Abstract: In September 2011, the National Highway Traffic Safety Administration and U.S. Environmental Protection Agency promulgated the first-ever federal regulations mandating fuel economy improvements for heavy-duty commercial vehicles. While the performance-based approach to these rules offers familiarity and assurances of fuel economy improvements, it also has some well-known weaknesses. In this paper, we describe fuel economy technologies for the trucking sector, its economic structure, the details of the new fuel economy regulations, and the controversies they sparked. We then address issues raised in reviewing the accompanying regulatory impact analysis. Next, we highlight some flaws of this form of regulation and suggest a variety of alternative, more market-oriented approaches that might work better.

Abstract: In this paper we evaluate and compare long-run economic effects of six road-pricing schemes aimed at internalizing social costs of transportation. In order to conduct this analysis, we employ a spatially disaggregated general equilibrium model of a regional economy that incorporates decisions of residents, firms, and developers, integrated with a spatially-disaggregated strategic transportation planning model that features mode, time period, and route choice. The model is calibrated to the greater Washington, DC metropolitan area. We compare two social cost functions: one restricted to congestion alone and another that accounts for other external effects of transportation. We find that when the ultimate policy goal is a reduction in the complete set of motor vehicle externalities, cordon-like policies and variable-toll policies lose some attractiveness compared to policies based primarily on mileage. We also find that full social cost pricing requires very high toll levels and therefore is bound to be controversial.

Abstract: Previous literature has suggested that the urban form (i.e., city size, density, and center distribution pattern) influences urban energy consumption. It has been argued that more dense development is likely to result in more energy-efficient and sustainable cities. However, very little is known about the precise magnitude of possible energy savings from more compact urban form. Moreover, practically no research has been done to investigate which urban policies are likely to be effective in making cities more energy efficient and to quantify those potential energy savings.In this paper we discuss the potential effectiveness of urban policies at improving energy efficiency. First, we analyze several abstract scenarios suggested by the literature to see whether making a previously dispersed city more compact would result in improved energy efficiency. Then we model realistic transportation and land-use policies and examine whether those policies are likely to reduce energy consumption in the urban context.

Abstract: The document describes the Washington START transportation simulation model. In particular, it provides information about the model structure, the equilibrium concept, and the data used to calibrate the model. It also briefly describes the reference scenario and the elasticity analysis. Finally, the document discusses past and potential future applications and possible directions for model extensions.

Abstract: This paper compares an emissions fee on measured vehicle emissions rates to a mandatory regulation that requires all vehicles to maintain emissions below a minimum standard. We model the motorist’s decision under the fee policy and simulate the fee and regulatory policies using data from an emissions inspection program that includes test and repair information for more than 50,000 vehicles. Under ideal conditions with perfect information and no subsidies, the fee on emissions rates performs substantially better than the regulatory policy. When more realistic modeling of available information and market conditions are included, there is little difference in the cost and effectiveness of the fee and regulatory programs. In particular, we find that the ability of the polluter to assess the emissions and cost outcomes of is critical importance for the performance of the fee policy.

Abstract: We evaluate and compare the long-term economic effects of three cordon-based road pricing schemes applied to the Washington, DC, metropolitan area. To conduct this analysis, we employ a spatially disaggregated general equilibrium model of a regional economy that incorporates the decisions of residents, firms, and developers, integrated with a spatially disaggregated strategic transportation planning model that features mode, time period, and route choice.We find that all cordon pricing schemes increase welfare of the residents, as well as lead to GDP growth. At the optimum, the larger cordon and a double cordon lead to higher benefits than the small cordon encompassing downtown core. Nevertheless, the small cordon seems to be a safer bet because when the toll charge is set suboptimally, the net benefits from the small cordon compared to the optimum change negligibly, while the net benefits from the larger cordon decline sharply as the charge deviates from the optimal level.

