Mobile Source Air Pollution

Benefit from increased control is a public good and therefore, cannot be appropriated exclusively by the new-car purchases.

 No. of vehicles – role of automobiles in the modern lifestyle – mobile source of pollution  Not possible to tailor make emission rates for local pollution patterns – vehicle may be anywhere in its life   Stationary sources run by professionals & automobiles by amateurs Without maintenance emission will get worse – each one is miniscule part of the problem – ozone, carbon monoxide & nitrogen monoxide  Producer & user can reduce pollution  Easier to control small no. of producers than a large no. of users

 Automobiles are durables – new vehicles a small % of total pollution controlled cars replace old vehicles slowly  Pollution cannot be always controlled at production point – as choices made by owners/drivers  Many types of mobiles on road - Changing mix of vehicles affects different type/ amount of emissions   Driving in urban > damage than in rural area Cluster emissions during peak hours – 2 peaks 2 rush hours  Timing of emission -High concentration dangerous than low – spreading over 24 hour period could help

Economics of Mobile-Source Pollution

 Vehicles emit an inefficiently high level of pollution Owners/drivers don’t bear full cost of pollution – inefficiently low cost has 2 sources: A. Implicit subsidies for road transport: many types of social costs i.

Road construction & maintenance costs ii.

Building & maintaining parking space B. A failure to internalise external costs - externalities i.

ii.

iii.

Social costs of accidents Congestion - time for travel Pollution inside the car

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Congestion inefficiency

$ units Demand A B Marginal social cost D C Marginal private cost

At V o marginal benefits (dd) = marginal social costs drivers don’t internalise the cost of their presence when traffic is high – Vp efficiency loss is ∆ ACD

0 V o V p Traffic volume to road capacity

As traffic ↑ the flow ↓ - takes more time to travel – at this point marginal private & marginal social costs begin to diverge – impose the presence on others is the externality

Consequences

 Perverse incentives due to understated road transport costs – too many vehicles – too many miles driven – too many trips transport energy use high – excessive pollution  Competitive modes suffer from inefficiently low demand –  Most destructive effect of understated transport cost is its effect on land use - low cost - find people residing away from work place & shopping – more transport is inevitable – high density travel corridors

Policy towards Mobile Sources

 Smog in Southern California, Delhi, Ulaanbaatar, ….

  Clean Air Act Laws in many countries – shift to CNG    In Finland? Other countries?

Car sharing clubs – in Switzerland & Germany – started in 1980s Emission standards – PUC certificates  1989: European community of 12 countries imposed emission standards – banned leaded gasoline in 2000

Differentiated Regulation

  New sources punished by raising their costs – used car more attractive for buyers New cars cleaner – less & delayed emission – old cars increase consumption of oil    Policy makers need to find a suitable policy Clean Air Act – same emission standards for all cars – high emissions due to poor maintenance – timing maladjustment Benefits of repairs are externalities – motorists have little / no incentive to comply with requirements – ∴ enforcement

 In addition to Inspection & Maintenance programmes, Clean Air Act – amendment of 1990 required to use alternative fuels, that are cleaner viz. oxygenated fuels in winter & reformulated gasoline round the year  2 additives widely used: ethanol & methyl Tertiary Butyl ether (MTEB)  Another problem: seepage – contaminating ground water & drinking water

Possible Reforms

    Use of uniform standard – more than needed in rural area & less than needed in urban area At production point - emissions controlled – improved cars Fuel taxes: turning to user – drivers have little incentive to ↓ emissions – to internalise social cost ↑ taxes – these taxes don’t consider when & where emissions occur Congestion pricing – under consideration in India Singapore: option to buy peak-off car with red licence plate & lower registration taxes - limiting number of new vehicles Bangkok: transport of goods to metro prohibited India: no trucks to metro during restricted time Finland/US: reserved bus lanes – Italy, Oslo….

 Private toll roads: user’s pay the cost of maintenance of highways rather than shifting that cost to all tax payers – recover the cost  CAFE studies:1975: more fuel for efficient vehicles  Fleet average!

 Parking cash-outs: is it free? Should it be charged?

 Feebates: targeted to consumer buying new vehicles – tax for high-emitting, subsidy for low-emitting taxes  subsidies  PAYD insurance  Accelerated Retirement Strategies for older polluting vehicles – “cash for clunkers” – vehicles identified through inspection & maintenance programme or remote sensing

 Increasingly common strategy involves limiting the days a particular vehicle can be on the road – limit the travel miles – can back fire  Mexico: banned each car from being on the road depending on the last 2 digits of the licence plate – in short-run effective – in LR the regulation was not only ineffective but also counterproductive – bought additional car  Beijing, China: even & odd number licence plates – banned half of all private vehicles from the road on week-days – ban heavy trucks form entering city during the day – many city buses run on CNG - rebates of $440 & $880 for cars & trucks for trading for the new

Currently…

 Current policy: Emissions controlled at point-of production & at-point-of use - Uniform emissions standards – Gram-per-mile approach in Us & Europe – have achieved but less effective in ↓ aggregate emissions & cost-effective reduction  Little control in highly polluted areas  Mixes success for inspection & maintenance strategies and accelerated retirement schemes – taxies in India – recent agitation: traffic closed for a day – too old is out now – CNG in Delhi  To ensure that the social costs are borne by those making residential & mode-of-travel choices – will move in right direction

Important Insights

 Belief: tougher laws produce more environmental results: sanctions were so severe that authorities were unwilling to impose them  Belief: simply applying the technical fix can solve the environmental problem - can have unintended effects – MTEB’s effect on ground water has dwarfed its positive effects

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Future Control

Future of mobile source air pollution – 2 new emphases are emerging : Encouraging the development & commercialisation of new cleaner automotive techniques Focus on influencing driver choices parking pay-out – bringing private marginal cost closer to social marginal cost through congestion pricing, PAYD insurance, Its more than simply controlling emissions affected structured correctly – vehicle purchases, driving behaviour, fuel choice & residential and employment choices must be – these will transpire only if economic incentives associated with those choices are