Pricing Externalities from Passenger Transportation in Mexico City

The Mexico City Metropolitan Area has been suffering severely from transportation externalities such as accidents, air pollution, and traffic congestion. This study examines pricing instruments to reduce these externalities using an analytical and...

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Bibliographic Details
Main Authors:	Parry, Ian W. H., Timilsina, Govinda R.
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ACCIDENT COSTS ACCIDENT EXTERNALITIES ACCIDENT RATES ACCIDENTS AIR AIR POLLUTION AIR QUALITY STANDARDS ALTERNATIVE TRANSPORTATION ALTERNATIVE TRANSPORTATION MODES ALTERNATIVE TRAVEL ALTERNATIVE TRAVEL MODES AUTO PASSENGER AUTO PRODUCTION AUTO TRAVEL AUTO USE AUTOMOBILE AUTOMOBILE CONGESTION AUTOMOBILE MILEAGE AUTOMOBILE TRAVEL AUTOMOBILE USE AUTOMOBILES AVERAGE TRAVEL TIME AVERAGE VEHICLE FUEL ECONOMY BAGGAGE BUS FARE BUS MILEAGE BUS PASS BUS PASSENGER BUS SYSTEM BUS TRANSIT BUS TRAVEL BUSES CAPITAL INVESTMENTS CAR CAR OWNERSHIP CARBON CONTENT CARS CLIMATE CHANGE COMMUTER RAIL CONGESTION CHARGES CONGESTION COSTS CONGESTION DECLINES CONGESTION EXTERNALITIES CONGESTION PRICING CONGESTION PROBLEMS CONGESTION TOLLS COST OF TRAFFIC COST OF TRAVEL COSTS OF ROAD CONGESTION COSTS OF TRAFFIC ACCIDENTS COSTS OF TRAVEL COSTS PER PASSENGER MILE DEMAND FOR TRANSPORTATION DIESEL DIESEL FUEL DRIVERS DRIVING DRIVING COSTS ELASTICITY EMISSION EMISSION RATES EMISSIONS EMISSIONS PER PASSENGER ENVIRONMENTAL COSTS EXCISE TAX EXCISE TAX ON GASOLINE EXTERNALITIES FARE ELASTICITIES FARE REDUCTIONS FARE SUBSIDIES FARES FIXED COSTS FUEL FUEL COSTS FUEL EXTERNALITIES FUEL PRICE FUEL PRICE ELASTICITIES FUEL PRICES FUEL PRODUCTION FUEL TAX FUEL TAX INCREASE FUEL TAX INCREASES FUEL TAX PAYMENTS FUEL TAX REVENUES FUEL TAXATION FUEL TAXES FUEL USE FUELS FUGITIVE EMISSIONS GASOLINE GASOLINE CONSUMPTION GASOLINE EXCISE GASOLINE PRICE GASOLINE PRICES GASOLINE TAX GASOLINE TAXES GASOLINE USE GLOBAL CLIMATE CHANGE GREENHOUSE GASES HEAVY RAIL HEAVY RAIL COMMUTER HIGHWAY IMPLICATIONS FOR TRANSPORTATION INFRASTRUCTURE INVESTMENT INJURY INTERCITY RAIL INVESTMENT IN ROADS LIGHT RAIL LOAD FACTORS LOCAL AIR POLLUTION LOCAL AIR QUALITY LONG-DISTANCE LONG-DISTANCE TRAVEL MARGINAL EXTERNAL COST MARGINAL EXTERNAL COSTS MASS TRANSIT MILEAGE MILEAGE REDUCTIONS MILES PER CAPITA MODAL SHARES MOTORISTS ODOMETER PASSENGER OCCUPANCY PASSENGER TRAVEL PASSENGER VEHICLES PASSENGERS PEAK TRAVEL PEDESTRIANS POLLUTION CONCENTRATIONS POLLUTION COSTS POLLUTION DAMAGES POLLUTION REDUCTION PRICE CHANGES PRICE ELASTICITIES PRICE ELASTICITY PRICE ELASTICITY OF GASOLINE PRICE OF FUEL PRICE OF GASOLINE PRIVATE VEHICLE PUBLIC ROADS PUBLIC TRANSIT PUBLIC TRANSPORT PUBLIC TRANSPORTATION RAIL CAR RAIL FARES RAIL LINKS RAIL PASSENGER RAIL PROJECTS RAIL SERVICE RAIL SYSTEMS RAIL TRAVEL RAILWAY RAILWAY SYSTEM RAILWAYS RAPID BUS ROAD