November 11, 2005

Big Business Versus the Car

Traffic NYC may be leading the next wave of driving-reduction initiatives as it considers congestion pricing for parts of Manhattan. According to the NY Times:

"The idea is to charge drivers for entering the most heavily trafficked parts of Manhattan at the busiest times of the day. By creating a financial incentive to carpool or use mass transit, congestion pricing could smooth the flow of traffic, reduce delays, improve air quality and raise the speed of crawling buses."

Congestion pricing, charging variable tolls based on predicted or actual congestion, was first tried on a large scale by London, which charges drives $14 to enter the financial district during weekday work hours. (New York would probably charge between $4 and $7 per car.) In the US, San Diego, Minneapolis, and a number of other cities have toyed with the idea, but New York's would be the most aggressive and comprehensive program.

Obviously, there are a welter of environmental benefits from crimping driving--it reduces air pollution, carbon emissions, and sprawl just to name a few--but I wonder if the big lesson from the big apple is not what congestion pricing accomplishes, but who's supporting it.

In the past, environmental advocates have had only limited success in winning policy changes that diminish driving. But in NYC the champion of congestion pricing is the city's major business assocation, Partnership for New York City. I wonder if there's an object lesson here about figuring out ways for environmental advocates to leverage the huge power of the business lobby to green ends.

Posted by Eric de Place | Permalink | Comments (0) | TrackBack

Taxation Without Privation

This is days old now, but the blogosphere was all a-twitter earlier in the week about this paper by economist Jayanta Sen, arguing that a stiff tax on crude oil, far from bankrupting the US economy, would actually transfer more than $100 billion a year from foreign governments to US consumers. 

Yes, consumers would pay steeper prices for gasoline. But since all of the oil tax revenue stays within the US, that money continues to stimulate the economy.  Meanwhile, we'd import less oil -- and, as a consequence, we'd export less money to pay for it.  I'll let Sen explain things:

[T]he wealth transfer savings for the United States ... should be in the range of $108 to $152 billion a year. The new tax revenues ... can be returned to the US consumers as a lump sum, thus providing the economic stimulus. The reduction in crude oil consumption ranges from 7.13% to 10.30% while providing a stimulus (defined as additional purchasing power to consumers) to the economy of $95 billion to $133 billion a year.

The title of Sen's paper:  "A Tax to Save the US $100 billion a Year and Solve Global Warming?"  Sounds like a plan to me.  Any takers?

Posted by ClarkWD | Permalink | Comments (0) | TrackBack

November 04, 2005

Tax and Farm

I thought this was a pretty intriguing way to conserve rural land. Clallam County, on Washington's Olympic Peninsula, is considering a real estate sales tax of 0.5 percent per sale to finance farmland preservation, which is something of a vanishing resource in the booming county. The tax would go to purchase development easements on farmland, which gives farmers an injection of cash and also guarantees that the land will stay rural.

Apparently, similar measures have failed in both King and Snohomish Counties, though San Juan County does have such a tax on the books. In spite of the taxes apparent unpopularity with Puget Sound voters, I wonder if there's a creative way to tweak the tax--or the way it's assessed--so that conservation can benefit from the real estate boom, which is arguably the biggest threat to forest and farmland preservation. I'd love to figure out a way to harness the building craze toward preservation. Perhaps a tax solely on new construction? On new construction in certain areas?

Posted by Eric de Place | Permalink | Comments (5) | TrackBack

September 15, 2005

$10 billion? That's nothing!

Cleaning up Puget Sound--removing toxics and restoring its ecosystems--could cost as much as $10 billion, according to a gathering of conservationists and lawmakers as reported in the Seattle Times. Leaders are hoping to wrangle $5 billion of that total from Congress, but so far the Army Corps of Engineers, which has a sweeping vision for restoring the Sound, has garnered only a tiny fraction of the necessary dough.

Okay, $10 billion is a lot of money--even when it's spread out over a number of years--but one way to make the amount seem smaller is to compare it to other expenses. So, just for the heck of it, how about a comparison to American household spending? Here's how that multi-year $10 billion compares to just a single year (2003) of spending. It's...

