Practice Exam Questions
Air Pollution and Policies to Control (Revision Essay Plan)
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Last updated 6 May 2019
Here is a suggested essay plan to this 25 mark question: "Using your own knowledge, assess the case for and against imposing an extra charge for vehicles in cities for all non ultra low emission cars."
Background (not part of the answer)
Ultra Low Emission Zones (ULEZ) are a system of local road charging or regulation, usually in urban areas, designed to improve air quality and reduce congestion. London introduced a ULEZ in 2019. The intention of the £12.50 a day charge is to encourage individuals and businesses (who bulk purchase vehicle fleets, goods vehicles and passenger vehicles) to choose cleaner vehicles. Some economists argue that alternative interventions might be better at addressing the air pollution problem.
KAA Point 1: Using the polluter-pays-principle to address market failure
Air pollution is a negative externality from both production and consumption that creates social costs such as increasedrisk of dementia & damaged lung development in children. Introducing an ultra-low emissions zone such as London can be effective because it increases the private cost of using more-polluting vehicles. This should help to reduce the volume of cars in the zone which will then curb external costs. This will help internalise the externalities and reduce the quantity of traffic towards a social optimum. Money raised from the ULEZ can be hypothecated to help fund an increase in capital spending e.g. on electric buses.
EVAL Point 1: Regressive effect on poorer households
A counter argument is that the £12.50 daily charge for higher emissions vehicles will have a regressive effect on poorer households many of whom are not well served by public transport and for whom taking their child to school or a hospital appointment will squeeze already hard hit budgets. Many relatively poorer families will not be able to afford to upgrade their cars and bus, underground and light rail services are already close to full capacity with limited scope for expanding supply in the short run. Workers on low hourly wages such as late night cleaners will also be badly affected.
KAA Point 2: Taxes as a hard nudge to drive investment
An emissions charge for high-polluting vehicles can be seen as a hard behavioural nudge designed to change the behaviour of vehicle users. For example, it might help persuade taxi fleets and logistics companies to upgrade their investment spending and instead, buy or lease new vehicles that emit less pollution and have better fuel efficiency. This extra spending spending itself would be an injection of demand into the circular flow leading to increased demand for cleaner vehicles such as electric cars and also associated infrastructure such as charging points.
EVAL Point 2: Small businesses and jobs may suffer
The downside is that many small businesses will face extra costs which will reduce profits and perhaps lead to a contraction in employment. There might be more effective ways of addressing worsening air pollution in towns and cities. Alternatives include banning vehicles that use dirty fuels, having car free days (Paris has tried this) and also bans on private hire vehicles that enter city centre districts (they are currently exempt from any charge). In London for example, all new single-decker buses are zero-emission, and new taxis must be hybrid or electric. These regulations are often seen as effective in a short space of time.
The causes of air pollution in cities are complex and no one policy on its own is likely to make a sufficient difference to what is fast becoming a national emergency – some environmental economists have called air pollution in towns and cities a ‘silent killer’ responsible in London for tens of thousands of premature deaths each year. Although an ultra low emission zone might work, alternative policies are likely to be more effective in the long run and perhaps less regressive on lower income families. For example, subsidies to reduce the cost of public transport to reduce the number of vehicles on our roads. Strict standards for all new vehicles, including particulate filters on all road vehicles, substantially higher parking fees in the city, electric vehicle car-share schemes and a ban on certain types of cars and light vans. The size of the market failure is huge and strong intervention is needed. Better information on air quality and the impact of traffic congestion on pollution can bring about soft behavioural change, but tougher regulations are, in my opinion, needed to change the cost-benefit analysis of households and businesses when deciding their preferred transport mode.