From the Web Page for Tradeable Personal Pollution Allowances
http://pages.csam.montclair.edu/~barrettki/personal-pollution-allowances/

 

 

Personal Pollution Allowance Proposal:

An Open Letter to Massachusetts Gov. William Weld

 

by Kirk R. Barrett, PhD, PE; email kirkrbarrett@yahoo.com

November, l995

 

(Originally published in the Fall 1995 Newsletter of Earthworks Projects, a nonprofit organization based in Boston, MA)

 

Dear Governor Weld:

 

Two of your administration's proposed programs to address air pollution in Massachusetts are embroiled in controversy: the enhanced inspection/maintenance (I/M) program for automobiles and mandated 2%  market share for electric vehicles (EVs) in 1998. While I applaud and support your goal of improving air quality, I submit that these two programs do not reflect your values of individual responsibility and the creative power of market-forces. Furthermore, let me suggest an alternative program which does conform to your values and is better at accomplishing the goal of pollution reduction.

 

First, let me point out the problems with these two programs. The EV mandate looks like another top-down, “command and control” "government knows best” program which are criticized so harshly by conservatives and libertarians, including yourself. Furthermore, the mandate places the responsibility on the automobile industry rather than on the car drivers who actually do the polluting. The I/M program is burdened with these same problems. It is intrusive government ordering car owners to pay for repairs, regardless of how much they drive their car or how much it costs. Neither of these programs uses the creativity of the market in determining the best way to reduce emissions. Let me suggest a bold, innovative plan for a program that addresses these shortcomings. The program is based on principles that conservatives, libertarians AND environmentalists should endorse:

1. No one has an inalienable or unlimited right to harm others through polluting the air.

2. Individuals who harm others through excessively pollution should compensate (via an pollution impact fee) for the harm they do.

3. Individuals should be allowed and encouraged to figure out for themselves the best way to reduce the harm (i. e., pollution) they cause.

 

The program implements these principles through a personal pollution allowance trading program for automobile pollution- You are probably already familiar with the existing polluting allowance trading scheme for sulfur dioxide emission by industries. This program would work much the same way, but on an individual basis. Let me lay out the program for you, but first let me emphasize there are many opportunities for modifying and fine tuning it. In short, I. ask you to consider the program from the perspective of "How could we make this work?" not from "What are the problems in the program?" .

 

In the most rigorous method, the Massachusetts Department of Environmental Protection would determine the amount of various pollutants presently emitted by automobiles in the Commonwealth. A single pollutant could be focused on (for example, VOCs) or several pollutants could be treated separately.

 

The DEP would then estimate the cost of the damage caused by automobile pollution to health (both treatment costs and lost productivity), crops, buildings and ecosystems. There is no way to calculate an exact figure, but estimates are possible, and have been calculated. Charles Komanoff, an energy consultant formerly with Transportation Alternatives in New York City, has estimated this amount to be about $66 billion per year nationwide, which averages out to be about $250 per person per year (or $500 per car per year or about 4 cents per mile driven). Other figures have been calculated or reported by the World Resources Institute in Washington, DC, the Union of Concerned Scientists in Cambridge and by the American Lung Association.

 

The damage cost per pound of pollution could then be calculated. An individual would then be required to pay a pollution impact fee equal to the damage they caused by the number of pounds of pollution they emitted.

 

Alternatively, the Commonwealth could to establish a price per pound based demand elasticity approach (that is, by trying to answer the question "How much must it cost to pollute before individuals adjust their behavior to reduce pollution by a desired amount?").

 

However, rather assessing the fee directly, a personal pollution allowance would be granted to every adult resident of the Commonwealth. An allowance of $250 per person per year (which would cover a corresponding amount of pollutant emissions) could form the baseline for the allowance trading program. That is, each resident would be granted a personal air pollution allowance (a PAPA!), granting them the right to emit $250 worth of pollution per year, issued, say, in 10 certificates worth $25 each.

 

(While this concept of the "right to pollute" might be abhorrent to some, the counter argument is that, presently, individuals have an unlimited "right" to pollute, and pay nothing for the damage they cause!)

