Mobile Source Air PollutionMobile 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 No. of vehicles – role of automobiles in the modern lifestyle – mobile source of pollutionmodern lifestyle – mobile source of pollution

Not possible to tailor make emission rates for Not possible to tailor make emission rates for local pollution patterns – vehicle may be local pollution patterns – vehicle may be anywhere in its lifeanywhere in its life

Stationary sources run by professionals & Stationary sources run by professionals & automobiles by amateursautomobiles by amateurs

Without maintenance emission will get worse –Without maintenance emission will get worse –each one is miniscule part of the problem – each one is miniscule part of the problem – ozone, carbon monoxide & nitrogen monoxideozone, carbon monoxide & nitrogen monoxide

Producer & user can reduce pollutionProducer & user can reduce pollution Easier to control small no. of producers than a Easier to control small no. of producers than a

large no. of userslarge no. of users

Automobiles are durables – new vehicles a small % Automobiles are durables – new vehicles a small % of total pollution controlled cars replace old of total pollution controlled cars replace old vehicles slowlyvehicles slowly

Pollution cannot be always controlled at production Pollution cannot be always controlled at production point – as choices made by owners/driverspoint – as choices made by owners/drivers

Many types of mobiles on road - Changing mix of Many types of mobiles on road - Changing mix of vehicles affects different type/ amount of emissionsvehicles affects different type/ amount of emissions

Driving in urban > damage than in rural areaDriving in urban > damage than in rural area Cluster emissions during peak hours – 2 peaks 2 Cluster emissions during peak hours – 2 peaks 2

rush hoursrush hours Timing of emission -High concentration dangerous Timing of emission -High concentration dangerous

than low – spreading over 24 hour period could than low – spreading over 24 hour period could helphelp

Economics of Mobile-Source PollutionEconomics of Mobile-Source Pollution

Vehicles emit an inefficiently high level of Vehicles emit an inefficiently high level of pollution - Owners/drivers don’t bear full cost of pollution - Owners/drivers don’t bear full cost of pollution – inefficiently low cost has 2 sources:pollution – inefficiently low cost has 2 sources:

A. Implicit subsidies for road transport: many types of A. Implicit subsidies for road transport: many types of social costs social costs

i.i. Road construction & maintenance costsRoad construction & maintenance costs

ii.ii. Building & maintaining parking spaceBuilding & maintaining parking space

B. A failure to internalise external costs - externalitiesB. A failure to internalise external costs - externalitiesi.i. Social costs of accidents Social costs of accidents

ii.ii. Congestion - time for travelCongestion - time for travel

iii.iii. Pollution inside the car Pollution inside the car

Congestion inefficiencyCongestion inefficiency

Demand

$ units

0

Traffic volume to road capacityVo Vp

A

D

B C

Marginal social cost

Marginal private cost

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

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

ConsequencesConsequences

Perverse incentives due to understated road Perverse incentives due to understated road transport costs – too many vehicles – too many transport costs – too many vehicles – too many miles driven – too many trips transport energy miles driven – too many trips transport energy use high – excessive pollutionuse high – excessive pollution

Competitive modes suffer from inefficiently low Competitive modes suffer from inefficiently low demand – demand –

Most destructive effect of understated transport Most destructive effect of understated transport cost is its effect on land use - low cost - find cost is its effect on land use - low cost - find people residing away from work place & people residing away from work place & shopping – more transport is inevitable – high shopping – more transport is inevitable – high density travel corridorsdensity travel corridors

Policy towardsPolicy towards Mobile SourcesMobile Sources

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

Clean Air ActClean Air Act Laws in many countries – shift to CNGLaws in many countries – shift to CNG In Finland? Other countries?In Finland? Other countries? Car sharing clubs – in Switzerland & Germany Car sharing clubs – in Switzerland & Germany

– started in 1980s– started in 1980s Emission standards – PUC certificatesEmission standards – PUC certificates 1989: European community of 12 countries 1989: European community of 12 countries

imposed emission standards – banned leaded imposed emission standards – banned leaded gasoline in 2000gasoline in 2000

Differentiated RegulationDifferentiated Regulation New sources punished by raising their costs –New sources punished by raising their costs –

used car more attractive for buyers used car more attractive for buyers New cars cleaner – less & delayed emission – old New cars cleaner – less & delayed emission – old

cars increase consumption of oil cars increase consumption of oil Policy makers need to find a suitable policyPolicy makers need to find a suitable policy Clean Air Act – same emission standards for all Clean Air Act – same emission standards for all

cars – high emissions due to poor maintenance – cars – high emissions due to poor maintenance – timing maladjustmenttiming maladjustment

Benefits of repairs are externalities – motorists Benefits of repairs are externalities – motorists have little / no incentive to comply with have little / no incentive to comply with requirements – requirements – ∴∴ enforcement enforcement

In addition to Inspection & Maintenance In addition to Inspection & Maintenance programmes, Clean Air Act – amendment of 1990 programmes, Clean Air Act – amendment of 1990 required to use alternative fuels, that are cleaner - required to use alternative fuels, that are cleaner - viz. oxygenated fuels in winter & reformulated viz. oxygenated fuels in winter & reformulated gasoline round the yeargasoline round the year

2 additives widely used: ethanol & methyl Tertiary 2 additives widely used: ethanol & methyl Tertiary Butyl ether (MTEB)Butyl ether (MTEB)

Another problem: seepage – contaminating Another problem: seepage – contaminating ground water & drinking waterground water & drinking water

