Environment and Transport in Economic Modelling

241 Pages·1998·4.77 MB·English

by  Roberto Roson, Kenneth A. Small (eds.)

ENVIRONMENT AND TRANSPORT IN ECONOMIC MODELLING
FONDAZIONE ENI ENRICO MAT IEl (FEEM) SERIES ON ECONOMICS,
ENERGY AND ENVIRONMENT
This series serves as an outlet for the main results of FEEM's research programmes
in the areas of economics, energy and environment.
The Scientific Advisory Board of the series is composed as follows:
Kenneth J. Arrow
Department of Economics,
Stanford University, Stanford, California, USA
William J. Baumol
C.V. Starr Center for Applied Economics,
New York University, New York City, USA
Partha Dasgupta
Cambridge University, Cambridge, United Kingdom
Siro Lombardini
University of Turin, Turin, Italy
Karl-Goran Maler
The Beijer Institute, Stockholm, Sweden
Ignazio Musu
University of Venice, Venice, Italy
James M. Poterba
Department of Economics,
Massachusetts Institute of Technology, Cambridge, Massachusetts, USA
Domenico Siniscalco (Series Editor)
Director, Fondazione Eni Enrico Mattei, Milan, Italy
and
University of Turin, Turin, Italy
Giorgio Barba Navaretti (Series Associate Editor)
Fondazione Eni Enrico Mattei
and
University of Milan, Milan, Italy
The titles published in this series are listed at the end o/this volume.
Environment and Transport in
Economic Modelling
Edited by
ROBERTO ROSON
Department of Economics, Ca' Foscari University, Venice, Italy
and
KENNETH A. SMALL
Department of Economics, University of Cal(f'ornia, Irvine, CA, USA
Springer-Science+Business Media, B.Y.
Library of Congress Cataloging-in-Publication Data
A c.I.P. Catalogue record for this book is available from the Library of Congress.
ISBN 978-90-481-4983-4 ISBN 978-94-015-9109-6 (eBook)
DOI 10.1007/978-94-015-9109-6
Printed on acid-free paper
All Rights Reserved
© 1998 Springer Science+Business Media Dordrecht
Originally published by Kluwer Academic Publishers in 1998.
Softcover reprint of the hardcover 1st edition 1998
No part of the material protected by this copyright notice may be reproduced
or utilized in any form or by any mean s, electronic or mechanical,
includ ing photocopying, recording or by any information storage and
retrieval system, without written permission from the copyright owner.
Table of Contents
CHAPTER 1. INTRODUCTION: Modelling environment and
transport
Roberto Roson and Kenneth A. Small
CHAPTER 2. Optimal pricing and regulation of transport
externalities: a welfare comparison of some policy alternatives
Bruno De Borger and Didier Swysen 10
CHAPTER 3. Revealed preferences, externalities and optimal pricing
for urban transportation
Roberto Roson 39
CHAPTER 4. Environmental effects and scale economies in transport
modelling: some results for the UK
John Peirson and Roger Vickerman 61
CHAPTER 5. Carbon emissions and the economic costs of transport
policy in Sweden
Glenn W. Harrison and Bengt Kristrom 76
CHAPTER 6. Evaluating external costs and benefits resulting from a
cleaner environment in a stylized CG E model
Giancarlo Pireddu 118
CHAPTER 7. Economic incentive policies under uncertainty: the case
of vehicle emission fees
Winston Harrington, Virginia McConnell and Anna Alberini 152
CHAPTER 8. Forecasting the environmental effects of road pricing
in London
John Bates 183
v
vi Contents
CHAPTER 9. Optimal speed limits for various types of roads:
a social cost-benefit analysis for the Netherlands
Piet Rietveld, Arjan van Binsbergen, Theo Schoemaker and
Paul Peeters 206
LIST OF CONTRIBUTORS 226
SUBJECT INDEX 227
CHAPTER 1
Introduction: Modelling Environment and Transport
Roberto Roson and Kenneth A. Small
Recent years have seen an outpouring of literature on the relationships between
transport and environmental policy. Besides a healthy number of contributions
through the normal channels of journals, reports and monographs, entire new
journals have been created and several edited collections of articles have
appeared. This is no wonder, given the perceived importance of environmental
problems in modern developed economies and the role the transport sector
plays. In Europe, the trend is further strengthened by the importance of harmo-
nizing both environmental and transport policies as part of unification, and
the difficulties created by the mixture of national and international impacts of
transport activities.
The topic rightly has invited interdisciplinary treatment and a variety of
approaches. An important subset of the approaches used involves economic
analysis; in common with other economic literature these works tend to empha-
size the role of markets in tracing the many effects, anticipated and otherwise,
of policies. Economic approaches often consider pricing policies and attempt
to evaluate their effectiveness in comparison with more traditional measures
such as 'command and control' regulation and directed technological innova-
tion. Another important subset of approaches involves simulation modelling,
in which key relationships are represented mathematically so that their influence
can be quantified and their inter-relationships discerned precisely. Such models
are increasingly required by regulatory agencies as part of their policy develop-
ment process, and in some cases (such as the US Clean Air Act) as part of the
process of regulatory approval.
This book treats the intersection of these two subsets of approaches: simula-
tion models with a strong economic content. This intersection defines a broad
but powerful way to study environment and transport. Its breadth is illustrated
by the wide range of policies, from carbon taxes to speed limits, treated here.
Its power comes from putting insights about inter-related actions and the role
of markets - the strong points of economic theory - into a form suitable for
making quantitative predictions about the results of policies.
