Sustainable Transportation Part 4: Solutions

Note: If you’d like to keep track of whenever I post a new article about this paper, check out the sustransitpaper category.

Proposed Transportation Solutions

The world needs to answer a serious question. How can the problems of resource depletion, congestion, and environmental degradation be addressed without sacrificing the benefits of mobility? No doubt, this question is a global one. These three problems exist across the planet.

Nevertheless, it is important for developed nations to lead the way. There have been a number of policies enacted within Europe intended to address these problems, however, in the United States, national action has been lethargic. For global progress to be made, the US must step forward and take leadership on this issue by exploring various sustainable transportation policies.

There have been many proposals for solutions to these transportation problems. Each of these has various costs and benefits, and some are more politically feasible than others. The following is a consideration of the details, benefits, costs, and shortcomings of a number of policies that could be enacted within the United States.

1. Raise the CAFE Standards

Background Information

The Corporate Average Fuel Economy Standards were created in 1975 as part of the Energy Policy Conservation Act. The purpose of the CAFE standards was to increase fuel economy in automobiles to conserve oil that was in short supply, due to the 1973-1974 Arab Oil Embargo.[1]

CAFE standards apply to an automobile manufacturer if it sells more than 10,000 vehicles in the United States. The standards require the manufacturer to have a sales-weighted fuel economy of 27.5 miles per gallon for cars and 20.7 miles per gallon for “light trucks,” such as vans and sport utility vehicles. If the automaker does not comply with the standard, they are fined $55 per vehicle per mile per gallon under the standard.[2]

Potential Benefits

Some individuals believe that raising the CAFE standards to a higher mile per gallon rating would help save oil and protect the environment. In principle, this seems like a good idea. The CAFE standards are at the same levels as they were in 1985,[3] and proponents of an efficiency increase point to this level as outdated. They claim that if the standards were increased, automakers would make more efficient automobiles and consumers would buy them instead of gas guzzlers, therefore reducing oil demand and helping save the environment.

Potential Costs and Shortcomings

Raising CAFE standards could also have many downsides. For instance, this proposal is expensive. It is projected that increasing the standards by 3 mpg would cost $1.841 billion in US consumer surplus, and increasing by 50% would cost $17.603 billion, in addition to huge financial losses by US automakers.[4]

In addition to expense, increasing the CAFE standards would be ineffective. One reason for this is that the penalties for violation are not harsh. According to Andrew Kleit, BMW views the $55 per car per mile per gallon fine as a tax, and does not even attempt to achieve CAFE standards.[5] Another reason for ineffectiveness is that the standards contain loopholes. Although car fleets must comply with a 27.5 mile per gallon CAFE rating, light truck fleets only need to average 20.7 miles per gallon. In fact, some believe that the discrepancy between cars and light trucks in CAFE standards led to the increased production of SUVs.[6] Furthermore, automobiles that weigh over 8,500 pounds don’t have to comply with CAFE at all![7] An increase in the CAFE standards also might result in rebound effects, where individuals choose to drive more as a result of having a more fuel efficient automobile. This would not only cancel out the positive resource conservation and environmental effects of fuel efficiency, but it could exacerbate congestion problems by putting more cars on the road at a given time.

Finally, raising the CAFE standards takes away some consumer choice. There might be a reasonable portion of the US population that absolutely needs to have a particular type of automobile that gets 10 miles per gallon. These individuals might be willing to pay a substantial premium to have the automobile, but if CAFE standards are increased, an automaker may avoid manufacturing the automobile so as to not affect the average fuel economy of its fleet.

Conclusion

In principle, raising the CAFE Standards in order to save oil and protect the environment sounds like a good idea. But in practice, increasing the standards might be expensive and ineffective.

Summary Chart

Resource Depletion	Congestion	Environment
+ Less fuel used, in theory- In practice, some believe CAFE has increased fuel use	- People might drive more if their cars are more efficient, exacerbating congestion problems	+ Fewer emissions, in theory- Producers might skimp on clean production technologies and damage the environment during production of a fuel efficient vehicle.