Abstract: We employ a spatially disaggregated general equilibrium model of a regional economy that incorporates decisions of residents, firms, and developers integrated with a spatially disaggregated strategic transportation planning (START) model that features mode, time period, and route choice to evaluate economic effects of congestion pricing. First, we evaluate the long-run effects of a road-pricing policy based on the integrated model of land use, strategic transport, and regional economy (LUSTRE) and compare them with the short-term effects obtained from the START model alone. We then look at distributional effects of the policy in question and point out differences and similarities in the short run versus the long run. Finally, we analyze the mechanisms at the source of the economic and land-use effects induced by the road-pricing policy.

Abstract: I review two recent estimates of the costs and, in one case, benefits of federal regulation. The first is found in the Office of Management and Budget’s 2005 report to Congress on the benefits and costs of federal regulations (OMB 2005b). OMB estimates annual benefits in 2004 to be $70 to $277 billion and costs to be $34 to $39 billion, but these estimates omit a great deal; the cost estimate, in particular, is generally acknowledged to be an underestimate. The other estimate, written by Mark Crain (Crain 2005) and sponsored by the Small Business Administration, uses a different approach and generates an estimate of $1 trillion. Crain also finds that the burden on small firms is much greater than the burden on large firms. In the final section of the paper, I also review a recent comparison, presented in the 2005 report to Congress, of ex ante and ex post estimates of the benefits and costs of individual regulations. I find the Crain report to be deeply problematic and the OMB’s ex ante/ex post comparison slightly less so.

Abstract: This paper reviews theoretical and empirical literature on the measurement of the major automobile externalities, namely local pollution, global pollution, oil dependence, traffic congestion and traffic accidents. It then dicusses the rationale for traditional policies to address these externalities, including fuel taxes, fuel economy standards, emissions standards and related policies. Finally, it discusses emerging, more finely-tuned policies, such as congestion pricing and pay-as-you-drive insurance, that have become feasible with advances in electronic metering technology.

Abstract: The discrepancy between transit’s large share of local transportation resources and its generally low share of local trips has raised questions about the use of scarce transportation funds for this purpose. We use a regional transport model consistent with utility theory and calibrated for the Washington, D.C., metropolitan area to estimate the travel benefits of the local transit system to transit users and the congestion-reduction benefits to motorists. We find that (i) rail transit generates congestion-reduction benefits that exceed rail subsidies; (ii) the combined benefits of rail and bus transit easily exceed local transit subsidies generally; (iii) the lowest-income group receives a disproportionately low share of the transit benefits, both in absolute terms and as a share of total income; and (iv) for practical purposes, the scale of the current transit system is about optimal.

Abstract: Economic analyses of climate change policies frequently focus on reductions of energy-related carbondioxide emissions via market-based, economywide policies. The current course of environment andenergy policy debate in the United States, however, suggests an alternative outcome: inefficientlydesigned and/or sector-based policies. This paper uses a collection of specialized, sector-based models inconjunction with a computable general equilibrium model of the economy to examine and compare thesepolicies at an aggregate level. We examine the relative cost of different policies designed to achieve thesame quantity of emissions reductions. We find that excluding a limited number of sectors from aneconomywide policy does not significantly raise costs. Focusing policy solely on the electricity andtransportation sectors doubles costs, however, and using nonmarket policies can raise costs by a factor of10. These results are driven in part by, and are sensitive to, our modeling of preexisting tax distortions.

Abstract: This paper develops analytical and numerical models to explain and estimate the welfare effects of raising Corporate Average Fuel Economy (CAFE) standards for new passenger vehicles. The analysis encompasses a wide range of scenarios concerning consumers’ valuation of fuel economy and the full economic costs of adopting fuel-saving technologies. It also accounts for, and improves estimates of, CAFE’s impact on externalities from local and global pollution, oil dependence, traffic congestion, and accidents. The bottom line is that it is difficult to make an airtight case either for or against tightening CAFE on pure efficiency grounds, as the magnitude and direction of the welfare change varies across different, plausible scenarios.

