ANALYZING THE COSTS
AND BENEFITS OF
The use of passenger vehicles and trucks can cause congestion and traffic
accidents and contributes to environmental issues such as climate change
and poor air quality. A challenge for policymakers is to identify strategies that
will reduce these problems at low cost—while ensuring that consumers and
businesses continue to receive the benefits from access to affordable and
convenient transportation options.
RFF experts address these issues by analyzing how transportation policies and
market forces affect the decisions of consumers, automakers, and other businesses,
including what vehicles to make and use and how much to drive. Learning about
their behavior is the basis for evaluating the costs, benefits, and consequences
of different policies for reducing congestion, accidents, and environmental
problems. Below are a few examples of recent research and analysis.
Controlling Ozone Pollution
In this RFF discussion paper, “Getting Cars Off the Road: The Cost-Effectiveness of
an Episodic Pollution Control Program,” RFF’s Maureen Cropper and colleagues
Yi Jiang, Anna Alberini, and Patrick Baur examine the cost-effectiveness and
feasibility of a permitting program for controlling transportation pollution and find
that a permit price of $75 per season would remove 34 to 44 percent of cars and
light-duty trucks from roads on high-ozone days.
Evaluating the Impacts of the “Cash-for-Clunkers” Program
In “Evaluating ‘Cash-for-Clunkers’: Program Effects on Auto Sales and the
Environment,” authors Shanjun Li, Elisheba Spiller, and RFF’s Joshua Linn review
the program that was designed to encourage consumers to retire older vehicles
and purchase more fuel-efficient ones. They find that little new demand was
created because many of the vehicle purchases made during the program would
have taken place anyway. Consequently, the fiscal cost of reducing carbon
dioxide emissions was higher than that of other policies.
The Future of Natural Gas Vehicles
“Will Natural Gas Vehicles Be in Our Future?” In this issue brief, RFF’s Alan
Krupnick examines whether natural gas will become a widespread fuel choice
in the United States in light of higher gasoline prices. He finds that heavy-duty
trucks running on liquefied natural gas can help reduce oil consumption and
carbon dioxide emissions with reasonably competitive cost-effectiveness, but
light-duty vehicles are only cost-competitive with significant subsidies.
ong>Researchong> and Analysis: The United States and European Markets and Developing Countries
Developed countries have adopted a wide range of policies that aim to reduce pollution emissions from passenger vehicles
and trucks, from fuel and vehicle taxes to fuel economy standards. RFF experts are examining how consumers, trucking
companies, and automakers respond to the complex incentives created by such policies, including the following issues:
• how consumer decisions are affected by public transportation options, commuting needs, and policies aimed at
• manufacturers’ choice of fuel economy in competitive markets;
• the economics of natural gas trucks and fuel economy standards for medium- and heavy-duty trucks;
• the effects of fuel prices and vehicle taxes on new vehicle purchases;
• how the quality of public transportation affects vehicle use in US markets;
• whether gasoline prices affect urban and rural households differently;
• recent changes to US fuel economy standards for light trucks; and
• how fuel prices and other factors affect the fuel economy and use of heavy-duty trucks.
In developing countries, growing incomes are resulting in problems with congestion and air quality—and creating
challenges for mitigating greenhouse gas emissions. RFF researchers are examining the consequences of potential
mitigation policies through research on the following topics:
• the interactions among economic growth, vehicle ownership, public transportation, and vehicle use in developing
countries such as China;
• the distributional consequences of fuel taxes and driving restrictions in Mexico and South America;
• consumer demand for fuel economy in India, as well as ways to reduce fuel consumption; and
• the effects of Beijing’s car lottery system.
RFF’s Center for Energy Economics and Policy (CEEP) conducts research to help policymakers understand the efficiency
and effectiveness of legislative, regulatory, and other options for the sustainable development of energy resources.
About RFF: 60 Years of Investing in Ideas
Since pioneering the field of environmental economics 60 years ago, RFF has delivered top-quality economic
research and policy analysis to public, private, and nonprofit leaders. RFF’s independence, credibility, relevance, and
academic rigor provide the foundation for intellectual leadership and innovation to set the future agenda for the
environmental policy community.
To learn more about CEEP’s research on transportation, contact
Joshua Linn, Fellow, at firstname.lastname@example.org, or Kristin Hayes, CEEP Center Manager, at email@example.com.
1616 P St. NW • Washington, DC 20036 • www.rff.org/ceep