  • 30% of household spending on tobacco
  • 22% of household spending on alcohol
  • 7% of household spending on gasoline
  • 4% of household spending on health care

Or another, more locally relevant way to think about it: it's substantially less money than taxpayers in just three counties--King, Pierce, and Snohomish--were, in 2004, nearly asked to shell out for a Regional Transportation Improvement District that was predominantly for road-building.

Posted by Eric de Place | Permalink | Comments (1)

September 06, 2005

Tax Hammer

Here's a reasonably good article on BC's Centre for Integral Economics, which works on an issue very dear to our hearts -- promoting reforms in tax policy that foster sustainability.

From the article...

[P]eople eat less and are healthier afterwards when they "pay by the slice" instead of going to the all-you-can-hold-down buffet. But most city services ... are based on the buffet model. That's not exactly a strategy for rewarding or encouraging thrifty and conservationist behaviour.

Moving to pay-by-the-slice methods means metering water use, which a 1999 Environment Canada study showed resulted in 70 per cent reductions in home water use, and charging by the bag for garbage... When individuals pay more per unit, the ornery side of human nature works for the social good.

That seems just about right to me.  I could preach until I was blue in the face about the importance of, say, voluntarily conserving water or fuel.  But all of the good I could do would probably be dwarfed by even a small tax shift that made those commodities more expensive.  It's not that people don't have an idealistic side, or that passionate arguments are useless.  Just that, all things considered, self interest seems to be a lot more effective at swaying actual behavior than appeals to altruism.

Posted by Northwest Environment Watch | Permalink | Comments (0)

May 24, 2005

Smarter Gas Tax III has a good update on Oregon's project to test a smarter, by-the-mile alternative to the gas tax.  The Oregon project begins field testing in 20 vehicles in September and plans to expand to 280 cars next year.

(Tip of the hat to BlueOregon.)

UPDATE: Willamette Week beats on the per-mile pilot.

Posted by Alan Durning | Permalink | Comments (14) | TrackBack

May 11, 2005

Burnt CAFE

It's a rare treat to read a dry, technical report and--almost by accident--learn something surprising, counterintuitive, useful and (at least to me) genuinely new. 

Which is exactly what happened when I read this paper (beware, pdf) by Todd Litman at the Victoria Transportation Policy Institute.  The upshot:  raising vehicle fuel-economy standards, which always seemed to me like a good idea, may actually be counterproductive, even if they're truly successful at reducing the amount of gasoline the average vehicle consumes per mile.

Now, I'd long heard the argument that current fuel economy standards (also known as Corporate Average Fuel Economy or "CAFE" standards) were ineffective in practice, because of a big loophole:  current CAFE rules hold big pickups and SUVs to a lower standard than cars.  This has let manufacturers skirt CAFE standards by shifting production away from cars to big trucks, which in turn has led to a gradual decline of the overall fuel efficiency of the US vehicle fleet -- thwarting the purpose of the CAFE standards.

To me, that seemed to be an argument for fixing the big-truck loophole, rather than scrapping the standards outright.  Clearly, the techonology exists to produce more efficient vehicles; and our economy would be better off, and our roads safer, if there weren't as many huge gas guzzlers on the road.  So ratcheting up fuel economy standards for SUVs and pickups--though currently a political non-starter at the federal level--certainly seemed like it would be a wise move over the long term.

Or so I thought.  But Litman's article argues, fairly convincingly, that CAFE standards suffer from the law of unintended consequences.  Improving vehicle fuel economy would reduce the amount of gas a vehicle consumes per mile--which, as a consequence, makes driving cheaper.  And according to Econ. 101 (which I never took, sadly) if something's cheaper, we do more of it.  So, all else being equal, the cheaper it is to drive, the more driving we do.

Here are the numbers: a 10 percent improvement in fuel economy reduces fuel consumption by 6 to 8 percent (a good thing), but also increases driving by 2 to 4 percent.  The increase in driving increases congestion, parking costs, noise pollution, and traffic accidents.  Plus, making driving cheaper fosters sprawl, while an increase in vehicle traffic makes walking and biking more dangerous and less convenient.  Assigning a rough dollar value to these competing effects, it looks as though an increase in fuel economy standards is actually a net economic loss for society, because the costs of increased driving outweigh the benefits of fuel and pollution savings.  Not at all what I expected.

