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Demand side instruments to reduce road transportation externalities in the greater Cairo metropolitan area
 
Author:Parry, Ian W.H.; Timilsina, Govinda R.; Collection Title:Policy Research working paper ; no. WPS 6083
Country:Egypt, Arab Republic of; Date Stored:2012/06/11
Document Date:2012/06/01Document Type:Policy Research Working Paper
Language:EnglishMajor Sector:Education; Public Administration, Law, and Justice; Transportation; Water, sanitation and flood protection
Rel. Proj ID:EG-Egypt - Programmatic Per -- -- P113136;Region:Middle East and North Africa
Report Number:WPS6083Sub Sectors:General water, sanitation and flood protection sector; General education sector; General public administration sector; General transportation sector
SubTopics:Energy Production and Transportation; Transport Economics Policy & Planning; Transport and Environment; Roads & Highways; Airports and Air ServicesVolume No:1 of 1

Summary: 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.

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