18 Nov 2014

There Ain't No Such Thing as a Free Highway

Kaiyuan C. writes:*

It seems nice for the government to make something free, for example, a local community club which is free of charge. However, this may not always be the case. According to a policy published by the Chinese central government in 2012, all private cars are allowed to travel toll-free on the nation’s expressway during the four national holidays. This all seems very promising, and indeed the policy was widely supported by the public with an online supporting rate of more than 90%. However, in the modern market economy in which almost everything, even pollution, has been tagged with a price, the free highway policy implemented by the government seems to be contradictory to the carbon-reduction policy it has embraced. Given problems with traffic jams all over the nation’s expressways, the government’s free-lunch-offering seems to be a little worrisome.

A passenger amuses himself by in a highway traffic jam
Some people suggest that besides the official aim to make traveling cheaper and more convenient for the people, as stated in the policy-paper, there is another implicit intention of the government: to boost the country’s economy by encouraging people to travel more during the holidays, but it seems that both aims have failed.

Take Beijing for example, during the first national holiday since the policy was implemented, approximately sixty thousand vehicles went on to the expressway every day, which turned the expressway into a virtual car park. In addition, the pollution caused by the low speed vehicles running on the expressway exacerbates the air pollution on which the government has spent millions to tackle. Even more ironically, as a response to the haze hanging over Beijing, the city council just passed a new legislation in 2014 to combat the pollution caused by the low speed vehicles. Then, people would ask, who should they blame when vehicles were, literally and unlawfully, invited to the free highway to pollute the environment for nothing?

Heavy haze in Beijing’s central business distric
Nevertheless, nobody in this county would not like a free lunch, especially the country is still constitutionally a socialist state. Two suggestions could be made to improve the policy, so that the use efficiency of the expressway could be increased without too much environmental cost being paid in the future. First, rather than only allowing private cars to enjoy the free-toll policy, public transportation (such as long-distance shuttles) could travel free, to allow more people - including those who cannot afford cars - to benefit. Second, rather than offering all-time-free, different discount rate for toll should be imposed to vehicles travelling in different times. In this way, private car owners could enjoy the freedoms to travel flexibly, meanwhile paying their costs to the environment accordingly.

Bottom Line: The toll-free- policy implemented by the Chinese government is problematic, of which not only failed to make the expressway convenient for people to travel, but also exacerbated the air pollution which the government has to fix expensively in the future.

* Please comment on these posts from my environmental economics students, to help them with unclear analysis, other perspectives, data sources, etc.


Anonymous said...

Very interesting, what percentage of citizens own private cars (and thus are reaping the benefit)?

Katharina Bauer said...

I also find your post very interesting as it illustrates nicely how turning roads into a public good creates regulatory issues. I especially like your policy recommendation to overcome traffic jams by introducing discounted travelling times.
You state that the policy leads to rising emissions and air pollution and that these are costs the Chinese government will have to face in the future. However, the free-toll policy is only introduced during four days. To what extent is this significant enough to contribute to future pollution in cities?
The government in Beijing is seeking to counter pollution. Supposing that pollution is significantly increased in cities during these four days, to what extent do you think the citizens will need to pay for the additional environmental pollution in other, more hidden taxes?
If the government uses revenue from an increase in these hidden taxes to compensate pollution, might that be an additional alternative to improving the policy?

Naor Deleanu said...

I believe in your last sentence, you are advocating for a congestion charge? It would be great to expand on this further.

Kaiyuan said...

Dear Anonymous: Thank you for your reply. Please refer to the following website for a very intuitive illustration of the question you concerned. It compares private car ownership rates between Chinese cities and foreign cities: http://www.chinasignpost.com/2013/06/23/counting-cars-rising-private-automobile-ownership-in-chinese-cities-paves-road-for-gasoline-demand/

Kaiyuan said...

Dear Katharina: thank you for your comment. The questions you raised are very valuable to my research, and I will put more thoughts into them when I am writing my paper. There is one thing I would like to clarify. The "four holidays" as referred by the policy actually has more than four days. Take the National Day Holiday for example, it is a Seven-Day Vacation during which many of the Chinese choose to travel. People usually call it, as well as other three holidays, the "golden week". The four holidays in total consist of more than twenty days, thus the pollution caused should be considerably large, although I do not have a number for that at this moment.

Kaiyuan said...

Dear Naor: thank you for your comment. Yes, that's what I planned to do. However I would not call it congestion charge,as the congestion is mainly caused by the policy, and the suggestions I will come up with is to modify the policy by minimizing the negative effects i.e. congestion and pollution it caused.

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