2. Increase the Excise Tax on Gasoline

Background Information

Gasoline seems to become more expensive every year. However, the tax on gasoline in the United States is far lower than almost all other developed nations.[8] In 2005, taxes amounted to only about 19% of the total cost of a gallon of gasoline. In 2006, federal excise taxes on gasoline were about 18.4 cents per gallon, whereas state taxes averaged about 21 cents.[9]

Logic Behind Taxing Gasoline

Proponents believe that increasing the gas tax will correct an externality created by gas consumption. Basic economic theory states that an individual will consume an additional unit of a good until the price of that good becomes greater than the benefit of consuming one more unit of the good. Furthermore, it is economically efficient for an individual to consume as long as the true marginal benefit the good imposes on the individual and society from consumption is greater than the true marginal cost it imposes on that individual and society. This is always the case when an individual faces the true marginal costs and true marginal benefits.

However, in some cases, consuming a good creates a negative externality. In other words, consumption of that good creates an external cost on a third party. Since these costs are not accounted for by the individual, unless there is market intervention, an individual will over consume. This results in what economists call a market failure, and is inefficient.

Proponents of an increased gasoline tax believe that gasoline creates a negative externality on society in many ways. One of these is an environmental externality. The consumption of gasoline creates emissions which contribute to climate change, smog, and other forms of environmental degradation. Consuming gasoline also creates an externality of increasing geopolitical instability. For instance, Saudi Arabia, one of the US’s top sources of oil imports, has been linked to funneling money to Sunni insurgents in Iraq.[10] Another major externality associated with gasoline consumption is that of increasing congestion. When one consumes gasoline, he or she is most likely in a car, and the more cars that are on the road, the more congestion.

One method economists use to address a negative externality is to levy a tax on the good creating the externality, equal to the negative external cost of consuming one unit of that good. If the tax is levied, it causes the consumer to pay the full cost of the good, resulting in efficient consumption rather than over consumption.

Potential Benefits

There are a vast number of benefits that could result from increasing the excise tax on gasoline. If an increased gas tax results in decreased driving, the environment would be protected through reduced emissions, crude oil would be conserved, and congestion would be reduced due to fewer automobiles being on the roads.[11] National security could be aided as well, as the United States will be able to buy less oil from Saudi Arabia, a country suspected of aiding insurgents in Iraq. [12]^,[13]

In addition, an increase in the gas tax could improve the national economy. According to the CBO, a 50 cent per gallon increase in the excise tax on motor fuels would increase federal revenues by $49.3 billion in 2008 and $320.8 billion over five years, after taking into account reductions in income and payroll taxes that could be taken.[14] The decrease in payroll and income taxes would encourage saving and investment, thus encouraging economic growth. [15]

Potential Costs and Shortcomings

Although the benefits of increasing the excise tax on gasoline are numerous, this plan is not without its critiques. First, some individuals claim that the demand for gasoline is highly inelastic. [16]^,[17] This means that changes in the price of gas do not tend to have much of an effect on the quantity of gas people consume. This may be true in the short run. It takes time to switch to a more fuel efficient car, map out a public transit route, find a carpool partner, or set up a telecommuting arrangement with one’s workplace. Because these things take time, cutting back one one’s fuel demand in the short run is difficult. However, in the long run, all of these things are much easier, indicating long-run gasoline demand is relatively elastic.

Some claim that an increase in the gas tax would disproportionately hurt the poor.[18] If this were the case, increasing the gasoline tax would be very inequitable. However, the poor tend to use public transportation more often than the rich.[19] Secondly, for the poor who do drive, this equity problem can be solved using the Earned Income Tax Credit. Just as businesses can report miles driven on their taxes, individuals who are eligible for the EITC could report miles driven and receive an income credit. This could be funded with some of the revenue generated by the gas tax increase.

