Shaheen, Susan A., Randall L. Guensler, Simon P. Washington (1994) Vehicle Scrappage Programs: Are Some Sectors of Society Paying More for Clean Air?. Institute of Transportation Studies, University of California, Davis, Presentation Series UCD-ITS-RP-94-46
Policy studies frequently focus on evaluating program efficiency, whether the overall costs of a program are likely to increase or decrease as a result of a program change. In environmental policy analysis, little attention is typically dedicated to the evaluation of how policies will redistribute environmental costs and benefits among various socioeconomic groups. Yet, almost any strategy designed to reduce overall program costs is also likely to reallocate costs. Some individuals' share of the total costs will increase while other individuals' share of the total costs will decrease.
One source of potential distributional inequities in environmental policy is that the economic costs of emissions controls are typically passed directly to consumers through higher prices. When needs-based concepts of equity are brought into play, it is easy to argue that when all costs are passed directly to consumers, certain socioeconomic groups will pay more than their 'fair share' relative to the socioeconomic distribution of benefits. Another source of potential distributional inequity is the inconsistency that often exists between projected and realized costs and benefits of a program.
Vehicle scrappage programs are designed to obtain emission reductions through the early retirement of older, high-polluting vehicles. The emissions offset from retired vehicles is used to offset emission increases at industrial sites. Hence, when the cost of controlling emissions from vehicles is lower than the cost of controlling emissions at the industrial site, the same emission reductions can be achieved but the overall costs of emission control are reduced.
This paper first discusses the potential emission control efficiency gains that are expected to result from vehicle scrappage programs. Then, the potential distributional impacts of scrappage programs and the policy implications arising from the implementation of scrappage programs are discussed.