Assessing total costs and benefits of sustainable transport policy in ireland

Abstract

The objective of this paper is to assess the benefits of greenhouse gas (GHG) and air pollutant emission reductions projected by current Irish sustainable transport policy and to compare the Business as Usual (BAU) scenario and the Smarter Travel scenario, as set out in the 2009 Irish Smarter Travel document. This Smarter Travel scenario projects a 44% reduction in GHG emissions by 2020, compared with the BAU scenario. Both scenarios are quantified and monetised using the social cost of carbon (SCC) approach and penalty price approach for GHG emissions and the damage cost approach for air pollutants. Total net cost of the policy strategy over the period 2011 to 2020 is estimated to be on average €450mn ($640mn) per annum. Thus, using the SCC approach, the benefit-cost ratio (BCR) is 0.67:1. Using the penalty price approach, the BCR is 1.82:1. In addition, potential loss in revenue from fuel sales could be €1.3bn ($1.85bn) in 2020, which suggests that additional compensatory tax measures may need to be considered. For example, it was estimated that total excise increases of €0.85 ($1.20) per litre for petrol and €0.92 ($1.30) per litre for diesel may be required to compensate for the revenue shortfall.