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The environmental cost and the accident externality of driving: Evidence from the Swiss franc’s appreciation

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  • Piera Bello

    (Istituto di economia politica (IDEP), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera)

Abstract

This study investigates the effects of driving on air quality and road safety by exploiting exogenous variation in traffic flows associated with the Swiss franc’s appreciation. During the Swiss franc’s appreciation, the volume of cars crossing the Swiss-Italian border rose considerably– the higher purchasing power of Swiss francs in the Euro area induced more Italian workers to cross the border daily to work in Switzerland and increased the propensity for Swiss consumers to shop abroad (Bello, 2019). By using hourly data on traffic flows, road accidents, and air pollution, I show that the higher mobility across the border increased the concentration of oxides of nitrogen at peak hours during working days and the risk of road traffic accidents with personal injuries at late morning on non-working days. The elasticity to the the number of cars of both variables of interest turns out to be larger than 1, providing evidence of a harmful externality. This suggests the need for programmes that treat traffic congestion, air quality, and road safety jointly. Moreover, the existence of an externality has important implications for optimal road use pricing.

Suggested Citation

  • Piera Bello, 2020. "The environmental cost and the accident externality of driving: Evidence from the Swiss franc’s appreciation," IdEP Economic Papers 2001, USI Università della Svizzera italiana.
    • Handle: RePEc:lug:wpidep:2001
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    References listed on IDEAS

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    1. Grossman, G.M & Krueger, A.B., 1991. "Environmental Impacts of a North American Free Trade Agreement," Papers 158, Princeton, Woodrow Wilson School - Public and International Affairs.
    2. Romem, Issi & Shurtz, Ity, 2016. "The accident externality of driving: Evidence from observance of the Jewish Sabbath in Israel," Journal of Urban Economics, Elsevier, vol. 96(C), pages 36-54.
    3. Andrew Dickerson & John Peirson & Roger Vickerman, 2000. "Road Accidents and Traffic Flows: An Econometric Investigation," Economica, London School of Economics and Political Science, vol. 67(265), pages 101-121, February.
    4. Bertoli, Paola & Grembi, Veronica & Vall Castellò, Judit, 2018. "Not all silver lining? The Great Recession and road traffic accidents," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 274-288.
    5. Viard, V. Brian & Fu, Shihe, 2015. "The effect of Beijing's driving restrictions on pollution and economic activity," Journal of Public Economics, Elsevier, vol. 125(C), pages 98-115.
    6. Piera Bello, 2017. "Exchange rate fluctuations and border crossings: evidence from the Swiss-Italian border," IdEP Economic Papers 1701, USI Università della Svizzera italiana.
    7. Christopher J. Ruhm, 2000. "Are Recessions Good for Your Health?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(2), pages 617-650.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    safety and accidents; air pollution; traffic; geographic labor mobility; cross-border shopping; exchange rate;
    All these keywords.

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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