Should the US Congress appropriate funds for the repurchase of older vehicles?

Abstract

Proponents of vehicle buyback programmes maintain that the earlier retirement of older vehicles will reduce pollution, increase income for lower income households and stimulate the automobile industry. This article provides a brief assessment of costs and benefits of vehicle buyback programmes. 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 buyback programmes 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 travelled. Vehicle buyback programmes 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 buyback programme. However, vehicle buyback programme 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 buyback programmes and create incentives for the creation of these programmes by additional municipalities.

Notes

The views expressed in this article belong exclusively to its author and do not represent a position of the US Treasury.

¹The vouchers in Senator Feinstein's bills range from $2500 to 4500 for new car purchases and from $1500 to 3000 for a used car purchase. Cash payments in an existing programme in California are $650 per vehicle.

²California buyback programmes are described at the following site. http://www.arb.ca.gov/msprog/avrp/avrpeo.htm.

³See Household Vehicles Energy Consumption 1994 by DOE/EIA July 1997. http://www.eia.doe.gov/emeu/rtecs/chapter3.html.

⁴Get price quotes at Kelley Blue book. http://www.kbb.com/?trid=29&psid=2-239-7183-5-89-1&OVRAW=kelly%20blue% 20book&OVKEY=kelly%20blue%20book&OVMTC=standard&OVADID=47693188011&OVKWID=1321660011.