Using Economic Incentives to Reduce Auto Pollution

Harrington, Winston, Walls, Margaret A., McConnell, Virginia D., Issues in Science and Technology

When the serious health threat posed by breathing ozone was recognized, Congress took aggressive action by writing emissions standards for new cars into the 1970 Clean Air Act. Because automobile emissions are the major source that react to form ozone, it was hoped that this would be enough to lower ozone concentrations to safe levels throughout the country. But by the late 1980s there were still nearly 100 urban areas that did not meet the desired ozone limits.

Frustrated, and determined to "clean up" these cities, Congress wrote even tighter regulations into the 1990 Clean Air Act amendments. As a result, the Environmental Protection Agency (EPA) and state air-quality agencies have begun to implement a series of new regulations, many of which may be very costly and cumbersome. For example, all cars may have to undergo expensive new testing when only a few cars are causing most of the problems. Tighter new car standards will increase the cost of new cars, straining customers' wallets and reducing new car sales. Employers in the worst of the cities - New York, Philadelphia, Baltimore, Chicago Houston, and Los Angeles among them - will be forced to curtail the number of vehicles traveling to and from their facilities.

Not only are these requirements potentially disruptive, but they are being implemented in spite of significant scientific uncertainty about their effectiveness in reducing ambient ozone levels. Before incurring the costs of this effort, we should stop to re-examine its wisdom. Does it make sense to mandate reduced emission rates for new cars? Sticker prices will rise noticeably, but only marginal improvement in air quality can be expected because so much progress has already been made in reducing emissions from new cars. How much faith can we put in new approaches, such as EPA's Enhanced Inspection and Maintenance program, which may turn out to be useful in some areas but which has yet to prove its value? What is gained by establishing rigid deadlines when emerging new technologies have the potential to reduce ozone levels much more cost effectively?

Furthermore, recent scientific data indicate that there may not be an urgent need to meet those deadlines. The most recent ozone readings from EPA (for 1990 to 1992) indicate that 42 of the 94 problematic urban areas did not exceed ozone standards during this period. In some of these areas, improvements may have resulted from cooler weather during that period (ozone is highly sensitive to temperature); in others, however, it stemmed from progress resulting from the older emissions regulations, which are still driving improvements.

The requirements of the Clean Air Act may be pushing us to commit too quickly to programs that will have high costs or low payoff. We should instead slow down and identify policies that will have measurable cost-effective effects on ozone levels. This will require experimentation with different programs and flexibility in where and how these programs are applied. But above all, it will require a shift away from mandates toward new economic incentives as the basis for regulation. We believe that a number of incentive programs, described below, will encourage drivers to avoid cars that pollute and change their driving habits to reduce emissions. The incentives also will encourage states to design flexible solutions to their unique pollution problems.

One-dimensional policy

Reducing ozone concentrations has bedeviled scientists and policymakers for decades. The 1970 Clean Air Act required ambient air-quality standards for six "criteria" pollutants, which had to be met by 1975. Ozone was the only one of the six not directly emitted from vehicles, factories, and other sources. It is a "secondary pollutant" formed by a reaction between nitrous oxides (NOx) and volatile organic compounds (VOC) in the presence of sunlight. A number of factors make it difficult to control ozone.

The process of ozone formation and transport is not fully understood, and airborne ozone is hard to measure. Although motor vehicles are the major source of VOC in urban areas, VOC are also emitted from chemical plants, petroleum refineries, dry leaning establishments, …

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Publication information: Article title: Using Economic Incentives to Reduce Auto Pollution. Contributors: Harrington, Winston - Author, Walls, Margaret A. - Author, McConnell, Virginia D. - Author. Magazine title: Issues in Science and Technology. Volume: 11. Issue: 2 Publication date: Winter 1994. Page number: 26+. © 1999 National Academy of Sciences. COPYRIGHT 1994 Gale Group.

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