Abstract: In this study we use datasets from the 1995 and 2000 Community Water Supply surveys to examine the production costs of water supply systems. We first estimate the economies of scale in water supply by estimating the total unit cost as well as individual component cost elasticities. For total unit cost elasticity, we find that a 1% increase in production reduces unit costs by a statistically significant 0.16%. For individual component cost elasticities, we find that higher economies of scale exist in capital costs, outside costs, other costs, and materials costs; labor costs and energy costs exhibit lower but still positive economies of scale. These economies of scale may reflect production economies or suggest that larger systems are better than smaller systems at bargaining and can obtain inputs at a lower unit cost. Importantly, bargaining gains and some production economies do not necessarily depend on water systems’ becoming physically interconnected.

Abstract: Federal agencies in the United States are required to prepare regulatory impact analyses (RIAs) for every major regulatory action they undertake. Increasingly, other OECD countries are imposing similar requirements. However, there has been little examination of the quality of these documents or of the uses to which they have been put in the regulatory process or elsewhere. In this paper we survey previous efforts to evaluate RIAs and find a fair amount of evaluation of RIAs as stand-alone documents, but much less evaluation of their contribution to producing better regulations.

Abstract: This paper discusses several rationales for the Corporate Average Fuel Economy(CAFE) program, including reduced oil dependence, reduced greenhouse gas emissions, and thepossibility that fuel saving benefits from higher standards might exceed added vehicle costs. Wethen summarize what can be said about the welfare effects of tightening standards, accountingfor prior fuel taxes, and perverse effects on congestion and traffic accidents through the impactof improved fuel economy on the incentive to drive. Implications of CAFE on local airpollution, and the controversy over CAFE, vehicle weight, and road safety, are also discussed.Finally, we describe ways in which the existing CAFE program could be substantially improvedand identify a variety of alternative, and much superior, policy approaches.

Abstract: Economists have long advocated congestion pricing as an efficient way of allocating scarce roadway capacity. However, with a few exceptions, congestion tolls are rarely used in practice and strongly opposed by the public and elected officials. Although high implementation costs and privacy issues are alleviated as appropriate technologies are developed, the concerns that congestion pricing will adversely affect low-income travelers remain.In this paper, we use a strategic transportation planning model calibrated for the Washington, DC, metropolitan area to compare the welfare and distributional effects of three pricing schemes: value pricing (HOT lanes), limited congestion pricing, and comprehensive congestion pricing. We find that social welfare gains from HOT lanes amount to three-quarters of those from the comprehensive road pricing. At the same time, a HOT lanes policy turns out to be much more equitable than other road pricing schemes, with all income groups strictly benefiting even before the toll revenue is recycled.

Abstract: The performance of the industrial point-source water pollution abatement program in the U.S. Clean Water Act is examined. I begin with a brief description of the statute and then turn to a description of the process used to develop the rules that govern effluent discharges. This is followed by a discussion of the outcomes resulting from efforts to apply these rules to industrial pollutant sources. Two types of outcomes are considered: administrative outcomes and outcomes in the water. Last, the issue of implementation is discussed: how the Clean Water Act may have affected the incentives governing the behavior of industrial dischargers, municipal waste treatment plant operators, and regulators. Surprisingly, there is some evidence that the Clean Water Act, at least as far as industrial point sources are concerned, may be evolving into an effluent fee policy, or at least a mixed policy.

Abstract: Improved technology is often cited as a means to alter the otherwise difficult trade-off between the economic burden of regulation and environmental damage. Focusing on energy-saving technologies that mitigate the threat of climate change, we find that both energy prices and financial health influence technology adoption among a sample of industrial plants in four heavily polluting sectors. Based on a model linking technology adoption to growth in aggregate efficiency, we estimate that a doubling of energy prices, after raising the growth rate to 2.1%, would require slightly more than 50 years to generate a 50% improvement in aggregate efficiency relative to the baseline forecast.

