Oct 9, 2013

Hoy No Circula: The effect of transport policies on car use: Evidence from Latin American cities

From a paper by Francisco Gallegoa, Juan-Pablo Monteroa, & Christian Salasb
In an effort to reduce air pollution and congestion, Latin American cities have experimented with different policies to persuade drivers to give up their cars in favor of public transport. This paper looks at two of such policies: the driving restriction program introduced in Mexico City in November of 1989—Hoy-No-Circula (HNC)—and the public transport reform carried out in Santiago in February of 2007—Transantiago (TS). Based on hourly concentration records of carbon monoxide, which comes primarily from vehicles exhaust, we find that household responses to both HNC and TS have been not only ultimately unfortunate—more cars on the road and higher pollution levels—but also remarkably similar in two important aspects: on how policy responses vary widely among income groups and on how fast households adjust their stock of vehicles, when they do.
A draft is here. From the conclusions 
Despite the bad news, there are some valuable policy lessons (not to mention how good a proxy for car use CO proved to be, particularly at peak hours). As illustrated by the theoretical model, the immediate or short-run impact of a policy may say little about its overall effectiveness. Both experiences confirm that policies that may appear effective in the short run can be highly detrimental in the long run; thereby, the impor- tance of understanding whether and the extent to which households adjust their stock of vehicles and how fast in response to these policies. Again, both experiences show that the adjustment process is quite fast, 9 to 11 months (pp. 39-40).

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