Wednesday, February 28, 2007

Money for nothing and your klicks for free

While people might be statistically against road tolls (just based on online discussions), support seems to be building. The logic is hard to argue with. Pay for what you use. If you take a step back and look at the high costs of providing the infrastructure, and consider the fact that people use it as much as they want once they pay a flat fee for their license plate, the current system doesn't make sense. This isn't even considering the air pollution associated with using our roads.

Look at our water supply. Water is a relatively cheap utility compared to all the asphalt and paving machines that are constantly resurfacing our streets. Water is not only essential to putting in a day's work, but it is, some would say, essential for life. We still put a price on it and make people pay for what they use.

Roads seem to be another story though. I think it's all about car creep. Over the years, we've slowly adjusted to the idea of repaving roads more and more often, and assumed that everyone benefits equally by road improvements.

As we transition to a society where transportation by personal-automobile becomes less popular, the percentage of the population putting the stress on the roads becomes less, and the benefit to non-users is less. For example, if the customers of your store all arrive by foot, then the road infrastructure doesn't affect your store's income in the same way.

An interesting essay on road tolls and the importance of taking advantage of the free market is on the Truck News website. (You didn't know I read that site?) Instead of suggestions for "carbon cost labels", we should stop messing around and let people decide with their money.

Now how should we take advantage of the free market? I've been talking about the costs of road use, but the costs of driving are many, even if they don't always hit the driver in the pocket. Pollution in the form of smog and greenhouse gases is a big one that car drivers get to do for free. There are a few different ideas floating around on how to charge people.

Tyler Hamilton in the Toronto Star's Clean Break column interviews the CEO of a Toronto company called Skymeter. The idea here is to give people a little GPS receiver for their car, and let them track their road use, then they pay at the end of the month. Not a bad idea, and it gives a city flexibility in terms of how people are charged, which roads, which times, parking locations, and more.

The other, more simple, instrument would be to incorporate into the gas tax a charge for using the atmosphere to hold your carbon dioxide or other pollutants. Last week on TV Ontario's Agenda, the program was called "The Debate: The Long Goodbye to GDP". (you can download the show's audio from the site). There was some discussion about how people should pay for CO2 emissions. CO2 tonnes could be priced by a government set price or by auction. There was clear agreement between Elizabeth May (Green Party leader) and Andrew Coyne (National Post writer) that the best way is to have an open auction-style market for the rights to emit CO2. Elizabeth May joked that she'd be giving Coyne party membership after they got off air. An auction would seem like the fastest way to come up with a price for CO2 and make the market solve the problem quickly (although possibly painfully). The severity of the impact would all depend on how fast we scaled back emissions (ie. how many tonnes we allowed ourselves to emit each month or year).

Imagine if the gasoline company, along with selling 25 litres of gasoline, had to sell the appropriate number of emission credits with the gasoline. As we scale back our emissions nationally, the price of those emissions goes up, because of a more competitive auction, and people adjust their consumption. This becomes less painful if the money from the credits goes into transit, sidewalks and bicycle infrastructure.

It would be really interesting to see if the price of gasoline actually dropped due to reduced gasoline consumption. I suspect that would only happen if many jurisdictions in North America implemented a carbon pricing scheme.

As long as people like money, the market will remain powerful.

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Darren J 2/28/2007 08:30:00 PM


5 stars, Darren. How can I email you?
Thanks Bern.

Any time: dazjenx @

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