Should the U.S. Congress Appropriate Funds for the Purchase of Older Vehicles?

Abstract:     
Proponents of vehicle buy back programs maintain the earlier retirement of older vehicles will reduce pollution, increase income for lower-income households and stimulate the automobile industry. This paper provides a brief assessment of costs and benefits of vehicle buy-back programs. There are environmental benefits from the early retirement of automobiles and light trucks; however, some pollutants are not closely related to vehicle age. Moreover, vehicle buy-back programs are unlikely to reduce consumption of gasoline by a substantial amount and may even increase gasoline consumption in the short run because vehicle age is associated with an increase in miles traveled. Vehicle buy-back programs are not unambiguously progressive because they will increase the price of older vehicles the only source of transportation for lower income groups. This analysis does NOT justify the creation of a national large scale vehicle buy back program. However, vehicle buy-back program targeting the highest emission vehicles and vehicles likely to fail emission inspections creates support for more stringent vehicle emission standards and systems, a proven method to reduce mobile source air pollution. It may be useful to expand subsidies for existing local vehicle buy-back programs and create incentives for the creation of these programs by additional municipalities.

Keywords: environment, global warming, automobiles, cash for clunkers, vehicle buy-back, pollution Carbon monoxide, Hydrocarbons, Nitric Oxides, Carbon Dioxide

JEL Classifications: Q40, Q41, Q50, Q51, Q52, Q53, Q54, Q58

Working Paper Series