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Demand side instruments to reduce road transportation externalities in the greater Cairo metropolitan area

  • Parry, Ian W.H.
  • Timilsina, Govinda R.

Economically efficient prices for the passenger transportation system in the Greater Cairo Metropolitan Area would account for broader societal costs of traffic congestion and accidents, and local and global pollution. A $2.20 per gallon gasoline tax (2006 US$) would be economically efficient, compared with the current subsidy of $1.20 per gallon. Removal of the existing subsidy alone would achieve about three-quarters of the net benefits from subsidy elimination and the tax. Per-mile tolls could target congestion and accident externalities more efficiently than fuel taxes, although they are not practical at present. A combination of $0.80 per gallon gasoline tax to address pollution (versus $2.20 without tolls), and $0.12 and $0.19 tolls per vehicle mile on automobiles and microbuses, respectively, to address traffic congestion and accident externalities (versus $0.22 without fuel taxes) would be most efficient. Current public bus and rail subsidies are relatively close to efficient levels in the absence of such policies; however, if automobile and microbus externalities were fully addressed through more efficient pricing, optimal subsides to public transit would be smaller than current levels.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6083.

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Date of creation: 01 Jun 2012
Date of revision:
Handle: RePEc:wbk:wbrwps:6083
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  1. Richard S. J. Tol, 2009. "The Economic Effects of Climate Change," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 29-51, Spring.
  2. Georgina Santos & Laurent Rojey, 2004. "Distributional impacts of road pricing: The truth behind the myth," Transportation, Springer, vol. 31(1), pages 21-42, February.
  3. Parry, Ian W.H. & Evans, David & Oates, Wallace E., 2014. "Are energy efficiency standards justified?," Journal of Environmental Economics and Management, Elsevier, vol. 67(2), pages 104-125.
  4. Parry, Ian W.H. & Timilsina, Govinda R., 2010. "How should passenger travel in Mexico City be priced?," Journal of Urban Economics, Elsevier, vol. 68(2), pages 167-182, September.
  5. Timilsina, Govinda R. & Dulal, Hari B., 2008. "Fiscal policy instruments for reducing congestion and atmospheric emissions in the transport sector : a review," Policy Research Working Paper Series 4652, The World Bank.
  6. Galindo, Luis Miguel, 2005. "Short- and long-run demand for energy in Mexico: a cointegration approach," Energy Policy, Elsevier, vol. 33(9), pages 1179-1185, June.
  7. Anas, Alex & Timilsina, Govinda R., 2009. "Lock-in effects of road expansion on CO2 emissions : results from a core-periphery model of Beijing," Policy Research Working Paper Series 5017, The World Bank.
  8. Anas, Alex & Timilsina, Govinda R., 2009. "Impacts of policy instruments to reduce congestion and emissions from urban transportation : the case of Sao Paulo, Brazil," Policy Research Working Paper Series 5099, The World Bank.
  9. repec:reg:rpubli:282 is not listed on IDEAS
  10. Anas, Alex & Timilsina, Govinda R. & Zheng, Siqi, 2009. "An analysis of various policy instruments to reduce congestion, fuel consumption and CO2 emissions in Beijing," Policy Research Working Paper Series 5068, The World Bank.
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