Abstract: Using data from 1995 and 1996, the authors of this paper estimate the cost of the Arizona Enhanced I/M Program and the emission reductions achieved. They begin by enumerating briefly the components of I/M costs and discuss their size and incidence. Then they describe the empirical information from Arizona and how they use it to construct cost estimates for both vehicle inspection and repair of failing vehicles. Inspection costs include the costs of operating the test stations and the costs motorists incur in time and money to get to the station and go through the testing process. The authors find that the inspection costs account for over two-thirds of the full costs of I/M, while costs associated with actual vehicle repair account for only one third. They conclude by comparing the empirical estimates of costs and program effectiveness in the Arizona program with the ex ante estimated Enhanced I/M program costs made by the EPA in the 1992 Regulatory Impact Analysis (RIA). The ex ante EPA analysis appears to have underestimated the costs of achieving the ambitious reductions in emissions hoped for under I/M.

Abstract: To what extent should developing countries eschew conventional command and control environmental regulation that is increasingly seen as inefficient and rely instead on economic incentives? This paper addresses this question as it pertains to industrial air pollution. The paper discusses the advantages and disadvantages of various economic incentive instruments, presents in-depth case studies of their application in Sweden, the United States, China, and Poland, and proposes a number of policy guidelines. The authors argue that both design deficiencies and pervasive constraints on monitoring and enforcement impede the effectiveness of economic instruments in developing countries. The latter are difficult to rectify, at least in the medium term. As a result, tradable permits are generally not practical. Suitably modified however, emissions fee policies probably are appropriate. They can provide a foundation for a transition to an effective economic incentive system, and can raise much needed revenue for environmental projects and programs. In addition, if political opposition can be overcome, environmental taxes constitute a second-best but potentially effective pollution control instrument.

Abstract: The Arizona I/M program provides one of the first opportunities to examine the costs and effectiveness of vehicle emission repair. This paper examines various aspects of emission reductions, fuel economy improvements, and costs of repair, drawing data from over 80,000 vehicles failing the I/M test in Arizona between 1995 and the first half of 1996. We summarize the wealth of repair data from the Arizona program and highlight its limitations. Because missing or incomplete cost information has been a serious shortcoming for evaluation of I/M programs, we develop a method for estimating the costs of repair when those costs are not reported. We find surprising evidence that almost one quarter of all vehicles that take the I/M test are never observed to pass the test. Using a statistical analysis, we provide some information about the differences between the vehicles that pass and those that do not. Older, more polluting vehicles are much more likely to never pass the I/M test, and their expected costs of repair are much higher than those of new cars. The paper summarizes the evidence on cost and emission reduction in the Arizona program, comparing costs and emission reductions for both cars and trucks. Finally, we examine the potential for more cost-effective repair, first through an analysis of tightening I/M cutpoints, and then by calculating the cost savings of achieving different emission reduction goals when the most cost effective repairs are made first.

Abstract: This paper examines the current assignment of liability for in-use vehicle emissions and suggests some alternative policies that may reduce the cost and increase the effectiveness. The authors first discuss the cost, performance and incentives under current Inspection and Maintenance (I/M) programs, using the recently implemented Arizona "Enhanced I/M" program as an example. These programs were designed to identify and repair vehicles with malfunctioning emission control systems. Since their inception, however, I/M programs have been plagued by transaction costs that have drastically raised the cost of I/M as well as limited its effectiveness. These transaction costs fall into three categories: emission monitoring, repair avoidance, and non-transferability of emission reductions. The authors argue that most of these transaction costs can be attributed to the current assignment of liability for I/M to motorists, and they examine the potential for other liability assignments to reduce transaction costs and improve program efficiency. Among the alternative institutional arrangements discussed are greater imposition of liability on manufacturers, emission repair subsidies, repair liability auctions, and vehicle leasing.

