Resource information
This study examines impacts on net
social benefits or economic welfare of alternative policy
instruments for reducing traffic congestion and atmospheric
emissions in São Paulo, Brazil. The study shows that
expanding road networks, subsidizing public transit, and
improving automobile fuel economy may not be as effective as
suggested by economic theories because these policies could
cause significant rebound effects. Although pricing
instruments such as congestion tolls and fuel taxes would
certainly reduce congestion and emissions, the optimal level
of these instruments would steeply increase the monetary
cost of travel per trip and are therefore politically
difficult to implement. However, a noticeable finding is
that even smaller tolls, which are more likely to be
politically acceptable, have substantial benefits in terms
of reducing congestion and emissions. Among the various
policy instruments examined in the study, the most socially
preferable policy option for São Paulo would be to introduce
a mix of congestion toll and fuel taxes on automobiles and
use the revenues to improve public transit systems.