Some critics argue that gasoline, even when taxed, does not cost enough compared to American incomes to make a significant impact on gasoline consumption. This does not appear to be the case, considering the extensive media coverage that gasoline price increases have received over the past few years and the dramatic decrease in profits and market share of America’s major automakers such as GM.[20]

Another critique states that taxing gasoline is a form of paternalism, and thus should be discouraged. This critique claims that raising the tax on gasoline is just a means to get people to do “what is good for them,”[21] and thus limits free choice. This does not appear to be a valid critique. The purpose of a gasoline tax is not to get people to do what is good for themselves, but to get people to pay the full cost of gasoline rather than over consuming and creating excessive negative externalities that harm others.

Finally, a gasoline tax is criticized because it is hard to know the correct amount to charge.[22] If the US is to create a “perfect” gasoline tax, it must tax gasoline at the same price as the externality gasoline consumption creates. Taxing too highly could create an inefficient situation, just as taxing too low does today. Although this is a reasonable critique, there are many gasoline consumption externality estimates available. [23]^,[24],[25] If the US uses these estimates, and can tax an amount close to the true external cost of gasoline, the situation will be more efficient than the current situation of massive over consumption.[26]

Conclusion

Increasing the excise tax on gasoline can result in resource conservation, reduced congestion, and an improved environment, among other benefits. It holds sincere promise, and should be seriously considered by US politicians.

Summary Chart

Resource Depletion	Congestion	Environment
+ People drive less+ People buy more fuel efficient cars	+ People live closer to work or carpool or just generally drive less, due to increased cost of driving	+ Fewer CO2 emissions+ Smaller cars built, requiring fewer materials.

 

3. Encouraging Proliferation of Hybrid, Plug-In Hybrid, and Electric Vehicles

Background Information

In the US, hybrid-electric cars, such as the Toyota Prius, have become very popular. They have two engines: one powered by gasoline and the other powered by electricity. The electricity is generated by means of regenerative braking: when the driver uses the brakes to slow down the car, the on-board battery is charged. This power enables the car to shut off its engine at stop lights, and use only the electric engine for initial acceleration, resulting in improved fuel economy. Because of increased popularity, hybrid-electric technology has spread from cars to SUVs.[27]

Some individuals have converted their hybrid-electric cars into plug-in hybrids. Plug-in hybrids have a much larger and more powerful battery pack than traditional hybrid-electrics. The battery pack is charged by connecting the plug to an electrical outlet when the vehicle is not being used. This enables the vehicle to travel a certain number of miles entirely on electric power. After the electric battery is depleted, the internal combustion engine powers the car. Because electricity is a much cheaper and more efficient form of vehicle propulsion compared to gasoline, driving a plug-in hybrid can save fuel and alleviate pollution problems. Plug-in hybrids are not officially sold in the US, but some major manufacturers claim they will introduce them soon.[28]

Electric vehicles run entirely on electricity and do not have an internal combustion engine. They run on a battery pack, one that is substantially more powerful than the battery pack that exists in hybrid and plug-in hybrid cars. Although they use very little energy per mile, electric vehicles have a limited range before they must be recharged. They are also currently substantially more expensive than gasoline-based cars. In the past, General Motors manufactured an electric car called the EV-1,[29] and currently a company called Tesla Motors is selling an electric car called the Tesla Roadster.[30]

Various incentives exist that promote hybrid-electric vehicles. Consumers who purchase hybrid-electric vehicles receive a federal tax credit, for instance. In addition, some areas of the country allow hybrids to travel in the HOV Lane with one driver, and currently a federal law has been passed but not yet implemented that would allow hybrids across the country with certain efficiency ratings to use all HOV lanes. Some insurance companies and hotels offer discounts for hybrid drivers, and some employers and public parking facilities have designated hybrid parking spots.[31]

Justification for Encouraging Proliferation of These Vehicles

In theory, because hybrid-electric vehicles, plug-in hybrids, and electric vehicles require less energy per mile to drive compared to pure gasoline vehicles, replacing the current car fleet with these types of vehicles could reduce fuel consumption. Moreover, increased business for advanced-technology vehicle manufacturers will result in increased research and development on these technologies, resulting in further gains in efficiency. Increased vehicle manufacturer business could have a downstream effect which would boost the sales of battery manufacturers. The increased battery sales could lead to increased R&D funding for batteries, which would make the vehicles themselves more efficient.