Abstract:

This study compares ex ante estimates of the direct costs of individual regulations to ex post assessments of the same regulations. A review of more than two dozen environmental and occupational safety regulations indicates that ex ante estimates of total (direct) costs have tended to exceed actuals. The authors find this to be true of 12 of the 25 rules in their data set, while for only 6 were the ex ante estimates too low. The overestimation of total costs is often due to errors in the quantity of emission reductions achieved by the rule which, in turn, suggest that the rule's benefits may also be overestimated. The quantity errors are driven by both baseline and compliance issues. At least for EPA and OSHA rules, overestimation of per-unit abatement costs occurs about as often as underestimation. In contrast, for those rules that use economic incentives, per-unit costs are consistently overestimated.

Much of the overestimation can be attributed to technical innovations unanticipated at the time the rule is issued, and to quantity errors. In addition, several methodological and procedural explanations also apply: changes in the regulation after the cost estimate is prepared, use of maximum cost estimates, and asymmetric error correction.

Since a number of environmental laws encourage the development of cost estimates that reflect a maximum rather than a mean, regulatory agencies could issue a "best estimate" along with the statutorily preferred cost estimate. Likewise, they could ensure that rule changes made in the course of the regulatory development process are manifest in revised cost estimates. Indeed, discovering how and when to adjust ex ante estimates provides the strongest possible justification for more credible ex post studies—a research activity that merits greater emphasis.

Abstract:

This paper examines the behavioral and stochastic aspects of modeling emission reductions from vehicle Inspection and Maintenance (I/M) programs. Forecasts of the potential emission reductions from such programs have been modeled by the use of the Environmental Protection Agency's MOBILE Model, EPA's computer model for estimating emission factors for mobile sources. We examine the structure of this Model and review the way behavior of drivers, mechanics and state regulatory authorities is incorporated in the current generation of the Model. We focus particularly on assumptions about vehicle repair under I/M, compliance with I/M requirements, and the impact of test measurement error on predicted I/M effectiveness. We also include some preliminary comparisons of the Model's outcomes to results of the I/M program in place in Arizona. Finally, we perform some sensitivity analyses to determine the most influential underlying parameters of the Model.

We find that many of the assumptions of the I/M component of the Model are based on relatively small data sets on vehicle done in a laboratory setting, and that the output of the Model makes it difficult to compare the results against real world data from on-going state programs. In addition, the Model assumes that vehicles will either be repaired or receive a waiver. In the Arizona program there appears to be a third category of vehicles — those which fail the test and do not receive passes. This share may be as high as a third of all failing vehicles. Vehicles which do not eventually pass the test would be treated in the Model as non-compliant. However, in current programs, states do not seem to be measuring and entering the compliance rate correctly. The paper also examines the evidence about whether emissions deteriorate over the life of vehicle in a grams per mile basis (as assumed by the Model) or a grams per gallon basis. It finds support for the argument that emissions deteriorate on a grams per gallon basis.

We find through sensitivity analysis that the repair effectiveness assumed by the Model to occur in an IM240 test are much greater than for the idle test, and that identification rates and repair effectiveness vary a great deal according to the cutpoint. These results are based on small numbers of vehicle tests in a laboratory setting and could be compared to real world evidence. Examining costs and cost-effectiveness of variations in I/M programs is important for determining improvements in I/M programs. States may not have incentives to develop cost-effective programs based on current Model that forecast emission reduction "credits" that are overly optimistic.

