Course:ECON371/UBCO2009WT1/GROUP3/Article7

Article 7: "Banned Autorickshaws Still Plying in Suburbs"

"Banned Autorickshaws Still Plying in Suburbs"

Summary

In an effort to reduce pollution, the Calcutta High Court banned "two-stroke and 15-year-old[or older] commercial vehicles from the Kolkata Metropolitan area"(timesofindia). The ban came into effect in August of this year but this article explains how some autorickshaw drivers have tried to work around the ban by painting their two-stroke autorickshaws the same colour as the three-stroke counterpart in an effort to fool authorities. The article explains that officials are reluctant to crack down too hard on these violators, citing a limited supply of four-stroke autorickshaws and the low income status of those in violation of the ban.

A typical Autorickshaw.

Analysis

Beating the Ban

The ban enacted by the High Court is a command and control approach to reducing air pollution. In terms of the autorickshaw industry, the ban can be considered a technology-based standard. There's no real consideration of efficiency but it does make it look as though the government is taking action. As with many command and control approaches, it's not surprising to find resistance to the ban.

By painting their two-stroke autorickshaws the same colour as the four-stroke autorickshaws, the drivers, in effect, raise the enforcement cost of the ban. Whereas before, officials could spot a banned vehicle on sight, now they are forced to inspect the autorickshaws they suspect might be of the two-stroke variety. Officials might not want to spend the extra money on enforcement. Also, the act of painting a two-stroke autorickshaw might suggest a level of desperation on the part of its owner. The moral consideration that taking away someones means of living might be enough to make some officials not want to address the issue too closely.

The article also seems to suggest that having the older autorickshaws operating in the less dense suburbs is less of a concern for officials. This might be a case of lower ambient emissions in the suburbs than in the metropolitan area.

The Emissions Formula

The formula for vehicle emissions is

Total Quantity of Emissions = Number of vehicles X Average kilometers traveled X Emissions per kilometre

This policy, in terms of autorickshaws, is concerned with the last element of the formula. As a mode of public transport, autorickshaws have a high 'average kilometers traveled' which compared to regular vehicles. This is offset somewhat by their good gas mileage, estimated at 2.9 liters per 100 km(wikipedia) but this is offset by their high emissions per kilometer. In that case the policy makes sense. Also, removing older vehicles from the road can have an effect on the last two terms of the equation. This policy is similar to policies enacted here in Canada in that it tries to reduce the number of older vehicles on the road.

A Regressive Policy

The comments made by the transport minister, "that autorickshaw operators were poor people who also had families to maintain"(timesofindia), point to the fact that this policy is regressive. Even if older vehicles and the two-stroke autorickshaws do pollute more than their newer counterparts, the ban reduces city pollution at the expense of those with lower incomes. People with higher incomes, most likely, would not be working as autorickshaw drivers nor would they own a vehicle that was older than fifteen years. The fairness of this policy could be questioned. Could this policy be made less regressive without reducing its effectiveness?

Ways to Make the Policy Less Regressive

Low Supply

The low supply of four-stroke autorickshaws is an economic double whammy for those wanting to convert their less efficient rickshaws. First off, even if they wanted to buy a four-stroke autorickshaw, there might not be any available within their price range. They are then left with two options: stop earning a living or defy the ban. Secondly, as everyone converts over,the demand curve for the four-stroke vehicle shifts to the right. Without a corresponding increase in supply, the price of the good goes up and the low income consumers are faced with this higher price. This might also deter many from switching over. Why pay more now, when the price will go down later?

One solution, is to allow a grace period for compliance which the article suggests is what the government is doing. Of course, initiating a ban and not acting on it or punishing some and not others might not seem fair.

Another solution might be to subsidize the production of the four-stroke autorickshaws in order to reduce their price. This subsidy could be paid for in a number of ways. One might be a tax on new non-commercial vehicles which could help to fund the purchase of the vehicles for low-income autorickshaw operators.

Other Polices

While a technology-based standard might reduce emissions from the autorickshaw industry, it probably isn't going to be efficient as marginal damage and abatement costs aren't considered.

One way to reduce the emissions is through moral suasion. Officials could implement a program whereby autorickshaws that have low emissions could qualify for something equivalent to a Certified Green sticker. This works under the assumption that consumers would choose the "Certified Green" autorickshaw over other autorickshaws which might be an incentive for higher emission vehicles to upgrade.

In the future, a variation of a transferable discharge permit might be considered. This type of system tends to be more efficient and doesn't have the same kind of "government control" feeling that standards have. It might be difficult to implement, but once in place part of the enforcement would come from within the autorickshaw community itself. Anyone cheating the system would be having a negative effect on everyone else.

In the case of autorickshaws, it seems a fairly simple task for a statistician to take a random sampling of autorickshaws. From this they could determine a distribution function for autorickshaws. Using this information, officials could determine an acceptable level of emissions from autorickshaws that would be fair. A number of permits could be distributed where each permit allows for say 1km of travel based on an average autorickshaw. Here's the tricky part. Before receiving a permit, an autorickshaw would have to undergo a licensing procedure whereby it's emissions per km is tested and their autorickshaw is given a number relative to the average autorickshaw. That is an autorickshaw that produces twice the pollution would recieve a .5 rating. This would count against their permit. So, initially if all autorickshaw drivers received the equivalent of a 500km/day in permits, an autorickshaw with a .5 rating would only be allowed to drive 250km/day. As a policing procedure, a sampling of vehicles could be checked every year, and on a larger scale, odometers could be checked against the number of permits and ratings.

What a system like this would do is, it would encourage trade in these permits. An autorickshaw with a rating of 1.5 would have 750km/day which might be more than they need, so they would sell to the higher polluting autorickshaws. There might have to be some adjustments made in terms of the pollution ratings and initially the target for reducing emissions might be modest but over time, in theory, this would eventually lead to the achievement of an acceptable levels of emissions in an efficient manner. It also might supply incentive for those with polluting autorickshaws to switch to cleaner burning fuel or buy more efficient autorickshaws. They'd feel more like they were choosing to upgrade rather than being forced to upgrade.

Conclusion

It is clear that there is an effort here to reduce emissions in the streets of the metropolis. The fact that many owner/operators of these rickshaws are of substantially low income means that steps must be taken to ensure that the initiative is implemented fairly. Those with low incomes have families to support and don't have the financial freedom to allocate a large amount of money to upgrading their rickshaw which works fine for them in the first place. A proper policy that accounts for all aspects of this particular industry could have the potential to be effective if implemented correctly.

Prof's Comments

Some nice ideas, particularly the tradable permit for distance. Another one could be a tax on fuel, if the two types use different fuel. If the four stroke ones use LPG, as suggested, then this might work.