Using Innovation to Reduce Emissions

Back in l968, the Golden Gate Bridge eliminated tolls on northbound traffic, and doubled the toll on southbound traffic. This brilliantly simple change greatly sped up traffic through the toll booths, but had no great effect on toll collection. Since then, it’s an idea that has been copied around the world.

For me, it’s a great example of how innovation can result in change for the better, without requiring new superstructure or new procedures. Good ideas can be found out there in the world, for those who take the trouble to listen and look for them. (If memory serves, the toll idea actually was given to the Golden Gate Bridge by an ordinary citizen…though I can’t find evidence of that on-line.) 

Here’s another such potential good idea to reduce carbon emissions, courtesy of economist Dean Baker at the new Harpers blog. It’s a very simple idea:

Currently, auto insurance is viewed as a fixed expense. People pay the same amount for their insurance no matter how much they drive. This means that when someone is comparing the cost of driving to work with the cost of carpooling or public transportation, they won’t factor in the cost of insurance, because they will pay the same whether they make any particular trip or not.

This would change if drivers paid for insurance by the mile. Taking rough numbers, the average person drives her car around 10,000 miles a year and pays a bit less than $1,000 each year for insurance. This means that the cost of insurance is approximately 10 cents per mile. If for each mile they drive drivers paid 10 cents for insurance, then on average they would pay the same amount for insurance as they do now—but they would have much more incentive to cut back their driving.

So, for instance, a driver who was considering carpooling to avoid a 40-mile roundtrip commute to work could save herself $4 a day (more than $800 a year) in insurance costs by carpooling under the pay-by-the-mile system. Many trips that make sense under the current insurance payment system would not make sense with a pay-by-the-mile system. It would discourage driving in the same way that a large gas tax would discourage driving, except that—on average—no one will pay more for insurance.

The only disadvantage I can see from this idea is that it would encourage lying about odometer readings. But this could be checked against odometer inspections, Baker points out, and some insurance companies and even some states already encourage this insurance-by-the-mile policy.

Gentlemen, start your odometers!


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