Tuesday, January 08, 2008

Simple assessment of new emissions tests

My concern with this issue started after I read a news titled "Motorists to pay for emissions tests". At the end of the article, one university student raise his opinion as
"I agree that emissions tests are important, but I don't want to pay 100 percent of the fees if I have to just clean up my exhaust because my carbon emission's too high. It would be too much"
That statement is clear shown that the Governor have not yet realize what is the "costs" of emissions tests. In this case, I mean the following costs after emissions tests. I believe, Mr. Governor only concern that emissions tests will force people to be more cautious with their vehicle's emissions and or the tests could generate revenue. Actually, Mr. Governor must concern several aspects not only "enforcement" and "revenue" factors.

There are three aspects that he might be consider before applying - supposed to be - environmental policy: 1) cost efficiency, 2) administrative and practical feasibility, and 3) fairness in the distribution of costs and benefits. Lets assess Mr. Governor policy with the three aspects mentioned.

Cost efficiency: The emissions test pay policy may be cost-efficient policy in terms of the basic idea of the test it self. By conducting the single-uniform test for all kind of vehicle, we could recognize how many vehicle contribute pollution and then we can set an exact target of how much pollution need to be reduce and in which way. Theoretically, the tests itself could be used to calculate marginal abatement cost from each polluter (vehicle users). However, in terms of calculating abatement costs, the fact that there are more than 9 million people living in Jakarta, plus 3 million additional people around the peripheral area, it will be very difficult to identify the marginal cost of abatement from each vehicle. In short, the test might be an efficient way just to know the total pollution produced by registered or voluntarily vehicle tested, but not so efficient for reducing pollutions. Moreover, the fee for emissions tests itself is possibly quite affordable for most of vehicle users. But, if the owner have to service and conduct special maintenance for their vehicle to reduce the emissions due to the emissions tests results it will not efficient at all for the owner. This argument will be related with distribution of fairness that will be discuss later.

Administrative and practical feasibility: This policy is obviously feasible to conduct. However, the lack of proper and efficient system in administration may be results to low monitoring, low enforcement, and potential corruption. Administering "lots of" vehicle is the critical issues here. When the administration transfer the decision of whether a vehicle is required to be overhauled or not due to high emissions to a particular repair shop, it requires high degree of monitoring and enforcement. Maintaining the credibility and capability of selected repair shops is another critical issue of monitoring and enforcement on selected testing agent. With a huge number of vehicles in Jakarta, this policy is administratively becoming very sensitive to conduct. It will need intensive monitoring system, sophisticated enforcement (especially for private owners), and special bureau to supervise the selected testing agents.

Fairness in the distribution of costs and benefits: There are three groups of economic agents that involved in the selected policy, the vehicle owner, the testing agents, and local administration. For the local administration the policy seems very inexpensive at all. For the vehicle owner, the testing only is not that so expensive - should be. But, potential additional cost for engine maintenance to meet the requirements must be very significantly unfair. How can we identify by how far our cars need to be repair to meet the requirements? In this case, the testing agents is the first economic agents that possibly gain benefit from this policy. While the local administration gain benefits in terms of targeted lower pollution (we can debate on this later), and testing agents benefited from testing fee and additional services costs that might be occurs; the vehicle owners is the only entity that face the uncertainty and should be cover the costs. It is obvious that small firms and company in transportation sectors will be suffering most from this policy because they have to face huge overhauled engine of their vehicle fleets to meet the emissions standards.


Berly said...

Yup, we need to internalize the externalities and make polluters pay for what they emit. But we need to know how each vehicle emit to correctly levy the pollution tax.

The longer a vehicle has not gone to mechanics for general check up (and the older it is) usually the higher the pollution.

So let start by putting a ceiling fee (monetary equivalent of very high pollution) to those vehicle owner that has not take the test. It can be levied at annual renewal of the license (STNK)

Those who take the test will pay less with the cleanest vehicle paying the least. It will provide incentive for the people to go for emission test. And those with the dirtiest vehicle might be induced to take public transportation or car pooling for the sake of Jakarta’s air.

fajar said...

salam kenal