The welfare impacts of alternative policies to address atmospheric pollution in urban road transport

in this paper we compare the effectiveness and welfare effects of alternati ve fuel efficiency, environmental and transport policies for a given urban area. The urban transport activities are represented as a set of interrelat ed markets, one for each mode of transport and type of vehicle, in peak and in off-peak hours. For each market, four different marginal external costs are computed in the present equilibrium: air pollution, accidents, noise a nd congestion. The gap between marginal social costs and prices shows that congestion and unpaid parking are the dominant sources of inefficiencies. A ir pollution costs are significant as well. The effects of a typical air qu ality policy (regulation of car emission technology) and two typical fuel-b ased policies (minimum fuel efficiency policy and fuel taxes) are compared with the effects of three alternative transport policies (full external cos t pricing, cordon pricing, parking charges). Regulation of emission technol ogy and of fuel efficiency beyond the 2005 levels do not lead to welfare ga ins, whereas transport pricing policies yield substantial gains for the urb an area under study. (C) 2001 Elsevier Science B.V. All rights reserved.