R. Roson and K.A. Small (eds.). Environment and Tralls!'ort in Emnomic Modelling. 1-9.
© 1998 K luwer Academic' Puhlishers.
2 Chapter 1
In this introduction, we first describe in more detail the particular methods
of analysis used in the book. We then discuss some broad themes that seem to
emerge from the papers, and from other evidence, concerning the changes that
can be expected from policies toward environment and transport. These obser-
vations suggest that environmental policies, even when highly successful in
their objectives, have smaller effects on broad transport trends than usually
believed; and that more significant changes in the transport sector are likely
to result from addressing other objectives such as congestion and overall
efficiency.
1.1. Contributions
All contributions included in this book illustrate real-world problems analysed
using applied economic models. Most of them were developed from preliminary
presentations at the international workshop, Environment and Transport in
Economic Modelling, held in Venice in November 1995. The workshop was
organised jointly by three organizations: Ca' Foscari University, the Italian
National Research Council (PFT2 project) and the Fondazione ENI 'Enrico
Mattei' in Milan. Purely theoretical models are not considered in this book,
nor are contributions dealing solely with issues of measurement such as valua-
tion of external costs; for these important topics a large and growing literature
is available, addressing issues that are not specifically related to the transport
sector.
Despite differences in perspective and methodology, the models used by our
authors often share certain traits which make classification useful. Some
authors, for example, use partial equilibrium models, focusing on just one part
of the economy. This is especially appropriate when a fine level of detail is
needed such as in the specification of alternative technologies, and when more
complexity is not expected to add much to the qualitative picture of results.
Other authors use general equilibrium models, which are needed to deal fully
with systemic effects of transport and environmental policies. As demand for
transportation services originates from all production and consumption activi-
ties, 'micro' measures affecting the transport sector may have important 'macro'
consequences for the whole economic system.
Another useful distinction is between normative models which find optimal
policies in the presence of given objectives, and positive models which assess
the impact of specific policy actions. Normative models can most easily be
found in research works following the public economics tradition, in which the
concepts of externality and market failure have been elaborated. Traditional
transportation models, on the other hand, are usually positive and lend them-
selves to 'what if' simulation exercises; they are better suited to specify transport
system characteristics in detail. Sometimes the distinction between normative
and positive models is blurred. For instance, when normative models are
Introduction: modelling environment and transport 3
Tahle 1.1. Key characteristics of the models
Authors General Normative Distributional Urban Price or Country
or or Implications? or Non-price
Partial Positive? (Yes, No) Other Instruments?
Equilibr.? Scale?
DeBorger-Swysen P N N 0 P Belgium
Roson P N Y U P Italy
Peirson-Vickerman P N N U+O P UK
Harrison-Kristrom G P Y 0 P Sweden
Pireddu G P Y 0 P
Harrington et al. P P Y 0 P+N USA
Bates P P N U P UK
Riet veld et al. P N N U+O N Netherlands
specified as programming problems, constraints can be added to represent a
restricted policy menu. Also, using simulation models of a positive type, simula-
tion exercises can be defined to determine which policy package is expected to
produce the best results with respect to some criterion.
The interactions among policy objectives is also important. Factors like
income distribution, political feasibility and international cooperation may be
critical for the success of environmental policies. Models may take into account
the existence of other policy objectives explicitly, for example by including
additional variables in the optimisation program or by evaluating ex post the
consequences of policy options for indicators of these other objectives.
Of course, the model structure depends critically on the geographical scale
under consideration. This affects the type of environmental problems consid-
ered, because environmental spillovers may occur at local, regional, national,
or even global scales. It is particularly useful to distinguish between models of
a single urban area and models of larger regions because they usually address
quite different issues. Traffic congestion and land use, for example, are typical
urban problems, whereas economics of scale and market structure may become
more important at a coarser geographical scale.
Policies in this field may be based on price instruments like taxes and
subsidies, or on non-price instruments such as required maintenance programs,
speed limits, and safety and other technical requirements. Although different
instruments may have similar economic consequences, the political and techni-
cal feasibility of alternative instruments may differ greatly.
Models of all the different classes mentioned above can be found in the
chapters of this book. Table 1.1 helps to pinpoint the key emphases of the
models presented. Parameters have been estimated in all models, with the
exception of Pireddu's, using a combination of calibration techniques (for
structural parameters) and econometric techniques (mainly for demand/supply
elasticities). In some cases, uncertainty about correct parameter values is accom-
modated through a sensitivity analysis.