ROAD CONGESTION ROAD EXPANSION ROAD SPACE ROAD SYSTEM ROAD TRAFFIC ROAD USERS ROAD VEHICLES ROUTE SUBURBAN RAIL SUBURBS SUBWAY SUBWAY SYSTEM SUSTAINABLE TRANSPORT TOLL TOLL REVENUES TOLLS TRAFFIC TRAFFIC ACCIDENTS TRAFFIC CONGESTION TRAFFIC DELAYS TRAFFIC ENGINEERING TRAFFIC SPEEDS TRAINS TRANSIT BUS TRANSIT FARES TRANSIT IMPROVEMENTS TRANSIT MILEAGE TRANSIT OPERATORS TRANSIT OPTIONS TRANSIT PATRONAGE TRANSIT STOPS TRANSIT SYSTEM TRANSIT TRAVEL TRANSIT VEHICLE TRANSIT VEHICLE OCCUPANCY TRANSIT VEHICLES TRANSPORT TRANSPORT INFRASTRUCTURE TRANSPORT MODES TRANSPORT NETWORK TRANSPORT SECTOR TRANSPORT SYSTEM TRANSPORTATION TRANSPORTATION INFRASTRUCTURE TRANSPORTATION POLICIES TRANSPORTATION PRICING TRANSPORTATION SYSTEM TRANSPORTATION SYSTEMS TRAVEL DEMAND TRAVEL MODE TRAVEL MODES TRAVEL SPEED TRAVEL TIME TRAVEL TIMES TRAVELERS TRIP TROLLEY BUS URBAN PASSENGER URBAN PASSENGER TRAVEL URBAN TRANSPORTATION VEHICLE VEHICLE COLLISIONS VEHICLE CRASHES VEHICLE EMISSION VEHICLE FLEET VEHICLE FUEL VEHICLE FUEL ECONOMY VEHICLE MILEAGE VEHICLE MILES VEHICLE OCCUPANCIES VEHICLE OPERATING VEHICLE OPERATING COSTS VEHICLE OPERATION VEHICLE SPEED VEHICLE TRAVEL
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20091009143814 http://hdl.handle.net/10986/4263

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Summary:	The Mexico City Metropolitan Area has been suffering severely from transportation externalities such as accidents, air pollution, and traffic congestion. This study examines pricing instruments to reduce these externalities using an analytical and numerical model. The study shows that the optimal levels of a gasoline tax and a congestion toll on automobiles could generate social benefits, measured in terms of welfare gain, of US$132 and US$109 per capita, respectively, through the reduction of externalities. The largest component of the welfare gains comes from reduced congestion, followed by local air pollution reduction. The optimal toll and tax would, however, double the cost of driving and could be politically sensitive. Still, more than half of those welfare gains could be obtained through a more modest tax or toll, equivalent to $1 per gallon of gasoline. The welfare gains from reforming the pricing of public transportation are small relative to those from reforming the taxation of automobiles. Although the choice among travel modes depends on specific circumstances, in the absence of road travel pricing that accounts for externalities, there will be potential for higher investment in roads relative to mass transit. Given the rapidly increasing demand for transportation infrastructure in Mexico City, careful efforts should be made to include the full social costs of travel in evaluating alternative infrastructure investments.

Pricing Externalities from Passenger Transportation in Mexico City

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