LItman gets similar results for alternative fuel subsidies -- by  reducing the cost of fuel, alternative fuel subsidies encourage driving.  The costs of increased driving largely offset any benefits in petroleum savings.

Fuel taxes are another matter.  On equity grounds, they don't do so well, since fuel taxes tend fall more heavily on the poor than on the well-off.  But otherwise they appear to do a fairly good job of reducing both fuel consumption and driving -- and all the associated costs for pollution, parking, etc.

But even better than fuel taxes, Litman finds, are strategies such as pay-as-you-drive car insurance (PAYD), which turn some of the fixed costs of driving (such as car insurance) into mileage-based fees.  Under PAYD people who drive less would pay less, which is a pretty good deal on equity grounds, and certainly gives people more control over their driving expenses.  But by discouraging low-value car trips, PAYD does well on just about any other measure one can think of.

I'm not quite to the point of thinking that improved CAFE standards are a waste of time.  But Litman's analysis certainly makes me a bigger fan of PAYD than I used to be.

Posted by ClarkWD | Permalink | Comments (20)

Tolls for Thee

Via Planetizen News, evidence that the impossible is finally catching on:  according to Governing magazine, more and more jurisdictions in the US and Europe are making drivers pay to use roads when they're congested.  And remarkably, the politicians responsible for instituting the tolls don't seem to be paying much of a political price.

London's experiment is perhaps the most famous:  the city now charges drivers about $10 to drive into the city center between 7 a.m. and 6:30 p.m. on weekdays. Some pundits predicted that the policy would spark a commuter rebellion.  Instead...

Rather than revolting, drivers did one of two things: They either paid up, as 100,000 a day now choose to do, or they changed their commuting behavior. Many people who used to drive to work switched to mass transit, which became a more attractive option because [London Mayor Ken] Livingstone pumped toll revenues into expanded bus service. Other commuters bought scooters or bikes, either of which they can ride downtown for free. All in all, 60,000 fewer automobile trips are made into central London today than before the charge. Traffic moves more quickly, there are fewer accidents, and taxis and buses are more plentiful. Livingstone got re-elected handily last June, some say because of — not in spite of — his congestion-charging scheme.

Closer to home, Minneapolis is adopting a congestion pricing scheme for an urban insterstate, charging variable tolls, dependent on traffic volume, to allow single-passenger cars to use HOV lanes -- a system known as "HOT" (or high-occupancy toll) lanes.  A similar plan was proposed in 1997, but was pulled after a public outcry.  But this time around--after years of worsening congestion with no other solution in sight--the plan passed with bipartisan support.

Minneapolis is not alone in playing with congestion pricing.  San Diego has had a variable-priced toll road in place since 1996, and other congestion pricing experiments are running in Orange County, California, and in Houston. Colorado, Washington State, Georgia and Virginia all have HOT lane projects under construction or review, while Maryland, the Bay Area of California and San Diego are looking at creating regional networks of toll lanes. And San Francisco is seriously studying London's center city toll.

A decade ago, this sort of trend probably seemed impossible.  But since then, congestion has grown, and the cost of building and widening urban highways has skyrocketed, with no end in sight.  So perhaps it's not surprising that so many places are adopting one of the few proven tools for squeezing more transportation capacity out of the same old roads.

Posted by ClarkWD | Permalink | Comments (0)

May 09, 2005

Kiwi Carbon

Via Tom Paine comes news of a carbon tax in New Zealand. The fee for emitting greenhouse gases pays for tax reductions for small business. Check it out.

Posted by Alan Durning | Permalink | Comments (0)

Bush's Latest Energy "Plan" II

Further to my earlier post, here's a national energy plan that I strongly endorse, from the Center for American Progress. The ideas actually come from Rocky Mountain Institute's Winning the Oil Endgame, but CAP has boiled them down to a few salient points. The short-term plan starts with:

1. A scrap-and-replace program for low-income households' clunkers.

2. Vehicle feebates.

3. Better tires.

4. Car sharing.

Posted by Alan Durning | Permalink | Comments (0) | TrackBack