Enviromental policies for transportation

Question 1

is transport a main contributor to air pollution?

Answer 1

yes, road transport is the primary responsible for emissions of air pollutants

Question 2

how many people are exposed to traffic noise higher than 65db?

Answer 2

110 mn individuals according to OCED(1991)

CONSIDERED UNACCEPTABLE

Question 3

how can noise pollution affection someone

Answer 3

negative effects:

• sleep
• stress
• hearing

studies show properties exposed to noise lose 0.58 of their market value every additional decibel

Question 4

what is an externality?

Answer 4

an acitivity generates an cost to a third party, which is not internalized by the agent

Question 5

what are the three main types of externalities from car travel

Answer 5

Congestion: cost to other drivers is time

pollution: cost to residents in the area of the trip
noise: cost to residents in the area of the trip

Question 6

can transport related externalites be positive

Answer 6

yes, if residents like the looks of super cars driving by, this is a benefit which isnt incurred by the driver

Question 7

describe the basic model of externalities

draw a diagram

what is the issue here?

Answer 7

V = traffic flow e.g. quantites of car on a specific road
B(V)=  represents total value/ benefit user gain from trips
d(V) = willingness to pay for an additional trip

c(V) = a
cost of a trip, where a is costant (dont depend on traffic
volume) (horiozntal line)
- DONT INCLUDE CONGESTION

Market.equ –>d(V)=a

Question 8

what are the 2 categories of instruments the government can use to correct externalties

Answer 8

market based instruments
- affect the price of triving or emissions

command and control instruments:
- directly impose limits on the quantity of driving or emission per milt

Question 9

whats an example of a market based policy for correcting externalities

Answer 9

-Fueltaxes
•Tradable permits
•Tolls/emissions charges

Question 10

whats an example of a command and control policy for correcting externalities

Answer 10

• Vehicle emission standards
• Low emissions zones
• Fuel standards (phasing out of lead)
• Traffic restrictions (e.g.alternate license plates)

Question 11

what do economists believe in terms of trading permits

Answer 11

economists see externalities stemming from absence of property

• driviers are not liable for the damge of bystanders produced by car emissions
• sufferers cant claim compensation

Question 12

what would happend to residants if they had a right not to be exposed to pollutants

Answer 12

• they would collect compensation for the damage from emissions from drivers
• drivers internalize cost of the damage to residents

Question 13

what would happen if drivers had the right to drive and produce emissions as much as they want

Answer 13

• residents would pay them for every unit of avoided emissions
• drivers internalize the external cost of emissions –> they lose out on money by driving more

Question 14

who was the researcher who proposed property rights to solve externalities

Answer 14

Coase 1960
issues:
- collecting payment from 1 party for the other

Question 15

what is the model of property rights

Answer 15

Assume:
- 1 mile road and 2 inviduals
- a driver and a resident
V = quanity of polluting emissions in the areas --> 1db of noise per mile
--------------------------------
e(V) = external cost to resd'ts
B(v) =  benefits driver gets by dribing
private cost = a
-------------------------

Question 16

in model of property rights: what would MEC represent

Answer 16

MEC = cost of a additional unit of emisions to the resident –> how much the resident would pay to AVOID one more unit of emission

Question 17

in model of property rights: what would d(V) represent

Answer 17

benefit of additional mile for the driver –> how much the driver would value one more mile

Question 18

draw the property rights diagram
analyse?
what would happen to V if there arent in equ

Answer 18

d(V)-a>MEC:

• driving willing to pay more for an extra trip than the compensation
• V would increase

d(V)-a

Question 19

what is a cap and trade scheme

Answer 19

proposed by Coase

• set a target level of emissions
• grants right to emit to pollutuers
• those who exceed permit must buy another one

Question 20

give an example of a cap and trade scheme

Answer 20

u emissions trading system

• covers more than 45% emissions in the EU
• PERMITS are allocated through direct trading and auctions

Question 21

why are market based solutions hard to implement?

Answer 21

• to reach equ the 2 parties must be able to trade without transactions costs
  COSTS:
• enforcement: ensure drivers pay
• measuring driver emissiosn
  PARTIES MUST BE PRICE TAKERS
• uber is a price maker –> so it would not work

Question 22

By allocating property rights and letting polluters and victims trade rights to emissions, the government.

Answer 22

can achieve an efficient level of emissions, provided transaction costs are negligible

Question 23

what is a pigouvian tax

Answer 23

carbon taxes

- government takes responsibility over the environmentand charge a price for any activity that harms it

Question 24

what is the model of of a pigouvian tax

Answer 24

government sets a tax =t
so a driver f(x) would be
d(v)-(a+t)V

Question 25

draw a diagram representing a pigouvian tax

Answer 25

MEC = t

- ensure all drivers choose optimal level miles(quantity)

Question 26

pigou vs permits

Answer 26

less contraversial: polluters buy the right to emissions from the GOV not private individials (residents)
- still important to measure emssions and enforce tax (implementation cost resoures)

Question 27

real life example of a pigouvian tax

Answer 27

hydrocarbon oil duty: introduced in 1909

- created 27.1 billion pounds which is 1.5% og GDP

Question 28

Pigouvian taxation of polluting activities

Answer 28

requires a careful evaluation of the damages from pollution and the benefits from polluting activities

Question 29

what are command and control measures

Answer 29

not all policies reduce car related externlities

- limit quantity of miles directly

Question 30

example of a command and control measure

Answer 30

London low emission zone

• charge of 200£ per day to lorries over 12 tonnes
• it acts as a ban –> extended to smaller lorries and vans
• 12. 5£ for polluting vehicles like diesel cars

Question 31

what is registration based rationing

Answer 31

Driving restriction

• few vehicles are allowed to drive
• rationed by the last number of a plate
• —- use in Milan and Paris

Question 32

disadvantage of driving restrictions

Answer 32

• driving is not given to drivers with the highest benefit/ highest willingness to pay
• no revenue for the government

Question 33

advantages of driving restrictions

Answer 33

more equitable –> random allocation doesnt depend on ability to pay
- driving is not reserved to the rich –> can easily afford it

Question 34

ompared to command and control policies, market based activities have the advantage of…

Answer 34

allocating polluting activities (e.g. driving) to the individuals who value them the most

Question 35

Mexico implement driving restrictions, what were the results

Answer 35

no increase in public transport usage
- people would buy 2 cars with varying number playtes –> new vehicles sales increased by 15%

uninteded consequence
- cheaper cars means less efficient –> more pollutants per mile