Policies designed to reduce the damage to the environment caused by transport should be judged by the criterion of the public interest (i.e. a net increase in welfare). Actual decisions (e.g. on speed limits) are taken on wrong grounds. Economics should give more attention to finding ways of reducing risks of harmful decisions.
Topic: 6. Environment and Energy
The author analyses the fuel efficiency of private cars in relation to both technical characteristics and the socio-economic characteristics of the drivers for a sample of Dutch drivers. The age and profession of the driver, and fuel prices, have more significant effects than the gender and income of the driver, or the annual or commuting mileage.
A model is developed which identifies and separates the effects of several responses by the household to a change in gasoline prices. It also estimates the manufacturers’ response of improving the technology of new cars. The results point to improving fuel efficiency as an effective means of energy conservation.
Gasoline demand elasticities in the OECD are analysed and used to forecast gasoline consumption and carbon emissions under various price and tax policies. If the whole OECD had taxes as high as Italy, emissions could be reduced by more than 30 per cent in the year 2000, instead of increasing by almost 50 per cent if taxes remained unchanged.
Increases in the price of fuel are found, on balance, to result in lower capacity, reduced passenger demand and higher load factors. This must be taken into account before the effects of deregulation can be assessed.
US law requires cars produced by each manufacturer to comply with average standards of fuel economy. The authors find that relative prices of large and small cars were adjusted during 1978 and 1979, but that in 1980 the standard was met through alterations in model characteristics and through changes in demand towards smaller cars.
Demand for energy by the transport sector does respond to changing prices; but the response is small because energy accounts for only a comparatively small portion of transport costs.
Measures directed at alternatives to single-occupancy vehicles, reducing the demand for travel, or creating disincentives to car use have become important policy options. These are referred to as transport control measures. This paper describes them, discusses their relative merits, and addresses the issues surrounding quantification of their effectiveness.
Smog check programmes have failed for several reasons: (1) Current programmes only encourage cars to be clean on the inspection day and do little to deter motorists from tampering; (2) Although most emissions come from a few vehicles with high emissions, current programmes require inspection of all cars; (3) About half the cars repaired following an inspection have increased emissions.
Alternative fuels are a potential means of reducing local pollution and greenhouse gas emissions. emission reductions are highest for gaseous fuels and electric vehicles using renewable energy sources. While some alternative fuels can be cost-competitive with gasoline, they have relatively small environmental advantages. Car owner-drivers will prefer fuels that can be used in existing vehicles such as reformulated gasoline.