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

Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2
approximately $100 per ton for a fee of $0.03 per mile, including only direct
implementation costs (Cambridge Systematics, 2009); for a range of fees from $0.02 to $0.05
per mile this would correspond to a cost-effectiveness in the range of $60 to $150 per tonne
(assuming the same implementation costs regardless of fee level). Higher fees should be
more cost-effective than lower fees because they will have a greater impact on VMT with
little or no additional administrative cost. These cost estimates do not include vehicle
operating cost savings to travelers, welfare losses from decreased mobility, or the fees
themselves; including vehicle operating costs would yield a net savings of $650 per tonne
for a one-cent fee or $840 per tonne for a three-cent fee, according to analysis conducted for
the Moving Cooler study (Cambridge Systematics, 2009). 8
Cobenefits
The fees are considered to be
transfers (from individuals to the transportation operator, and which may be returned to
individuals through transportation investments or tax rebates), and would not represent a
net social cost.
Reductions in air pollutant emissions and crashes should be roughly proportional to the
reduction in VMT as a result of the fee. Consumers will experience some welfare losses as
a result of decreased mobility. To the extent that congestion is reduced, however, some
peak-period travelers with high values of time (or those riding transit and not paying fees)
will benefit.
A VMT fee of 1 cent (averaged across vehicle classes) would generate annual gross
revenues ranging from $30 billion currently to between $46 and $57 billion per year in the
future, depending on the level of future VMT growth. Even with reduced travel due to
higher prices, a 5-cent-per-mile VMT fee would generate over $150 billion per year,
growing annually. Some of these costs would be needed to cover administration of the fee;
the remainder could be reinvested in infrastructure or returned to taxpayers. The
additional revenue generated does not represent a net benefit to society; instead, it is a
transfer that offsets the losses to travelers who are paying higher fees.
Feasibility
VMT fees have not yet been implemented in the U.S. A weight distance tax is
administered by Oregon for heavy vehicles, and Oregon is also one of the leading States in
considering the application of VMT fees to all vehicles. A shift to mileage-based pricing
must overcome considerable political and institutional resistance due in particular to
concerns over privacy issues, the logistics of implementation, and the appearance of
implementing a new tax. Monitoring through mechanical hubodometers requires a
relatively frequent (annual or biennial) inspection which is not currently conducted in all
8 The Moving Cooler study (Cambridge Systematics, 2009) examined the GHG impacts and costeffectiveness
of a wide range of strategies directed at reducing VMT and improving transportation
system efficiency. More information on this study, which is referenced for a number of strategies
presented in this section, is included in Appendix A.
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