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Air quality policy in the United States centers on the Clean Air Act (and its amendments) and its enforcement by the EPA and state agencies. The CAA includes a variety of regulatory tools and targets, such as regulating emitting industries, emissions control technologies for new cars, and forcing metropolitan areas to implement a host of measures to reduce local emissions under threat of “nonattainment status” (and the loss of federal transportation dollars) when local ambient air quality exceeds federal standards. Research has shown that the CAA has had a significant effect on ambient concentrations (Greenstone 2004, Auffhammer et al. 2009), on regulator behavior (Auffhammer et al. 2009), on the location decisions of industrial emitters (List et al. 2003, Greenstone 2002), on infant mortality (Chay and Greenstone 2003), and even on the amount of pollution emitted into waterways (Greenstone 2003). The CAA amendments of 1990, which established a large-scale “cap and trade” system for reducing sulfur dioxide emissions, has been shown to affect R&D into abatement technologies as well (Popp 2003).
While CAA has been shown to have some far-reaching implications for society, the sweeping nature of the CAA is often thought to have only minimal direct impact on typical U.S. households. From the household‟s perspective, the CAA can be attributed with bringing catalytic converters to all of their cars, altering the quality of the air they breathe, and altering the industry (and available job) mix in their area. Yet these changes are all indirect impacts on the household as a result of the regulation affecting others‟ (e.g., auto manufacturers, industrial emitters) behavior.
This report emphasizes one way that regulations following from the CAA directly influences individuals‟ behavior: through the Inspection and Maintenance (I&M) programs. Metropolitan areas found to be in nonattainment typically must institute them, making these programs commonplace. Most residents own vehicles subject to these regulations. Thus, the I&M program component of CAA implementation has particularly widespread impact on American households. This report describes the ways in which the I&M program affects vehicle owners in Atlanta, a large automobile-dominated metropolitan area with serious air quality concerns. By focusing attention on how people respond to the testing program, we addresses concerns about the equity of the burden of I&M programs and mechanisms by which the fleet is “greened.”
This report shows several major impacts:
1. The I&M program is effectively screening dirtier vehicles out of the fleet. It must be noted, however, that failure rates are sufficiently low for the bulk of the tested fleet that the vast majority of tests accomplish little and the reliance on diagnostic computers (rather than actual tailpipe emissions) is problematic as vehicles age – precisely when better screening is most important.
2. Households tend to “shop” for inspection stations to minimize their costs – thus picking stations nearby their homes and those that are more lenient.
3. The I&M program imposes a burden on those who own dirty cars, and those cars are clearly owned by poorer households.
These findings hold several lessons for policymakers. First, air quality regulations can have large impacts directly on households, even if they are ostensibly aiming to regulate technologies. These regulations are shown to affect the composition of the vehicle fleet, which means affecting who owns what kinds of cars and how fast households replace their vehicles. Policymakers would do well to keep in mind these kinds of far-reaching impacts that might result from similar future regulations, such as technology mandates associated with carbon emissions. Second, these regulations‟ impacts on households behavior is significant, predictable, and fraught with unintended consequences. Two significant implications are the burden of compliance falling most heavily on the poor and the persistent effort of households to avoid compliance costs. Third, implementing rules that seek to regulate millions of households‟ vehicles poses massive administrative costs and challenges. These should not be underestimated.
The findings have implications for those seeking to tweak or more radically reform vehicle emissions policy. We show that the validity of I&M tests declines for older, dirtier cars. Casting some doubt on the testing mechanism itself points to alternative testing technologies. Showing how households “shop” for inspection stations attests to the impact of I&M on households and can guide regulators in permitting and auditing the hundreds of stations in the metro area. Moreover, we show that the I&M program in Atlanta is working to “green” the vehicle fleet, but its costs fall predominantly on poor households and it is not motivating greater maintenance of cars‟ emission control systems as we might expect. This raises the possibility of reshaping the incentives and softening the blow on poor households. Further discussion of these policy reforms appears in the Conclusion.
The rest of the report is organized as follows. First, some background on the I&M program is presented. Then, three different aspects of the I&M program’s impacts on households are reviewed: (1) how I&M “greens” the fleet and who passes the test; (2) how households “shop” for testing stations; and (3) who bears the costs of repair and keeping cars clean.
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