Benefit Cost Analysis of Encouraging Proliferation of:

A. Hybrid-Electric Vehicles and Plug-in Hybrids

Hybrid-electric and plug-in hybrid vehicles, in theory, save gasoline, therefore also protecting the environment by limiting emissions. Some empirical evidence exists to suggest this is the case. A study in Switzerland by Haan et al (2005) examined whether the Toyota Prius was actually effective at lowering fuel consumption, after accounting for “rebound effects.” Rebound effects are, for example, a Prius owner driving more miles because he has a more efficient car than before, or purchasing a Prius as an extra car rather than a replacement vehicle. The study concluded that the Prius is not only fuel efficient, but effective in lowering annual fuel sales.[32]

Plug-in hybrids are even more efficient. Individuals who have converted their Toyota Prius to a plug-in hybrid achieve around the equivalent of 100 miles per gallon,[33] about double that of a Prius, while driving in electric mode.

Furthermore, the more these vehicles are sold, the more manufacturers will take them seriously and invest in their research and development as well as that of their batteries. This can result in further efficiency gains. For instance, the 2008 Toyota Prius, the upcoming version of the most popular model of hybrid-electric vehicle today, is rumored to use lithium-ion batteries and get close to one-hundred miles per gallon.[34]

However, there are costs associated with this technology. Due to the necessity of batteries, an electric motor, and other technologies, there is a substantial price premium on hybrid-electric and plug-in hybrid vehicles compared to their gasoline-only counterparts. This can make the benefits of these vehicles cost-ineffective. A study by Robert Hahn (1995) found that the price premium associated with low-emissions vehicles and zero-emissions vehicles caused them to fail a test of cost-effectiveness.[35] However, Hahn’s study was from 1995, and technology as well as pollution costs have dramatically changed since then. Regardless, the point still remains that the price premium on vehicles with hybrid-electric technologies does negatively impact their cost-benefit analysis.

Batteries used by these vehicles can be problematic. The batteries themselves are not only costly, but they have a limited lifespan. Some estimate the lifespan of a hybrid-electric vehicle’s battery at only three to four years.[36] After the battery no longer works, it must be replaced, which is a considerable expense. Furthermore, many of these batteries are made with lead or nickel, which is environmentally harmful to produce or dispose of.[37] On the flip side, manufacturers claim that the batteries are designed to last the life of the car,[38] they are not environmentally dangerous to dispose of if recycled, and the batteries of the future for hybrids will use lithium instead of nickel or lead, which is much more environmentally friendly.[39]

There is also evidence that hybrid-electric vehicles, the Prius in particular, may use much more energy per mile over its lifetime than conventional gasoline vehicles to build, operate, and dispose of. A study from 2005 entitled “Dust to Dust: The Energy Cost of New Vehicles from Concept to Disposal” evaluated a vehicle’s cost in dollars per lifetime mile. This study found that a Hummer H3 cost only $1.95 per lifetime mile, whereas a Prius cost $3.25 per lifetime mile.[40] Although this study is useful because it sheds light on the fact that the production and disposal of a vehicle should be considered in its impacts on fuel consumption and the environment, this particular study appears to be biased. For instance, it rates the Prius’s expected life at 109,000 miles, yet assumes the Hummer will last 207,000, which seems unreasonable. Moreover, the study spreads the costs of “design, development and manufacturing energy” across more than one model for the Hummer and other gasoline-based cars, but not the Prius.[41]

In the short run, promoting these vehicles may have greater cost than benefit. However, in the long run, a net benefit should emerge.

