Decision analysis of auto emission control

In response to public pressure to reduce air pollution, governments are forced to consider alternate means to limit auto emissions. This paper addresses the problem of evaluating these regulatory policies and choosing the one that is best for society.Economic tradeoffs play an important role in the analysis of emission control policies. Cleaner air comes only at a price, and the judgments as to “How clean?” At what price?” and “At who's expense?” are crucial. Once these value issues are resolved, questions of implementation remain. “How do regulatory policies such as mandatory emission standards for cars compare with a system of emission taxes?” “Are there ways to collect a fee from drivers to compensate those who breathe their pollution, without taxing emissions directly?”Our approach is first to describe a decision-focused analytical procedure for evaluating various policy alternatives. This procedure is then demonstrated with a preliminary analysis of representative emission control plans for the Los Angeles air basin. Both emission standards and market or “pricing” alternatives are considered. These plans include: present (1975) emission standards; an emission tax; an increase in the gasoline tax; a policy of no government control.The preliminary analysis shows market mechanisms to be superior to present emission standards. Many significant advantages of market mechanisms are discussed, though this conclusion is due primarily to—in our opinion—inappropriate value judgments that are implicit in the present standards.The analytical framework is very general, and it can be applied to a wide variety of social decisions involving externalities. The quantitative models developed, though preliminary, can be used by organizations such as regional planning agencies or pollution control boards. However, these models must not be viewed as formulas for answers to social problems. Rather, they are intended as aids for the policy maker that will help him or her balance the many factors that influence the decision and provide insight to the wisest social course of action.