 

The Commonwealth would then require individuals pay their pollution impact fee in cash or PAPA certificates. If a person emits less than $250 worth of pollution during a year, he/she would be allowed to sell their remaining certificates on the open market. Conversely, if a person emits more than $250 worth, he/she would be required to pay the extra amount in cash, or in pollution allowances purchased. on the open market. Brokers to buy and sell allowances would soon spring up. Few if any people would pay in cash, since the certificates will certainly sell at a discount since they could only be used to pay the pollution fee. However, the cash-payment option alleviative the nightmare scenario in which there are no pollution allowances available for folks who must buy them.

 

This makes the plan immune to criticism as a tax increase. Almost no money would go to the state. Instead, money would transfer from people who cause a lot of pollution damage to people who cause a little. Over time, the allowance amount or the per-pound fee could be adjusted to encourage overall reductions in emissions (which is mandated to Massachusetts by the Clean Air Act Amendments). The per-pound fee could also be incremental to discourage heavy polluters-- the more you pollute, the more it costs per pound.

 

If the total  amount of allowances does not cover the total cost of pollution, the state will. collect some money. Reasonably, that money should be used to mitigate air pollution damage. It could be used for health research and treatment of air pollution disease, to clean the air (e. g., by planting trees which remove Pollutants), and/or to fund alternative transportation facilities (buses, trains, bicycles and walking) to give polluters an alternative to driving. The state spends a lot on such programs already. The new funds could increase funding in these areas, or allow other funds to be diverted to other areas.

 

If a person feel’s their pollution fee is too high, they shouldn't go whining to their legislator-- they have the freedom to decide what to do about it. They could repair their car's pollution control equipment, get a less polluting car, or drive less (my preferred solution).

 

Of course, the real trick to the successful implementation of this plan is to calculate the amount of pollution a person emits. The simplest way to do this is to correlate it with the amount of miles driven. The US EPA already has tabulated data listing, by automobile year and model, gas mileage and pollution emission per mile traveled. Every year, when a automobile owner renews their automobile registration (or gets a safety inspection), they would report the odometer reading, from which the number of miles driven in the past year could be calculated. Using this value, and knowing the year and model of car and the emission rate, the amount of pollution emitted by this car could be calculated. Then, using the cost per pound of pollution, the pollution damage fee could be calculated. This method is attractive because it is simple and requires almost zero hassle for the public.

 

A more elaborate method could involve using the results from an emission test for an automobile. Forwarding the emission per mile results and the odometer reading to the Commonwealth, the pollution damage fee could be calculated. If a car owner repairs their pollution-control. system, they could get the car retested and their pollution-damage fee would be lowered.

 

A major effort would be needed to discourage and uncover fraud in underreporting miles traveled. When a car is sold, traded or junk, the new and old owners must report the odometer reading to the state. The reading would be checked against previous reports, and a large fine would be issued to liars. Laws should be strengthened which make it illegal to tamper with or disconnect an odometer, or to drive with a non-functional odometer. A random auditing system could check on people with suspicious reports (i . e., very low mileage cars) .

 

This program would give the car owner to freedom to decide how to deal with their pollution problem-- repair the car, drive less, or pay the pollution fee. It also lessens the regressivity of the traditional emission test and mandatory repair program. Poor people generally drive older, more polluting cars, but also tend to drive them less, so their total emission (which is what really matters) may be less than the pollution allowance.

 

Using gasoline expenditures as a surrogate for miles driven, US Bureau of Labor statistics show that the top income households spend much more on gasoline than lower income households. Furthermore, over 35% of households in the lowest income decile had no spending on gasoline. Presumably, many of these people are city-dwellers who can rely on public transportation.

 

In conclusion, I think this is a superior plan because of its reliance on market forces and individual responsibility. People need to be confronted with and pay for the damage they cause. I think this could cause an entire change in mindset when an individual receives a report of the damage his/her driving caused and a bill for the damage.

 

Thanks for your attention and please give serious consideration to the plan, then let me know what you think. I stand ready to serve in anyway possible to implement this plan.