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Environmental Pricing in Transport

Author

Listed:
  • Edward Caltrhop
  • Stef Proost

    (K.U.Leuven, C.E.S., Energy, Transport and Environment)

Abstract

Transport activity is inextricably linked with environmental damage. Economists traditionally urge policy makers to adopt pricing solutions, in particular taxes, to reduce environmental damage rather than quantity restrictions or standards. This chapter examines environmental pricing, defined broadly to include emission taxes, product taxes and subsidies and compares it to alternative approaches. We begin with a simple formal model to demonstrate the relative efficiency properties of pricing solutions, before highlighting some of the associated implementation problems. We then extend the scope and realism of the analysis by examining the choice between regulatory instruments in the presence of several market distortions. The basic case for environmental taxes, set at the correct level, is shown to remain. It is impossible to cover all modes and all real world case studies of pricing in this text. Rather, we illustrate our central point in the context of air pollution from car use. However, as we stress in the concluding section, the essential insight from the model applies to a whole range of enviromental problems in the transport sector. Readers interested in surveys of practical experiences are referred to The Policy Issues chapters of Handbook 6. A general introduction to the choice of regulatory instruments to tackle environmental damage can be found in Kolstad (1999).

Suggested Citation

  • Edward Caltrhop & Stef Proost, 2002. "Environmental Pricing in Transport," Energy, Transport and Environment Working Papers Series ete0208, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
  • Handle: RePEc:ete:etewps:ete0208
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    File URL: https://lirias.kuleuven.be/bitstream/123456789/544194/1/ETE-WP02-08.pdf
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    Citations

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    Cited by:

    1. Bruno De Borger & Stef Proost, 2015. "Tax and regulatory policies for European Transport – getting there, but in the slow lane," Working Papers of Department of Economics, Leuven 497597, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    2. Barbot, Cristina & Betancor, Ofelia & Socorro, M. Pilar & Viecens, M. Fernanda, 2014. "Trade-offs between environmental regulation and market competition: Airlines, emission trading systems and entry deterrence," Transport Policy, Elsevier, vol. 33(C), pages 65-72.

    More about this item

    Keywords

    Transport; environment; emission taxes;
    All these keywords.

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