reviewed literature.
Water Res 2014;67:187–202.
[8] Lemos D, Dias AC, Gabarrell X, Arroja L. Environmental assessment of an urban
water system. J Clean Prod 2013;54:157–65.
[9] Wang S, Chen B. Energy–water nexus of urban agglomeration based on
multiregional input–output tables and ecological network analysis: a case
study of the Beijing–Tianjin–Hebei region. Appl Energy 2016;178:773–83.
[10] Chen S, Chen B. Urban energy–water nexus: A network perspective. Appl
Energy 2016. In Press.
[11] Zhang X, Vesselinov VV. Energy-water nexus: Balancing the tradeoffs between
two-level decision makers. Appl Energy 2016;183:77–87.
[12] Molinos-Senante M, Hanley N, Sala-Garrido R. Measuring the CO2 shadow
price for wastewater treatment: a directional distance function approach. Appl
Energy 2015;144:241–9.
[13] Tang K, Gong C, Wang D. Reduction potential, shadow prices, and pollution
costs of agricultural pollutants in China. Sci Total Environ 2016;541:42–50.
[14] Färe R, Grosskopf S, Lovell CAK, Yaisawarng S. Derivation of shadow prices for
undesirable outputs: a distance function approach. Rev Econ Stat 1993;75
(2):374–80.
[15] Zhou P, Zhou X, Fan LW. On estimating shadow prices of undesirable outputs
with efficiency models: a literature review. Appl Energy 2014;130:799–806.
[16] Hernández-Sancho F, Molinos-Senante M, Sala-Garrido R. Document economic
valuation of environmental benefits from wastewater treatment processes: an
empirical approach for Spain. Sci Total Environ 2010;408(4):953–7.
[17] Molinos-Senante M, Hernández-Sancho F, Sala-Garrido R. Economic feasibility
study for wastewater treatment: a cost-benefit analysis. Sci Total Environ
2010;408(20):4396–402.
[18] Molinos-Senante M, Reif R, Garrido-Baserba M, Hernánde-Sancho F, Poch M,
Sala-Garrido R. Economic valuation of environmental benefits of removing
pharmaceutical and personal care products from WWTP effluents by
ozonation. Sci Total Environ 2013;461–462:409–15.
[19] Färe R, Grosskopf S, Weber WL. Shadow prices and pollution costs in U.S.
agriculture. Ecol Econ 2006;56(1):89–103.
[20] Unicef and WHO (2015). 25 Years Progress on Sanitation and Drinking Water
2015. Update and MDG Assessment. Available on: http://files.unicef.org/
publications/files/Progress_on_Sanitation_and_Drinking_Water_2015_
Update_.pdf.
[21] Wei C, Löschel A, Liu B. An empirical analysis of the CO2 shadow price in
Chinese thermal power enterprises. Energy Econ 2013;40:22–31.
[22] Du L, Hanley A, Wei C. Marginal abatement costs of carbon dioxide
emissions in China: a parametric analysis. Environ Resource Econ 2015;61
(2):191–216.
[23] Hang Y, Sun J, Wang Q, Zhao Z, Wang Y. Measuring energy inefficiency with
undesirable outputs and technology heterogeneity in Chinese cities. Econ
Model 2015;49:46–52.
[24] Molinos-Senante M, Maziotis A, Sala-Garrido R. Estimating the cost of
improving service quality in water supply: a shadow price approach for
England and Wales. Sci Total Environ 2016;539:470–7.
[25] Färe R, Grosskopf S, Noh D-W, Weber W. Characteristics of a polluting
technology: theory and practice. J Econom 2005;126(2):469–92.
[26] Wang S, Chu C, Chen G, Peng Z, Li F. Efficiency and reduction cost of carbon
emissions in China: a non-radial directional distance function method. J Clean
Prod 2016;113:624–34.
[27] Zhang X, Xu Q, Zhang F, Guo Z, Rao R. Exploring shadow prices of carbon
emissions at provincial levels in China. Ecol Ind 2014;46:407–14.
[28] Wang K, Wei Y-M. China’s regional industrial energy efficiency and carbon
emissions abatement costs. Appl Energy 2014;130:617–31.
[29] Saal DS, Parker D, Weyman-Jones T. Determining the contribution of technical
change, efficiency change and scale change to productivity growth in the
privatized English and Welsh water and sewerage industry: 1985–2000. J Prod
Anal 2007;28(1–2):127–39.
[30] Molinos-Senante M, Donoso G, Sala-Garrido R. Assessing the efficiency of
Chilean water and sewerage companies accounting for uncertainty. Environ
Sci Policy 2016;61:116–23.
[31] SISS. Water Industry Management Report (in Spanish); 2014. <http://
www.siss.cl/577/articles-11844_inf_gest.pdf>.
 M. Molinos-Senante, C. Guzmán / Applied Energy xxx (2016) xxx–xxx 9

[32] Australian Clean Energy Regulator. Energy Reporting Scheme Available at:
Available from: http://www.cleanenergyregulator.gov.au/NGER/About-the-
National-Greenhouse-and-Energy-Reporting-scheme/Greenhouse-gases-and-
energy2016.
[33] IPCC guidelines for National Greenhouse Gas Inventories, IGES, Japan, 6.1-6.28.
[34] Energía Central. Information and diffusion of energy issues in Chile Available
at:Available from: <http://www.centralenergia.cl/centrales/capacidad-
instalada-sing/>2012.
[35] Chilean Energy Ministry. Reports of greenhouse gas emissions for SIC and SING
Available at:Available from: <http://huelladecarbono.minenergia.cl/emision-
para-el-sic>2016.
[36] Molinos-Senante M, Mocholí-Arce M, Sala-Garrido R. Estimating the
environmental and resource costs of leakage in water distribution systems:
a shadow price approach. Sci Total Environ 2016;568:374–80.
[37] Liu L, Sun X, Chen C, Zhao E. How will auctioning impact on the carbon
emission abatement cost of electric power generation sector in China? Appl
Energy 2016;168:594–609.
[38] UKEA. Greenhouse gas emissions of water supply and demand management
options. Science Report – SC070010. Bristol, United Kingdom; 2008.
[39] Marques RC, Berg S, Yane S. Nonparametric benchmarking of Japanese water
utilities: institutional and environmental factors affecting efficiency. J Water
Resour Plan Manage 2014;140(5):562–71.
[40] Molinos-Senante M, Sala-Garrido R. The impact of privatization approaches on
the productivity growth of the water industry: a case study of Chile. Environ
Sci Policy 2015;50:166–79.

Please cite this article in press as: Molinos-Senante M, Guzmán C. Reducing CO2 emissions from drinking water treatment plants: A shadow price
approach. Appl Energy (2016), http://dx.doi.org/10.1016/j.apenergy.2016.09.065