The Eighth Annual Global Conference on Environmental Taxation
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Workshop 3: Road traffic management and market based instruments

Effects of fiscal reforms on Spanish CO2 emissions from new passenger cars

Dr. Cristina de Gispert, Dr. Marta Espasa, T. Mora, University of Barcelona, Spain

In this paper we estimate the reduction on Spanish CO2 emissions as a consequence of the possible implementation of the Commission Proposal for a Directive on passenger cars taxation system. The proposal aims to restructure the tax base of annual circulation tax so as to include elements directly related to carbon dioxide emissions of passenger cars. It also contains the abolition of car registration taxes over a transitional period of five to ten years.

To undertake the analysis, firstly we estimate the demand system of new passenger cars using Spanish microdata on household consumption for the period 1998 to 2003 and following the methodology explored in López Nicolás (1995), Labandeira and López (2002), and Álvarez et al (2006) in the field of private transport. Secondly, we evaluate the impact of several fiscal reforms on the reduction of CO2 emissions according to the directions of the Commission Proposal.


Acceptability of Urban Road User Charging: State of the Art

Dr. Jens Schade, Technical University of Dresden, Germany

Economists have favoured the use of pricing in regulating transportation for decades. Several policy documents at the EU and the national level have adopted this view, but the reality is different. With a few exceptions, urban road pricing is rare. While important institutional barriers remain in many countries (e.g. Glazer, Link, May, Milne and Niskanen, 2001) most commentators acknowledge that the main barrier to implementing transport pricing strategies is now a lack of public (and linked to this) political acceptability (Jones, 2003; Schade and Schlag, 2003). This paper summarizes most recent theoretical and empirical evidence about the determinants of urban road pricing acceptability including practical experiences from several cities (e.g. Edinburgh, London, Stockholm, Rome). Based on this comprehensive analysis some policy implications as well as some research gaps and plans for future research are outlined (cf. Schade, Gehlert & Schlag, 2007).


An international comparison of factors influencing modal split
with emphasis on price signals

Dr. Hana Brůhová-Foltýnová, Dr. Jan Bruha, Charles University Environment Center, Czech Republic

There are various possibilities of transport regulation such as taxes, congestion charging or normative regulation. To choose efficiently, one has to understand the main factors influencing transport behavior. This paper contributes to this task and analyzes the main factors of modal split of passenger transport in selected European countries. We try especially to understand whether and to what extend fuel prices are among the decisive factors. If the prices are an important factor, then public policy may use environmental taxes to influence the modal split, otherwise other instruments should be used.
We construct a panel database and argue that statistical analysis of the panel is a suitable tool to address our question. Data on selected European countries over the last 20 years are included in the panel. An innovative aspect of our study is that we include data on some transition countries as well. Since data for different countries are available for different years, our panel is unbalanced. Nevertheless, because of advances in statistics and econometrics over the last decade, unbalanced panels do not represent a major problem for estimation (Biørn, 2004).   
The panel database consists not only of fuel prices but also of other transport characteristics (such as congestions) and of characteristics of included subjects, such as existence and mode of land use, density of traffic network, structure of road network (share of highways), structure of urbanized areas, demography and the level of economic development.
From the formal point of view, we apply methods of multivariate statistics suitable for dealing with unbalanced panels. Both cross-section and time-series dimension of the panel provides variation necessary to identify the impact of prices on the modal split. The cross-section dimension identifies fixed characteristics of subjects, while the time dimension identifies time-varying characteristics. Thus our paper contributes to the research agenda represented by Kain (2001) or Medlock and Soligo (2002).


Public Choice over Efficiency: The Case of Road Traffic Management

Prof. Jonathan R. Nash, Tulane Law School, USA

This Paper will consider the diagnoses that the two dominant competing economic explanations for the development of governance regimes - public choice and economic efficiency - offer for the problem of traffic congestion. Traffic congestion is a growing problem on the world’s roads. As land development continues to consume more previously unoccupied land, more people drive more vehicles greater distances. The resulting traffic has many deleterious effects for society, including time delays (for both people and freight), magnification of the environmental impact of driving, and increases in “road rage.”

The traditional solution to congestion is simple: Provide new roadway capacity. But new roadway capacity is not an efficient way to address traffic congestion. Even if congestion is abated, the fact remains that providing roadway capacity fails to address the fundamental underlying economic problem: the ability of roadway users to externalize costs on other roadway users and on society at large. Moreover, over time new capacity may serve to exacerbate congestion problems: New roadway capacity may induce additional travel that would not have taken place but for the new construction. 

By contrast, congestion charges offer an efficient way to address congestion. Simply put, congestion charges are tolls that are designed to force drivers to internalize the congestion costs that their driving imposes on other drivers. A system of congestion charges is likely to reduce roadway usage closer to an efficient level, and also more likely to result in the allocation of the resource of roadway usage to those who value it most.

Despite its inferiority in terms of efficiency, the provision of new roadway capacity remains by far the more popular option. Public choice theory explains this conundrum: New roadway construction is a politically attractive way to satisfy constituents and powerful interest groups.

The sustained popularity of providing new roadway capacity suggests the dominance of public choice over efficiency. At the same time, there appears currently to be something of a shift in position. In recent years, the United States Congress has authorized pilot congestion charging regimes. Moreover, experimentation with congestion pricing programs is growing—including a notable program in London—and a serious proposal for congestion pricing has emerged for New York City’s central business district. President Bush has recently appointed a Transportation Secretary who advocates congestion pricing. This suggests that, despite public choice’s power, it is possible for efficiency concerns to prevail when the inefficiencies of other responses become too large.


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