B. Electric Vehicles

Electric cars share similar benefits and costs of hybrid-electric vehicles and plug-in hybrids. However, pure-electric cars are much more energy efficient than any other automotive fuel source. The May 2006 issue of Popular Mechanics compared the cost of driving across the country with different fuel sources:

“The benchmark drive cost is $212 in a Honda Civic. The VW Diesel Golf came close at $230. E85 ethanol (85% ethanol, 15% gasoline) came in at $425; methanol cost $619; the hydrogen fuel cell drive cost a whopping $804! Compressed Natural Gas looked pretty good at $110. And the electric car? $60.”[42]

- Popular Mechanics, May 2006

Furthermore, electric cars can be powered by any energy source. If it is plugged into an electrical grid that is powered by solar energy, in effect, driving a mile creates zero emissions. Electric cars are also beneficial in that individuals do not need to go to a gas station to refuel. All an owner must do is charge the car when they are near an outlet.

However, electric cars have many costs and shortcomings. Obviously, they are limited by their range. The highest quality electric cars today can travel just a little over 200 miles. They are also very expensive, about 25 - 30% more expensive than non-electric counterparts,[43] as a result of their need for powerful battery packs. Battery cost accounts for 30-35% of the price of most electric vehicles.[44]

Fortunately, in the long run, these costs and shortcomings can be mitigated as battery technology improves. As batteries become more affordable, more reliable, longer lasting, more compact, and faster charging, the quality of electric cars will improve as well. Battery technology improvements should occur at an fast pace, especially due to the growth of hybrid-electric vehicle popularity and the emergence of plug-in hybrids and electric cars. The cost of batteries should fall as well, due to economies of scale from increased production.

In conclusion, although the short-run benefit cost analysis test on promoting these vehicles might fail, in the long run, electric vehicles should become more favorable.

How Can These Vehicles be Promoted?

To promote hybrid-electrics, plug-in hybrids, and electric cars, the US government can do a number of things. These include offering and increasing subsidies for research and production of these types of cars and their batteries, offering and increasing tax breaks for purchases, allowing owners of these vehicles to use the HOV lane and perhaps pay lower tolls on roads, and using public service announcements to give positive stigma to drivers of these automobiles.

Conclusion

The US government should consider encouraging the proliferation of hybrid-electrics, plug-in hybrids, and electric cars. Although in the short-run, the cost-benefit analysis on selling these advanced technology vehicles might be negative, the technology holds promise. Promoting these vehicles might further the development of battery technology and could lead to dramatic reductions in resource consumption and polluting emissions from automobiles.

Summary Chart (for electric cars)

Resource Depletion	Congestion	Environment
+ Less fuel consumed, doesn’t need fuel from oil, just any electricity generator- The materials used to create electric car batteries are not in infinite supply	- Could make congestion worse, because driving would become cheaper to people, so they would drive more	+ Fewer emissions+ Transportation, in theory, could come from completely zero emissions sources, such as solar or wind energy.

4. Powering Automobiles with Ethanol

Background Information

Ethanol is a “biofuel”, created by converting biomass into fuel. It can be made from corn, switchgrass, wood biomass, sugarcane, and other natural products.[45] To make ethanol, natural products are grown, then taken to an ethanol plant where they are broken down and fermented, purified to the desired concentration, and then mixed with gasoline. This mixture can be used in an automobile in virtually the same way as gasoline. A concentration of 10% ethanol and 90% gasoline can be used in any car in the US, but a concentration greater than 10% requires a special engine.[46]

Ethanol production can be accomplished through dry-milling or wet-milling, and each process results in different valuable secondary products. Dry-milling, for instance, can result in the production of dried distillers grains with solubles which can be used as livestock feed.[47]

Currently, the federal government looks favorably upon corn-based ethanol. In 2006, about 4.8 billion gallons of ethanol were produced, primarily from corn.[48] In addition, the US government has provided over $3 billion in subsidies each year to fuel that production (pun intended).[49] Conversely, ethanol is heavily produced in Brazil, but it is primarily derived from sugarcane.[50]

