Demand Side Instruments to Reduce Road Transportation Externalities in the Greater Cairo Metropolitan Area

38 Pages Posted: 20 Apr 2016

See all articles by Ian W. H. Parry

Ian W. H. Parry

Resources for the Future

Govinda R. Timilsina

World Bank - Development Research Group (DECRG)

Date Written: June 1, 2012

Abstract

Economically efficient prices for the passenger transportation system in the Greater Cairo Metropolitan Area would account for broader societal costs of traffic congestion and accidents, and local and global pollution. A $2.20 per gallon gasoline tax (2006 US$) would be economically efficient, compared with the current subsidy of $1.20 per gallon. Removal of the existing subsidy alone would achieve about three-quarters of the net benefits from subsidy elimination and the tax. Per-mile tolls could target congestion and accident externalities more efficiently than fuel taxes, although they are not practical at present. A combination of $0.80 per gallon gasoline tax to address pollution (versus $2.20 without tolls), and $0.12 and $0.19 tolls per vehicle mile on automobiles and microbuses, respectively, to address traffic congestion and accident externalities (versus $0.22 without fuel taxes) would be most efficient. Current public bus and rail subsidies are relatively close to efficient levels in the absence of such policies; however, if automobile and microbus externalities were fully addressed through more efficient pricing, optimal subsides to public transit would be smaller than current levels.

Keywords: Transport Economics Policy & Planning, Roads & Highways, Airports and Air Services, Transport and Environment, Energy Production and Transportation

Suggested Citation

Parry, Ian W. H. and Timilsina, Govinda R., Demand Side Instruments to Reduce Road Transportation Externalities in the Greater Cairo Metropolitan Area (June 1, 2012). World Bank Policy Research Working Paper No. 6083. Available at SSRN: https://ssrn.com/abstract=2082774

Ian W. H. Parry

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
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HOME PAGE: http://www.rff.org/~parry

Govinda R. Timilsina

World Bank - Development Research Group (DECRG) ( email )

1818 H Street NW
MSN3-311
Washington, DC 20433
United States

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