Transportation's Role in Reducing U.S. Greenhouse Gas Emissions ...

Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2
Magnitude and Timing of GHG Reductions
VMT fees could be applied to all VMT on all systems (2.9 trillion VMT in 2006). Assuming
price elasticities and vehicle operating costs as documented in Appendix A, a toll of 2 cents
per mile (roughly equivalent to current motor fuel taxes) is estimated to reduce VMT by
about 1 percent, with a corresponding reduction in GHG emissions from motor vehicle
travel. 7
Very limited empirical evidence is available from a mileage-based fee experiment. A
study conducted on 130 households in the Minneapolis–St. Paul metropolitan area
concluded that per-mile pricing would result in a VMT reduction of 4.4 percent for all
daily travel, or somewhat higher reductions (6.6 percent) during weekday peak periods
(Cambridge Systematics, 2006). This study was based on a relatively high fee rate—
between 5 and 25 cents per mile, varying for different participants—based on converting
automobile fixed to variable costs. The study concluded that some households were
willing to change their behavior even at relatively low fee levels; but that increasing fees
toward the higher end of the range had little additional impact on travel, since other
households were unwilling or unable to change their behavior. If the daily reduction were
applied to all light-duty VMT nationwide (impacts on truck travel were not evaluated in
this experiment), GHG emissions would be reduced by 51 mmt CO2e in 2030. This finding
corroborates the elasticity-based estimates provided above.
5-18
A higher toll of 5 cents per mile would reduce VMT by about 2.5 percent. The
VMT impacts of a 2- to 5-cent fee equate to a reduction of about 30 to 75 billion VMT, or 17
to 50 mmt CO2e in 2030. These estimates could potentially be lower or higher by at least a
factor of two, reflecting the range of uncertainty in the literature regarding travelers’
response to price changes.
VMT fees can be implemented in a very short timeframe using mechanical hubodometers;
implementation of electronic systems would take somewhat longer but still could be done
within a few years. Some impacts would be realized immediately after implementation.
The effects will increase somewhat over the first few years of implementation, as travelers
can make more structural adjustments (such as changing residential or activity locations)
in response to price signals.
Cost-Effectiveness
Using cost factors from two recent studies (Howard, no date; Kitchen, 2008), the national
full application of VMT fees is estimated to cost $131 billion through 2050 if based on
mechanical hubodometers, with a net present value of $61 billion. More effective
electronic systems are estimated to cost $230 billion through 2050, with a net present value
of $166 billion. The cost-effectiveness of a VMT tax has been estimated to be
7 Two cents per mile would equal about $0.50 for the average round-trip work trip of 25 miles, or
about $500 per year per person given the average of about 10,000 VMT per capita. To have a net
impact on GHG emissions, of course, the VMT fee would either need to supplement the gas tax or
be significantly greater than the gas tax it replaces.