Getting Cars Off the Road: The Cost-Effectiveness of an Episodic Pollution Control Program

Ground-level ozone remains a serious problem in the United States. Because ozone non-attainment is a summer problem, episodic rather than continuous controls of ozone precursors are possible. We evaluate the costs and emissions reductions of a program that requires people to buy permits to drive on high-ozone days. We estimate the demand function for permits based on a survey of 1,300 households in the Washington, DC, metropolitan area. Assuming that all vehicle owners comply with the scheme, the permit program would reduce nitrogen oxides ( $\text{ NO }_{\mathrm{x}}$ ) by 42 tons per Code Red day at a permit price of $75. Allowing for non-compliance by 15 % of respondents reduces the effectiveness of the scheme to 33 tons of $\text{ NO }_{\mathrm{x}}$ per day. The cost per ozone season of achieving these reductions is approximately $9 million (2008 USD). Although year-round measures, such as the Tier II emissions standards, might be preferred on benefit-cost grounds, an episodic permit system might be considered as an interim measure before the Tier II emissions standards are fully reflected in the vehicle fleet.