Getting Cars off the Road: The Cost-Effectiveness of an Episodic Pollution Control Program
Ground-level ozone contributes to urban smog, reduces forest yields, increases the susceptibility of trees and plants to disease, and adversely effects human health. The United States Environmental Protection Agency (EPA) sets National Ambient Air Quality Standards on ozone levels that all cities are supposed to meet. Although federal and state governments have adopted various strategies to battle ground-level ozone, many areas fail to meet the ozone standard. Because ozone levels are typically higher on hot, sunny days during the summer, it may be cheaper to reduce the emissions of volatile organic compounds (VOCs) and nitrous oxides (NOx) that lead to ozone formation specifically at these times, rather than controlling these emissions uniformly throughout the ozone season. Cropper, Jiang, Alberini, and Baur study the cost-effectiveness of an episodic control scheme that would require people living in the Washington, DC metropolitan area to purchase a permit if they wish to drive on high-ozone days.
To measure the cost of the driving permit scheme, Cropper, et al. began by surveying over 1,300 Washington-area commuters, asking for information on demographics, type of car owned, whether the respondent would purchase a permit to drive on high-ozone days at different stated prices, and how likely the respondent would be to drive on such days without a permit. These data imply that, at a permit price of $75 per ozone season and assuming that 85% of drivers comply with the law, the permit program would remove approximately 40% of cars and light-duty trucks from the road on high-ozone days. This could be expected to reduce emissions of VOCs by approximately 38.6 tons per high-ozone day and emissions of NOx by approximately 32.8 tons per high-ozone day, with additional benefits in terms of reduced levels of other pollutants, reduced congestion and, possibly, fewer road traffic accidents. The estimated cost of achieving these reductions is based on the value to commuters of being able to drive on high-ozone days as reflected in the prices they would be willing to pay for a permit. According to Cropper et al.’s calculations, the cost of the driving restrictions as valued by consumers would be approximately $9 million per ozone season.
Ozone-reduction programs more commonly focus on permanent controls that lead to year-round reductions in the emissions of VOCs and NOx. Depending on how these year-round reductions are achieved, however, their cost could be substantially higher than the cost of episodic measures such as the driving permit program that realize the same overall reduction in ozone levels. In addition, year-round measures may take years to fully penetrate the vehicle fleet. An episodic control scheme may be an attractive option for achieving compliance with the ozone standard in the short-to-medium term.
Maureen Cropper, Yi Jiang, Anna Alberini and Patrick Baur, Environmental and Resource Economics 57(1), 117-143, January 2014.