Fiscal Policy Instruments for Reducing Congestion and Atmospheric Emissions in the Transport Sector : A Review

This paper reviews the literature on the fiscal policy instruments commonly used to reduce transport sector externalities. The findings show that congestion charges would reduce vehicle traffic by 9 to 12 percent and significantly improve environmental quality. The vehicle tax literature suggests that every 1 percent increase in vehicle taxes would reduce vehicle miles by 0.22 to 0.45 percent and CO2 emissions by 0.19 percent. The fuel tax is the most common fiscal policy instrument; however its primary objective is to raise government revenues rather than to reduce emissions and traffic congestion. Although subsidizing public transportation is a common practice, reducing emissions has not been the primary objective of such subsidies. Nevertheless, it is shown that transport sector emissions would be higher in the absence of both public transportation subsidies and fuel taxation. Subsidies are also the main policy tool for the promotion of clean fuels and vehicles. Although some studies are very critical of biofuel subsidies, the literature is mostly supportive of clean vehicle subsidies.

Bibliographic Details

Main Authors:	Timilsina, Govinda R., Dulal, Hari B.
Language:	English
Published:	World Bank, Washington, DC 2008-06
Subjects:	ACCIDENTS, AIR, AIR POLLUTION, ALCOHOLIC BEVERAGES, ALTERNATIVE FUEL, ALTERNATIVE FUEL VEHICLES, ALTERNATIVE FUELS, ALTERNATIVE MODES, AMBIENT AIR POLLUTION, ATMOSPHERIC EMISSIONS, AUTOMOBILE, AUTOMOBILES, AVERAGE FUEL TAX, AVERAGE TRAVEL TIME, BICYCLES, BRIDGE, BUS, BUS SUBSIDY, BUSES, CAR, CAR MILEAGE, CAR OWNERS, CAR OWNERSHIP, CAR SHARE, CAR TRIPS, CAR USE, CARBON EMISSIONS, CARBON MONOXIDE, CARBON TAX, CARBON TAXES, CARS, CLEAN FUEL, CLEAN FUELS, CLEANER FUELS, CLIMATE CHANGE, COMMUTERS, CONGESTION, CONGESTION CHARGE, CONGESTION CHARGES, CONGESTION CHARGING, CONGESTION CHARGING SCHEME, CONGESTION CHARGING SCHEMES, CONGESTION COSTS, CONGESTION EXTERNALITIES, CONGESTION PRICING, CONGESTION PROBLEMS, CONGESTION RELIEF, CONGESTION TOLLS, COST OF TRAVEL, DIESEL, DIESEL FUEL, DISPOSABLE INCOME, DRIVERS, DRIVING, EFFICIENT VEHICLES, ELECTRIC VEHICLES, ELECTRONIC ROAD PRICING, ELECTRONIC ROAD PRICING SYSTEM, EMISSION, EMISSION RATES, EMISSION REDUCTIONS, EMISSION STANDARDS, EMISSION TARGETS, EMISSIONS FROM TRANSPORT, EMISSIONS STANDARDS, ENVIRONMENTAL BENEFITS, ENVIRONMENTAL COSTS, ENVIRONMENTAL DEGRADATION, ENVIRONMENTAL IMPACTS, ENVIRONMENTAL IMPACTS OF TRANSPORT, ENVIRONMENTAL TARGETS, ENVIRONMENTAL TAXES, EXCISE DUTIES, EXCISE DUTY, EXCISE TAX, EXCISE TAX ON FUEL, EXCISE TAX ON GASOLINE, EXPRESSWAYS, EXTERNALITIES, FARES, FINANCIAL