Benefits

Proponents of ethanol use in the US point to many potential benefits. The most significant of these is that the use of ethanol could reduce US dependence on oil. This can result in improved national security, as well as relieving the world’s resource depletion problem. Furthermore, proponents claim that ethanol is a renewable resource, so the world will not need to worry about “running out” of ethanol, like oil. In addition, ethanol is produced within the United States, so its production could create domestic jobs and improve the US trade balance.[51]^,[52]

In addition, proponents believe the use of ethanol as automotive fuel is affordable. For one, there are lower upfront costs to switch the nation over to using it as a primary fuel source. Many vehicles on the roads today can drive using high concentrations of ethanol, and the cost of building new vehicles with this capability is relatively low.[53] Moreover, gasoline stations would not need to be significantly modified to serve ethanol. Proponents also claim that ethanol is more than 30 cents cheaper per gallon than gasoline.[54] Furthermore, its production also yields a by-product of dried distillers grains, which can be used to feed livestock.[55]

Finally, supporters claim that ethanol is more environmentally friendly than gasoline. Burning ethanol creates 10-15% fewer CO₂ emissions, and a very large reduction in carbon monoxide emissions, for instance.[56]

Costs/Shortcomings

Unfortunately, ethanol is far from a perfect fuel source. One major ethanol critic in the US is David Pimentel. In a paper he wrote in 2005, he found that ethanol made from corn, wood biomass, and switchgrass each required significantly more fossil energy to produce than they yielded, even after accounting for the by-product of dry distillers grains.[57]

Counter-critiques have been raised against Pimentel’s negative energy balance claims, yet they seem unfounded. The US Department of Energy asserts that Pimentel does not take the by-product of ethanol production, dry distillers grains, into his calculations.[58] This is false: Pimentel explicitly states the effect dry distillers grains have on his energy calculations.[59] The US Department of Energy and other critics also claim Pimentel’s work is based on old data and thus is ineffective.[60]^,[61] This does not appear to be true, either. Very few data sources in his paper are from before 1995, and of those sources, they do not account for a significant portion of his costs. [62]

Ethanol production also yields a very small amount of energy per acre. Even if 100% of all US corn were used to produce ethanol, only 7% of total oil use would be offset.[63] Under current technological conditions, there is not enough land in the US to feasibly supply our demand for transportation fuel with ethanol, regardless of whether corn or another type of biomass is used. [64]^{, [65]}

The use of ethanol as fuel is ethically questionable. Consider the fact that approximately 3.7 out of the 6.5 billion people in the world today are malnourished. Burning food as fuel means that there is less food available for the world and these malnourished individuals.[66] In addition, the use of ethanol drives up food prices for food, livestock, milk, and more, making it harder for families to afford food.[67]

Ethanol production is not environmentally friendly. Corn production, in particular, harms the environment due to its extensive use of nitrogen fertilizers. Furthermore, the production of ethanol often uses fossil fuels, and creates all of their associated pollutants.[68] If ethanol production truly has a negative energy balance, then more fossil fuels could be used with an ethanol-based transportation system than a gasoline-based one, which is rather self-defeating.

Ethanol may only seem affordable today due to massive federal subsidies and a weak energy density. There are over $3 billion of federal subsidies for ethanol production each year. Moreover, ethanol contains less energy per gallon than gasoline, so buying a gallon of ethanol is really like buying less than a gallon of gasoline. If ethanol subsidies did not exist, the cost of producing an equivalent amount of ethanol to gasoline would be $7.12 per gallon.[69]

Conclusion

Ideally, the United States would be able to create its own fuel within its own borders, from a renewable energy source that is environmentally friendly. However, if ethanol possesses the negative characteristics mentioned, then it should not be pursued as an alternative fuel source.