Abstract:

Transportation authorities have consistently failed to employ economic incentives on major roadways--i.e. time-of-day pricing or "congestion fees"--to internalize the costs of congestion. In principle at least, such tolls can easily be shown to increase social welfare by making motorists pay something closer to the full social costs of their driving decisions. In addition, recent advances in electronics make it possible to implement such fees fairly cheaply and non-intrusively. While these same authorities generally understand and acknowledge the case for using congestion fees, they also claim that their use is politically infeasible because too many motorists would suffer large increases in commuting costs. This is the puzzle: If congestion tolls truly do advance social welfare, why is it so difficult to find a way to implement them? Two common explanations for this difficulty are the following: (i) The public perceives, or politicians fear that they would perceive, such fees simply as tax increases. If so, they might be responsive to an explicit promise to return the money in some way. (ii) Motorists dislike congestion fees because they find them coercive, in that they often have few if any practical alternatives to paying the fee. If so, then a policy option that offers motorists a choice of toll lanes and the more customary free lanes may be more attractive than a policy that policy of tolls on all lanes.

We have completed a survey of Southern California residents designed to test these hypotheses. Unlike most opinion surveys on congestion pricing, our survey was quite explicit about the fate of the collected revenues. For example, we presented respondents with policies that returned a substantial portion of the revenues to the public, either in the form of cash (through reductions in sales taxes and vehicle registration fees or through income tax credits) or in the form of coupons to be used for vehicle emissions equipment repair, transit, and the like. In the past, most surveys have not been explicit about the revenues, or they have stated that revenue use was to be for improved highways, transit, or other public purposes. We find that a promise to offset the imposition of congestion fees by other taxes can result in a 7 percentage point increase in support for congestion pricing policies, and the restriction of congestion pricing to a single lane on a freeway attracts from 9 to 17 percentage points of additional support.

Abstract: This paper incorporates owners' decisions to keep, repair or scrap their old vehicles into a simulation model of fleet emissions. This decision depends critically on the owner's perceived value of the vehicle, so we examine the factors affecting owners' valuations of their old vehicles using a unique longitudinal dataset. Willingness to accept for the vehicle is well predicted by mileage and condition of the car, and declines systematically with its age. Our estimated model of vehicle value is used as an input into a simulation model of a 1,000-car fleet representative of California's fleet. Other inputs into the simulation models are the estimated distributions of emissions in the fleet, and two equations that link emissions reductions to the cost of repairs. The simulation model is used to examine the role of scrap policies alone and combined with other policies for reducing emissions, such as current I/M programs and proposed emissions fees, and the welfare implications of combining such programs. The model incorporates both technical and behavioral relationships, and assumes that of all possible options (repairing the car, scrapping the vehicle, or paying the emissions fee without repairing the vehicle) the owner chooses the one with the least cost. We find that old car scrap programs may increase net welfare under a regulatory program like I/M in practice today, but that a stand alone scrap program is unlikely to provide very much in the way of emission reductions.

Abstract: The expense and inconvenience of enhanced vehicle emissions testing using the full 240-second dynamometer test has led states to search for ways to shorten the test process. In fact, all states that currently use the IM240 allow some type of fast-pass, usually as early in the test as second 31, and Arizona allows vehicles to fast-fail after second 93. While these shorter tests save states millions of dollars in inspection lanes and driver costs, there is a loss in information since test results are no longer comparable across vehicles. This paper presents a methodology for estimating full 240 second results from partial-test results for three pollutants: HC, CO and NOx. Using random sample of vehicles in Arizona which received full 240 second tests, we use regression analysis to estimate the relationship between emissions at second 240 and emissions at earlier seconds in the test. We examine the influence of other variables such as age, model-year group, and the pollution level itself on this relationship. We then use the estimated coefficients in several applications. First, we attempt to shed light on the frequent assertion that the results of the dynamometer test provide guidance for vehicle repair of failing vehicles. Using a probit analysis, we find that the probability that a failing vehicle will passing the test on the first retest is greater the longer the test has progressed. Second, we test the accuracy of our estimates for forecasting fleet emissions from partial test emissions results in Arizona. We find that forecast fleet average emissions are very close to the actual fleet averages.