Possible ReformsPossible Reforms

Use of uniform standard – more than needed in Use of uniform standard – more than needed in rural area & less than needed in urban arearural area & less than needed in urban area

At production point - emissions controlled – At production point - emissions controlled – improved carsimproved cars

Fuel taxes: turning to user – drivers have little Fuel taxes: turning to user – drivers have little incentive to incentive to ↓ ↓ emissions – to internalise social cost emissions – to internalise social cost ↑↑ taxes – these taxes don’t consider when & where taxes – these taxes don’t consider when & where emissions occur emissions occur

Congestion pricingCongestion pricing – under consideration in India – under consideration in India SingaporeSingapore: option to buy peak-off car with red : option to buy peak-off car with red licence plate & lower registration taxes - limiting licence plate & lower registration taxes - limiting number of new vehicles number of new vehicles

BangkokBangkok: transport of goods to metro prohibited : transport of goods to metro prohibited IndiaIndia: no trucks to metro during restricted time : no trucks to metro during restricted time Finland/USFinland/US: reserved bus lanes – Italy, Oslo….: reserved bus lanes – Italy, Oslo….

Private toll roads: user’s pay the cost of maintenance Private toll roads: user’s pay the cost of maintenance of highways rather than shifting that cost to all tax-of highways rather than shifting that cost to all tax-payers – recover the costpayers – recover the cost

CAFE studies:1975: more fuel for efficient vehiclesCAFE studies:1975: more fuel for efficient vehicles Fleet average!Fleet average! Parking cash-outs: is it free? Should it be charged?Parking cash-outs: is it free? Should it be charged? Feebates: targeted to consumer buying new vehicles Feebates: targeted to consumer buying new vehicles

– tax for high-emitting, subsidy for low-emitting – tax for high-emitting, subsidy for low-emitting taxestaxes subsidies subsidies

PAYD insurancePAYD insurance Accelerated Retirement Strategies for older polluting Accelerated Retirement Strategies for older polluting

vehicles – “cash for clunkers” – vehicles identified vehicles – “cash for clunkers” – vehicles identified through inspection & maintenance programme or through inspection & maintenance programme or remote sensingremote sensing

Increasingly common strategy involves limiting Increasingly common strategy involves limiting the days a particular vehicle can be on the road – the days a particular vehicle can be on the road – limit the travel miles – can back firelimit the travel miles – can back fire

Mexico: banned each car from being on the road Mexico: banned each car from being on the road depending on the last 2 digits of the licence plate depending on the last 2 digits of the licence plate – in short-run effective – in LR the regulation was – in short-run effective – in LR the regulation was not only ineffective but also counterproductive – not only ineffective but also counterproductive – bought additional car bought additional car

Beijing, China: even & odd number licence plates Beijing, China: even & odd number licence plates – banned half of all private vehicles from the road – banned half of all private vehicles from the road on week-days – ban heavy trucks form entering on week-days – ban heavy trucks form entering city during the day – many city buses run on CNG city during the day – many city buses run on CNG - rebates of $440 & $880 for cars & trucks for - rebates of $440 & $880 for cars & trucks for trading for the new trading for the new

Currently…Currently…

Current policy: Emissions controlled at point-of-Current policy: Emissions controlled at point-of-production & at-point-of use - Uniform emissions production & at-point-of use - Uniform emissions standards – Gram-per-mile approach in Us & standards – Gram-per-mile approach in Us & Europe – have achieved but less effective in ↓ Europe – have achieved but less effective in ↓ aggregate emissions & cost-effective reduction aggregate emissions & cost-effective reduction

Little control in highly polluted areasLittle control in highly polluted areas Mixes success for inspection & maintenance Mixes success for inspection & maintenance

strategies and accelerated retirement schemes – strategies and accelerated retirement schemes – taxies in India – recent agitation: traffic closed for taxies in India – recent agitation: traffic closed for a day – too old is out now – CNG in Delhia day – too old is out now – CNG in Delhi

To ensure that the social costs are borne by To ensure that the social costs are borne by those making residential & mode-of-travel those making residential & mode-of-travel choices – will move in right directionchoices – will move in right direction

Important InsightsImportant Insights

Belief: tougher laws produce more environmental Belief: tougher laws produce more environmental results: sanctions were so severe that authorities results: sanctions were so severe that authorities were unwilling to impose them were unwilling to impose them

Belief: simply applying the technical fix can solve Belief: simply applying the technical fix can solve the environmental problem - can have unintended the environmental problem - can have unintended effects – MTEB’s effect on ground water has effects – MTEB’s effect on ground water has dwarfed its positive effectsdwarfed its positive effects

Future ControlFuture Control Future of mobile source air pollution – 2 new Future of mobile source air pollution – 2 new

emphases are emerging :emphases are emerging :1.1. Encouraging the development & commercialisation Encouraging the development & commercialisation

of new cleaner automotive techniquesof new cleaner automotive techniques2.2. Focus on influencing driver choices – bringing Focus on influencing driver choices – bringing

private marginal cost closer to social marginal cost private marginal cost closer to social marginal cost through congestion pricing, PAYD insurance, through congestion pricing, PAYD insurance, parking pay-out parking pay-out

Its more than simply controlling emissions – Its more than simply controlling emissions – vehicle purchases, driving behaviour, fuel choice & vehicle purchases, driving behaviour, fuel choice & residential and employment choices must be residential and employment choices must be affected – these will transpire only if economic affected – these will transpire only if economic incentives associated with those choices are incentives associated with those choices are structured correctlystructured correctly