INCENTIVES, FREEWAY, FREEWAY LANES, FUEL, FUEL CELL, FUEL CONSUMPTION, FUEL CONVERSION, FUEL ECONOMY, FUEL INFRASTRUCTURE, FUEL PRICE, FUEL PRICE INCREASE, FUEL PRICES, FUEL SUBSIDIES, FUEL TAX, FUEL TAX RATES, FUEL TAX REVENUES, FUEL TAXATION, FUEL TAXES, FUEL TYPE, FUEL USE, GAS TAX, GASOLINE, GASOLINE CONSUMPTION, GASOLINE TAX, GASOLINE TAXES, HIGH OCCUPANCY TOLL, HIGHWAY, HIGHWAY CONGESTION, HIGHWAY NETWORK, HOUSEHOLD TRAVEL, HYBRID CARS, HYBRID PASSENGER CARS, HYBRID VEHICLES, IMPACT OF TRANSPORT, IMPACTS OF CONGESTION PRICING, IMPACTS ON TRANSPORTATION, INFRASTRUCTURE COST, INFRASTRUCTURE INVESTMENT, JOURNEY, LOCAL AIR POLLUTANTS, MOBILITY, MODE OF TRANSPORTATION, MOTOR VEHICLE, MOTOR VEHICLES, MOTORIST, MOTORISTS, NOISE, PEAK HOURS, PEAK PERIODS, PETROLEUM GAS, PETROLEUM PRODUCTS, POLLUTION, POLLUTION CONTROL, POPULATION GROWTH, PRICE ELASTICITY, PRIVATE TRANSPORT, PRIVATE VEHICLE, PRIVATE VEHICLE OWNERSHIP, PRIVATE VEHICLES, PUBLIC ATTITUDES, PUBLIC ROADS, PUBLIC ROADWAYS, PUBLIC SERVICE VEHICLES, PUBLIC TRANSIT, PUBLIC TRANSPORT, PUBLIC TRANSPORT DEMAND, PUBLIC TRANSPORT SUBSIDIES, PUBLIC TRANSPORT SYSTEM, PUBLIC TRANSPORTATION, PUBLIC TRANSPORTATION SUBSIDIES, RAIL, RAILWAY, RAPID TRANSIT, REBATES, REGISTRATION FEES, RIDERSHIP, ROAD, ROAD MAINTENANCE, ROAD SYSTEMS, ROAD TAX, ROAD TAXES, ROAD TRANSPORT, ROAD USE, ROAD USER, ROAD USER CHARGING, ROAD USER CHARGING SCHEMES, ROUTES, SAFETY, SCHOOL BUS, SPEEDS, TAX, TAX EXEMPTIONS, TAX REVENUE, TAXIS, TOLL, TOLLS, TRAFFIC CONGESTION, TRAFFIC FLOW, TRAFFIC FLOWS, TRAFFIC MANAGEMENT, TRAFFIC VOLUME, TRANSIT SERVICE, TRANSPORT, TRANSPORT ACTIVITIES, TRANSPORT ECONOMICS, TRANSPORT EXTERNALITIES, TRANSPORT NETWORK, TRANSPORT POLICIES, TRANSPORT POLICY, TRANSPORT RESEARCH, TRANSPORT SECTOR, TRANSPORT SECTOR EMISSIONS, TRANSPORTATION COSTS, TRANSPORTATION MANAGEMENT, TRANSPORTATION POLICIES, TRANSPORTATION PRICING, TRANSPORTATION RESEARCH, TRANSPORTATION SERVICES, TRANSPORTATION SYSTEM, TRANSPORTATION SYSTEMS, TRAVEL BEHAVIOR, TRAVEL CHOICE, TRAVEL COSTS, TRAVEL DEMAND, TRAVELERS, TRIP, TRIP DESTINATION, TRIPS, TRUE, URBAN ROAD, URBAN TRANSPORTATION, VEHICLE, VEHICLE DESIGN, VEHICLE EMISSIONS, VEHICLE ENGINE, VEHICLE FLEET, VEHICLE LANES, VEHICLE MILEAGE, VEHICLE MILES, VEHICLE OCCUPANCY, VEHICLE OWNERS, VEHICLE OWNERSHIP, VEHICLE POPULATION, VEHICLE QUOTA SYSTEM, VEHICLE TAXES, VEHICLE TRAFFIC, VEHICLE TRAVEL, VEHICLE USE, VEHICLE-MILES, VEHICLES,
Online Access:	http://documents.worldbank.org/curated/en/2008/06/9579011/fiscal-policy-instruments-reducing-congestion-atmospheric-emissions-transport-sector-review https://hdl.handle.net/10986/6872
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