Resource Depletion	Congestion	Environment
+ Alternative source of fuel means less dependence on oil, in theory- Oil is used as a source of power to produce ethanol and is contained in the mixture of ethanol put in an engine	No effect, could be positive if fuel is expensive and people drive less, negative if fuel is cheap and people drive more	+ Ethanol is slightly better for the environment in terms of CO2 and more cleaner burning in terms of carbon monoxide

5. Congestion Pricing

Background Information

Currently, tolls in the United States are set at static rates. However, in London, a system has been implemented called congestion pricing.[70] Congestion pricing means that the price one has to pay to drive on a toll road changes depending on traffic levels at the time. During rush hour, for instance, a driver pays a much higher toll than if he is driving on a quiet Sunday evening.

The logic behind congestion pricing is that a driver imposes more of an external cost on others by choosing to drive during highly congested times. It is theorized that if individuals must pay more to drive during busy periods, they will do things like find another time to drive to work, carpool to reduce costs, or telecommute, thus cutting down on congestion and fuel use.

Benefits

Congestion pricing, as opposed to a static toll system, has many benefits. Principally, it should alleviate congestion, which in turn will reduce pollution. With high tolls during rush hour, many individuals who used to drive on toll roads alone might be persuaded to drive with a partner, go to work earlier or later, take public transportation, or simply telecommute. Because congestion pricing is designed to alleviate congestion, individuals who value rapid car transportation highest can get to where they need to go quickly. Without congestion pricing, no matter how much an individual valued speedy, individual, car-based transportation, he/she could not pay an additional fee to get to a destination faster. With congestion pricing, however, those who are willing to pay high amounts to quickly get to their destination can do so, and this is economically efficient.

Congestion pricing is also relatively cheap to implement. In the US, virtually all toll roads have an option for drivers to use a tag on their car which is connected to a bank account or credit card to pay a toll. This system could simply monitor the total number of individuals that are on the road at a given time and adjust the toll accordingly. Changing the computer monitoring and tolling software would likely be a small cost. Additionally, it would be very cheap and easy to adjust tolls during a “code red” day or if a road were under construction.

Costs/Shortcomings

Congestion pricing would have its share of problems. The most glaring problem related to equity. It could make using toll lanes so expensive that they would become “a racetrack for the rich.”[71] For example, in Northern Virginia, construction of a new high occupancy toll road that uses congestion pricing is being considered. It is estimated that the round trip toll one would pay, if driving the full length of the road during AM and PM rush hour, could be more than $57.[72] This idea is could be very politically unpopular.

Congestion pricing could also result in environmental harm. This is because if it resulted in new road construction, it could occur in environmentally vulnerable areas or using environmentally unsound materials.

Conclusion

Congestion pricing, if implemented, could result in less congestion while conserving resources and protecting the environment. However, it will be politically difficult to implement and could be considered highly inequitable.

Resource Depletion	Congestion	Environment
+ Will reduce fuel usage, as congestion involves a lot of idling, and this should reduce congestion at least a little+ Will reduce fuel usage even more because people might carpool, use public transit.	+ Could dramatically reduce congestion by encouraging people to carpool, go to work at different times, and use public transit.	+ Reduce fuel usage, thus reducing emissions+ Helpful on code red days - New road construction could cause environmental harm

6. Encouraging Telecommuting

Background Information

Reducing the number and length of car trips one needs to make can result in resource conservation, decreased congestion, and environmental protection. Most car trips in the US are related to work. Therefore, a good way to reduce the total number and length of car trips would be to alter the current norm of driving to work.

Recently, in the United States, there have been a growing number of individuals who have decided to telecommute instead of drive to work every day. Telecommuting entails working outside of a central company office. Instead, an individual drives to a local satellite office or works at home. They use the internet to connect to the company mainframe, and can do work without physically being in the office. Some individuals do this five days a week, and others telecommute occasionally.[73]

How Could Telecommuting be Encouraged?

To encourage telecommuting, the government could offer tax incentives to firms who are willing to allow their workers to telecommute. If firms receive a financial incentive for encouraging telecommuting, they will be more likely to set up satellite offices or help employees connect to the company network from home. In addition, employees could receive tax incentives for telecommuting.

