Green Network Design and Facility Location

Green location models are an important alternative to reduce CO2 emissions in logistics, i.e., transportation, which is one of the main contributing factors to global carbon emissions and the sector with the highest growth. In this chapter, we discuss green facility location problems, i.e., a variant of facility location problems that specifically include the transport carbon emissions in the formulation. We review some fundamental location models (both analytical and discrete) and present managerial implications on the comparison between decisions obtained by a cost minimization and by green facility location models. Our results show that for the context of urban deliveries, cost minimization solutions tend to locate facilities closer to high-demand customers, while CO2 emission minimization solutions tend to locate facilities closer to customers that have truck accessibility constraints. In addition, we illustrate the disadvantages of using aggregate estimation models in green facility location models (i.e., assuming the same structure), for example, in companies interested in intermodal transportation, using aggregate models may result in an increase in CO2 emissions since the difference in parameters for transportation cost and CO2 emissions can lead to a completely different set of solutions for both objective functions.