Erik T. Verhoef

Energy saving by firms: decision-making, barriers and policies

Promoting investments in energy saving technologies is an important means forachieving environmental goals. Unfortunately, the empirical evidence on successconditions of policies isscarce. Based on a survey among Dutch firms, this paper sets out to identify thefactors that determine the investment behaviour of firms, their attitude towardsvarious types of energy policy,and their responsiveness to changes in environmental policy in the Netherlands.On the basis of discrete choice models, this paper aims to investigate empiricallywhether (and how) these strategic features vary over firm characteristics and over sectors.

THE VALUE OF STATISTICAL LIFE IN ROAD SAFETY: A META-ANALYSIS

Costs of accidents make up an important part of the total external cost of traffic. A substantial proportion of accident costs is related to fatal accidents. In the evaluation of fatal accident costs the availability of an estimate of the economic value of a statistical life is pivotal. We present an overview of the empirical literature on the value of statistical life in road safety (VOSL), and use meta-analysis to determine variables that explain the variation in VOSL estimates reported in the literature. We show that the magnitude of VOSL estimates depends on the value assessment approach (particularly, stated versus revealed preference), and for contingent valuation studies also on the type of payment vehicle and elicitation format. We explain that VOSL estimates cannot simply be averaged over studies. The magnitude of VOSL is intrinsically linked to the initial level of the risk of being caught up in a fatal traffic accident and to the risk decline implied by the research set-up.

The economics of regulatory parking policies: The (IM)possibilities of parking policies in traffic regulation

This article contains an economic analysis of regulatory parking policies as a substitute to road pricing. The scope for such policies is discussed, after which a simple diagrammatic analysis is presented, focusing on the differences between the use of parking fees and physical restrictions on parking space supply. The former is found to be superior for three reasons: an information argument, a temporal efficiency argument and an intertemporal efficiency argument. Finally, a spatial parking model is developed, showing that it may be possible to overcome the difficulty of regulatory parking policies not differentiating according to distance driven by specifying the appropriate spatial pattern of parking fees, making individuals respond to (spatial) parking fee differentials.

Traffic congestion and congestion pricing

For several decades growth of traffic volumes has outstrippedinvestments inroad infrastructure. The result has been a relentless increase intrafficcongestion. This paper reviews the economic principles behindcongestionpricing in static and dynamic settings, which derive from thebenefits ofcharging travellers for the externalities they create. Specialattention ispaid to various complications that make simple textbook congestionpricingmodels of limited relevance, and dictate that congestion pricingschemes bestudied from the perspective of the theory of the second best. Thesecomplications include pricing in networks, heterogeneity of users,stochasticcongestion, interactions of the transport sector with the rest of theeconomy,and tolling on private roads. Also the implications of congestionpricing foroptimal road capacity are considered, and finally some explanationsfor thelongstanding social and political resistance to road pricing areoffered.

External effects and social costs of road transport

The article contains a welfare economic analysis of road transports external effects. First, we discuss the definition of external effects. Applying this definition, it is concluded that road transport activities give rise to a wide range of external costs. However, there are no external benefits associated with individual road transport activities which might compensate for such effects. Therefore, road transport volumes will in general be beyond the optimal levels. Second, we describe a conceptual framework for the analysis of environmental external costs. It is explicitly recognized that not only the externality as such, but also the induced outlays on defensive and abatement activities should play an important role in welfare economic analyses of external effects. Then, this framework is used for the evaluation of the existing empirical work on road transports environmental external costs (i.e., noise and air pollution). It is concluded that most of the studies carried out in that field will provide an underestimation of road transports external costs by definition. Finally, some attention is paid to empirical estimates of road transports accident costs.

Tradeable permits: their potential in the regulation of road transport externalities

In this paper the possibilities of using tradeable permits in the regulation of road transport externalities are explored. After discussing the theory of tradeable permits and some practical applications, we will identify a number of potentially promising applications of their usage for coping with road transport externalities. These include applications on the demand side (user oriented) and on the supply side (automobile and fuel industry).

The social support for policy measures in passenger transport: a statistical analysis for the Netherlands

This paper empirically analyses the social feasibility of a wide range of transport policy measures. After a literature review, some general results of a project on the support for transport policy measures in the Netherlands are discussed. Next, a statistical analysis of opinions of various relevant subgroups of citizens is carried out. It appears that safety problems are considered most important from an individual point of view, while environmental problems are most severe from a social point of view. Measures with small direct effects on the behaviour of respondents are generally regarded as most effective by the respondents. The support for safety measures is highest, while perceived problems and effectiveness as well as personal features also influence the support for policy measures. It is concluded that the social support for transport policy measures and packages can be increased by attending to these underlying factors.

How large is the gap between present and efficient transport prices in Europe

The concluding chapter of this volume analyzes the gap between present transport prices and efficient transport prices with the help of 6 case studies previously discussed. These case studies focus on the pricing of both urban and interurban transport. Long-range international transport flows have not been studied; airline and shipping problems are not treated. All other modes are considered. Case study results are presented for 4 urban areas and for non-urban transport in 2 countries: Belgium and Ireland. For each, a reference equilibrium was constructed with unchanged policies for 2005. To measure the gap between expected prices in the reference case and efficient prices, the full optimum prices were next computed. The same modeling tool was used for all the case studies, and is well suited to discuss optimal short-run pricing of infrastructure, but not to study optimal investment decisions in infrastructure.

Transport and Environment

The impact of transport on the environment is a major issue of worldwide concern. This important new book presents state-of-the-art contributions on spatial and technological aspects of transport in relation to environmental degradation, together with analysis of sustainable transport policy.

Auctioning concessions for private roads

Private toll roads are now seriously considered as an alternative to public (free-access) road infrastructure. Nevertheless, complete private provision without governmental control is only rarely considered. A main consideration against private roads would be that operators would be primarily interested in maximizing profits, which - given the market power they will have - will typically not lead to welfare-maximizing tolls and capacities. An important question is whether these discrepancies can be mitigated by a proper design of auctions for concessions of private roads. This paper therefore analyses capacity choice and toll setting by private investors in a competitive bidding framework organized by the government. We develop a two-link network simulation model with an untolled alternative to determine relative efficiency effects, and analyze rules for the government to organize the bidding process such that a more desired (welfare optimal) outcome is achieved. Our results show that, depending on the design of the auction, its outcomes may vary strongly, and may approach the maximum possible (second-best) welfare gains.