Win-Win Transportation Management Strategies: Cooperation for Economic, Social and Environmental Benefits

By Litman, Todd | Journal of Business Administration and Policy Analysis, Annual 1999 | Go to article overview

Win-Win Transportation Management Strategies: Cooperation for Economic, Social and Environmental Benefits


Litman, Todd, Journal of Business Administration and Policy Analysis


INTRODUCTION

Environmental protection, social equity and community livability are often considered to conflict with economic goals. Critics often argue that policies to protect the environment and achieve social objectives reduce economic productivity. Climate change emission reductions strategies in particular are frequently attacked by industry groups because they would reduce employment and economic development. [1] Such claims are not necessarily true. Some policy changes help achieve environmental and social objectives and provide economic benefits. These are called "no regrets" strategies because they are justified regardless of uncertainties about environmental risks, such as global warming.

For example, a revenue-neutral shift from employment and general sales taxes to resource consumption taxes could reduce pollution while increasing economic productivity and employment. [2] One recent study found that increasing fuel taxes and using the revenues to replace more economically harmful income taxes could increase GDP by 7.7% and average household wealth by 5.5%, while reducing fossil-fuel use by 38%. [3] Similarly, the U.S. Congress Office of Technology Assessment concluded "...if a gasoline tax were coupled with an equal-revenue increase in investment tax credits, short-run macroeconomic losses resulting from motor fuel tax increases could be more than offset by the short-run macroeconomic gains." [4] These shifts provide economic benefits because higher fuel taxes encourage energy efficiency and technological innovation, reduce the economic costs of imported petroleum, and encourage employment and investment which stimulates economic development.

Our institute has identified many "no regrets" strategies in the transportation sector, many of which involved no new taxes or fees. They provide multiple benefits, including reduced traffic congestion, road and parking facility savings, consumer savings and accident reductions, and significant environmental protection. We call these "Win-Win Transportation Management Strategies."

WHAT ARE WIN-WIN STRATEGIES?

Win-Win strategies are cost effective, technically feasible changes in current policies and practices that help solve transportation problems by increasing consumer choice and encouraging more efficient travel behavior. Win-Win strategies are based on market principles. Most involve minimal regulation and some reduce existing regulations altogether. They remove barriers and market distortions that reduce consumer choice and encourage

excessive motor vehicle travel (by "excessive" I mean driving above what would occur in a more efficient market).

If fully implemented to the degree that they are economically justified (from savings in facility costs, congestion reduction and road safety), Win-Win strategies could reduce motor vehicle impacts by 15-30%, or even more if implemented in conjunction with additional TDM policies. [5] This could achieve the Kyoto emission reduction objectives while increasing consumer benefits and economic development at the same time. Win-Win strategies are essential for sustainable transportation.

WHY WIN-WIN STRATEGIES WORK

These are, admittedly, big claims. To understand why such large benefits are possible, it is important to clarify a few basic economic concepts. Efficient markets have two basic requirements: Consumers must have viable choices, and prices for goods and services should generally reflect their full production costs. Most markets satisfy these requirements. Consumers have many choices when it comes to buying food, clothing and shelter, and the prices for most products and services cover production costs.

But the transportation market violates these market principles. Although consumers have many choices when it comes to purchasing a vehicle, they often have few alternatives to driving if they want to participate in common activities. …

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