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Cost-benefit analysis of an accelerated vehicle-retirement programme

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  • Doron Lavee
  • Nir Becker

Abstract

High taxes on new cars in Israel provide an incentive for car owners to defer the purchase of new vehicles. The result is a vehicle fleet of older, more polluting vehicles, with air pollution costs estimated at up to $530 million annually. The purpose of this paper is to conduct a cost benefit analysis (CBA) of an accelerated vehicle-retirement (AVR) programme. The analysis considers the private car fleet as well as trucks and buses. The study develops an economic model to identify the optimal payment level that will maximise the net benefit of the programme, and then apply the model to three different vehicle categories. It finds that an AVR programme for private cars may indeed yield significant net benefits, while a similar programme for trucks and buses fails to meet the cost-benefit test. For private cars, the study finds that even according to a conservative estimate, the programme will result in the voluntary retirement of approximately 98,000 private cars, with a present value net benefit of more than $50 million. This is equal to a 17% reduction in total annual private car air pollution costs for the five-year time span of the proposed programme.

Suggested Citation

  • Doron Lavee & Nir Becker, 2009. "Cost-benefit analysis of an accelerated vehicle-retirement programme," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 52(6), pages 777-795.
    • Handle: RePEc:taf:jenpmg:v:52:y:2009:i:6:p:777-795
    DOI: 10.1080/09640560903083731
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    Citations

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    Cited by:

    1. Lorentziadis, Panos L. & Vournas, Stylianos G., 2011. "A quantitative model of accelerated vehicle-retirement induced by subsidy," European Journal of Operational Research, Elsevier, vol. 211(3), pages 623-629, June.
    2. Doron Lavee & Ofer Menachem, 2018. "Identifying Policy Measures for Reducing Expected Air Pollution Across Israel and Analyzing their Expected Effects," Journal of Environmental Assessment Policy and Management (JEAPM), World Scientific Publishing Co. Pte. Ltd., vol. 20(01), pages 1-38, March.
    3. Chandra Setiawan, Indra & Indarto, & Deendarlianto,, 2021. "Quantitative analysis of automobile sector in Indonesian automotive roadmap for achieving national oil and CO2 emission reduction targets by 2030," Energy Policy, Elsevier, vol. 150(C).
    4. Huang, Jian & Leng, Mingming & Liang, Liping & Luo, Chunlin, 2014. "Qualifying for a government’s scrappage program to stimulate consumers’ trade-in transactions? Analysis of an automobile supply chain involving a manufacturer and a retailer," European Journal of Operational Research, Elsevier, vol. 239(2), pages 363-376.
    5. Zaman, Hosain & Zaccour, Georges, 2020. "Vehicle scrappage incentives to accelerate the replacement decision of heterogeneous consumers," Omega, Elsevier, vol. 91(C).
    6. Huang, Zhenhua & Fan, Hongqin, 2022. "Responsibility-sharing subsidy policy for reducing diesel emissions from in-use off-road construction equipment," Applied Energy, Elsevier, vol. 320(C).

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