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Pricing Externalities From Passenger Transportation in Mexico City / Parry, Ian W.H.
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Parry, Ian W.H.
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Accidents.
- Air.
- Air pollution.
- Automobiles.
- Demand for transportation.
- Driving.
- Energy.
- Environment.
- Externalities.
- Gasoline.
- Gasoline tax.
- Investment in roads.
- Local air pollution.
- Mass transit.
- Pollution reduction.
- Public transportation.
- Road.
- Toll.
- Traffic.
- Traffic congestion.
- Transport.
- Transport Economics, Policy and Planning.
- Transportation.
- Travel modes.
- Local Subjects:
- Accidents.
- Air.
- Air pollution.
- Automobiles.
- Demand for transportation.
- Driving.
- Energy.
- Environment.
- Externalities.
- Gasoline.
- Gasoline tax.
- Investment in roads.
- Local air pollution.
- Mass transit.
- Pollution reduction.
- Public transportation.
- Road.
- Toll.
- Traffic.
- Traffic congestion.
- Transport.
- Transport Economics, Policy and Planning.
- Transportation.
- Travel modes.
- Physical Description:
- 1 online resource (55 pages)
- Place of Publication:
- Washington, D.C., The World Bank, 2009
- System Details:
- data file
- 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 USD 132 and USD 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 USD 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.
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