Abstract:

The Congestion Mitigation/Air Quality Program (CMAQ), established in 1991 by the Intermodal Surface Transportation Efficiency Act (ISTEA) to provide about $1 billion per year to fund transportation projects that improve air quality, is intended both to support traditional transportation control measures and to encourage innovation in developing new strategies and technologies for controlling emissions from transportation sources. While the program has indeed encouraged some innovative approaches to local transportation and air quality problems, critics see it as a diversion of funds that could more usefully be devoted to conventional highway improvement projects. The current debate in Congress over the reauthorization of ISTEA and, specifically, the CMAQ provisions, is hampered by the lack of detailed information about the achievements of previous CMAQ projects and a plan for evaluating future projects.

Resolution of this debate could be aided by emphasizing the role of CMAQ projects as natural experiments and developing a plan to conduct them. The purpose of this paper is to outline a strategy of analysis and data collection that will facilitate evaluation of CMAQ projects. This paper argues that the lack of emphasis (in all but the largest projects) on project evaluation can be explained by the public goods nature of information. Because local implementing agencies bear the costs of evaluation, while the benefits are enjoyed primarily by other jurisdictions in planning their transportation and environment projects, too little evaluation is conducted. At present, much of the potential usefulness of CMAQ projects to planners is dissipated because there is little systematic learning. Indeed, a project could succeed as an experiment if learning took place, even if it failed to improve air quality.

This paper examines the kinds of data collected now in CMAQ programs in comparison with the kinds of data that would permit more effective program evaluation, particularly ex post evaluation, i.e., analysis of what actually resulted from the implementation of the individual project. In many cases, data-gathering should concentrate on observable outcomes that can clearly be attributed to the project and yet bear some relationship to air quality or congestion, either established by previous empirical study or by model results. A method is proposed for collecting the requisite data for each of several important types of CMAQ projects. To assure that the data are collected and evaluated will also require changes in the way in which CMAQ is administered, including the dedication of some portion of CMAQ funds for evaluating completed projects. The biggest change may be the need to develop measures of "success" and identify "control cases" against which to judge the success of the experiment.

Abstract:

In this paper we report on the results of a telephone survey conducted in Southern California during August and September 1996. The purpose of the survey was to inform respondents about a set of rather complex pricing policies designed to reduce motor vehicle emissions and to estimate respondent support for those policies. After receiving extensive information about these policies, respondents were polled on whether they would support, i.e., vote for, any or all of these options.

The pollution fee survey elicited support for a plan that levied a fee on vehicles in the region, depending on the vehicle's emissions per mile and on the miles driven. The sample was then split in two, with half the respondents being told that a portion of the revenues would be returned to the public in the form of reductions in motor vehicle fees or sales tax reductions, and half told that these returns would be made in the form of coupons. Nearly 40 percent of respondents agreed to support the base plan (42 percent of those expressing an opinion). More than 50 percent supported the fees with rebates, including support of 54 percent when all the available revenues are returned to the public (57 percent of the sample expressing an opinion). Support for the coupon policy was intermediate between the base and rebate policies, attracting 42 percent of the sample (45 percent of those expressing an opinion).

Statistical analyses were performed on the data to explain the voting patterns observed. Generally, the levels of support were significantly affected by the design features of the plans, such as the size of the fee paid and the rebate, as well as by a host of socio-demographic and perceptual variables, such as ethnicity, age, political affiliation, expected efficacy of the policy, and the degree to which air pollution affects the respondent or his or her family. Examination of these statistical results may be useful in the development of pollution fee programs to present to the public, as well as in the design of public information campaigns and the allocation of marketing resources to win support for these programs.

Abstract:

Regulation of mobile source emissions in the US has evolved as a complex combination of central government and decentralized authority. The central government required uniform new car emissions standards in the 1970 Clean Air Act, but gave states the power to meet ambient air quality standards however they saw fit, including various regulations on mobile sources. The 1990 Amendments to the Act strengthened the Federal role in some ways, by requiring tighter new car standards and more specific requirements for fuels and for vehicle emissions inspection and maintenance, but at the same time left states with a great deal of latitude to meet ambient standards and took greater recognition of regional variation in environmental problems. We examine the role of various levels of government in attempts to control vehicle emissions in the US, focusing primarily on regulations affecting ambient ozone pollution.