Benefits of Promoting Telecommuting

An increased rate of telecommuting could be very beneficial. Initially, it will result in decreased congestion, as fewer people would drive their cars to work. This will result in decreased fuel usage and decreased tailpipe emissions. It could also result in a more enjoyable work experience for employees, who would regain lost commuting time, which may result in increased productivity. In addition, employees would be closer to their families, and can run errands if needed, which is important, especially in a family with children.

In the long run, telecommuting would slow the rate a new vehicle ownership and relieve the demand for new road capacity.[74] In addition, firms could hire employees they value highly that would otherwise not accept employment for geographic reasons.[75]

Costs/Shortcomings

Unfortunately, telecommuting could result in lower productivity. Obviously, when telecommuting, an employee does not have face to face contact with coworkers or clients. This can decrease productivity, and certain interactions may be difficult or impossible without face to face contact. However, it is possible that this problem will be mitigated over time as technology improves.

Telecommuting from home also might be distracting, which could lower productivity. If an individual is at home with one’s spouse or children, there is a chance that they could be distracted with family members’ wants and needs, and might not work as productively as they might in the office.

Telecommuting also heavily relies on the speed and reliability of the internet. If there are outages or times when the internet is running slowly, an employee will not be able to work as efficiently as if they were in the office.

Finally, telecommuting has resulted in outsourcing of domestic jobs abroad,[76] and could continue to do so. Although some do not believe this is a major problem, many Americans are politically resistant to anything that eliminates domestic jobs. Because of this, promoting telecommuting might be politically difficult.

Conclusion

Ideally, telecommuting could result in an improved environment, congestion, and reduced use of oil. However, its success is highly dependent upon technology and its effects on worker productivity.

Resource Depletion	Congestion	Environment
+ Less fuel usage because fewer people are driving to work	+ Less congestion because fewer people need to drive to work	+ Fewer emissions because less fuel usage.

7. What About Public Transportation?

Public transportation is a great way to reduce congestion and emissions while conserving resources. However, public transportation will not be as important in the United States as it is elsewhere in the world. For one, the US is a very car-centric culture. In North America, there are more registered cars per licensed driver than any other society in the world.[77] To get people to switch over to public transit in large numbers would require a huge and costly creation of various incentives. Secondly, urban sprawl exists throughout the US. Because this means there is very low population density, public transportation must cover a lot of ground to effectively serve a large percentage of Americans. This can be very costly, and sending a bus out into a suburban area that will collect few passengers can be very inefficient.

Public transportation should continue to operate, and efforts should be made to increase the number of passengers that use it. However, in the United States, it will act as more of a complement to personal transportation rather than a substitute, because using it requires a major sacrifice of mobility that most citizens are not willing to accept.

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[1] CAFE Overview - Frequently Asked Questions, 03/02/2005 2005, 04/30 2007 <http://www.nhtsa.dot.gov/cars/rules/cafe/overview.htm>.[2] Andrew Kleit, “CAFE Changes, by the Numbers,” Regulation 2002: 32-5.

[3] National Highway Traffic Safety Administration.

[4] Kleit, 32-5

[5] Kleit, 32-5

[6] The Pigou Club Manifesto, 10/20/2006 2006, 04/30 2007 <http://gregmankiw.blogspot.com/2006/10/pigou-club-manifesto.html>.

[7] National Highway Traffic Safety Administration.

[8] NBC6.net, U.S. Versus the World: How Do Gas Prices Compare?, 2006).

[9] A Primer on Gasoline Prices, 08/02/2006 2006, Energy Information Administration, 04/30 2007 <http://www.eia.doe.gov/bookshelf/brochures/gasolinepricesprimer/eia1_2005primerM.html>.

[10] Friedman.

[11] Mankiw.

[12] Mankiw.

[13] Friedman.

[14] Congressional Budget Office, Budget Options, 2007) 323.

[15] Mankiw.

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