Controlling Episodic Air Pollution with a Seasonal Gas Tax: The Case of Cache Valley,Utah

Using daily data spanning 10 years, we establish a statistical relationship between episodic particulate-matter ((hbox {PM}_{2.5})) concentrations and vehicle trips in Cache Valley, Utah, and estimate an average gas-price elasticity for the region. We also estimate the benefits and costs associated with a seasonal gas tax set to reduce vehicle trips during the winter-inversion season and thereby lower health costs through concomitant decreases in the (hbox {PM}_{2.5}) concentrations. We find a strong positive relationship between vehicle trips reduced and associated reductions in (hbox {PM}_{2.5}) concentrations. Further, we estimate a mean gas price elasticity of approximately (-)0.3 in what we call a “high price variability environment.” Incorporating these results, cost-benefit analysis suggests that the social net benefit for Cache Valley associated with the imposition of a seasonal gas tax during the winter-inversion season is highly dependent upon the type of benefit estimation method used.