Current regulations coming out of the 1990 Amendments are still the subject of much controversy. Several regulations are examined here from the federalist perspective, including the California new car standards and the current debate over "enhanced" inspection and maintenance. We discuss the theoretical basis for national uniform regulations, including production scale economies for new cars, pollution spillovers from one jurisdiction to another, and prevention of state non-compliance with ambient air quality goals. For the analysis of economies of scale in production, we model the trade-offs between gains from scale economies in polluted regions and losses from excess controls in cleaner regions, and illustrate the role of interregional transfers or side-payments. These trade-offs and transfers are particularly important as decisions are being made about whether the "California cars" will be sold only in California or whether they will be sold in the Northeast states and elsewhere. We then look at the debate over enhanced I&M. Finally, we draw some tentative conclusions about the future role of the states versus the central government in US ozone policy.

Abstract: The paper compares policy alternatives for reducing vehicle emissions when there is uncertainty in the ability of existing emissions tests to identify a vehicle's true emissions rates and also in the ability to predict the effectiveness of repair. Using a simulation model, we compare the cases of a command and control type of policy, like a vehicle inspection program which requires the repair of all failing vehicles, to emissions fee policies which give motorists choice about whether to repair their vehicles. We find that even under uncertainty, fees are more efficient than the command and control policy. We do find, however, that uncertainty has a large impact on the costs and emissions reduction potential of both policies. In addition, we find that uncertainty can have important impacts on the evaluation of fee alternatives. Under uncertainty, a fee which only has to be paid after emissions reach some limit, are found to be as efficient as pure fees but have the advantage of mitigating the high costs of fees to motorists. Maximum fees with repair subsidies are also we also examined and are found to have both efficiency and distributional advantages, but are likely to face incentive and implementation problems.

Abstract: The conventional wisdom is that there is no relationship between fuel economy and motor vehicle emissions, at least for new cars. The requirement that all vehicles meet a common emission standard in terms of grams per mile effectively breaks whatever link there might have been between fuel economy and emissions in uncontrolled (preregulatory) vehicles. As cars age, however, the emission control equipment tends to break down, providing reason to think that the conventional wisdom might do the same. This paper reports on an empirical examination of this proposition, by linking EPA fuel economy certification data to a large database of motor vehicle emission measurements collected by remote sensing. It is found that better fuel economy is strongly associated with lower emissions of CO and HC and that the effect gets stronger as vehicles age.

Abstract: In this paper we review and analyze the existing estimates of the costs of compliance with environmental regulation of light duty vehicles over the two decades, 1970 to 1990. The cost estimates reviewed include several on-going compliance costs estimates by government agencies: (i) EPA's periodic estimates which can be found in the Cost of Clean Air and Water Reports of 1984, 1990 and in unpublished 1993 revisions, and (ii) estimates by the Bureau of Economic Analysis (BEA) which are published in the Survey of Current Business. We also look at several independent research studies, one by Lawrence White (1982) The Regulation of Air Pollutant Emissions from Motor Vehicles, another by Robert Crandall et al. (1986) Regulating the Automobile, and one study of capital costs for 1990 model year vehicles in California by Wang, Kling and Sperling (1993) "Emission Control Costs for Light-Duty Vehicles." We compare the methods and assumptions used by these studies for estimating the costs of complying with environmental regulations, focusing on the three major components of cost: capital, operating, and maintenance costs. We then explore some of the difficult conceptual issues that arise when trying to define and estimate these costs, such as defining the baseline or "no regulation" world, determining which costs should be included when there is more than one regulatory change, and how to define costs to include the full social costs of the regulations. Where possible, we suggest some ways that the cost estimates might be improved or made more consistent.