Free rides to cleaner air? Examining the impact of massive public transport fare discounts on air quality

Daniel Albalate, Mattia Borsati () and Albert Gragera
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Daniel Albalate: Dept. of Econometrics, Statistics and Applied Economics, Universitat de Barcelona, Spain.
Mattia Borsati: Dept. of Econometrics, Statistics and Applied Economics, Universitat de Barcelona, Spain.
Albert Gragera: Dept. of Applied Economics, Autonomous University of Barcelona, Spain.

No 202414, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

Abstract: We quantify the effect of public transportation fare subsidies on air quality by exploiting the sharp discontinuity in the cost of ridership introduced by policy intervention. We identify this effect by taking advantage of four months of massive discounts for transit services introduced in Spain on September 1, 2022, as part of the national plan to tackle the global energy crisis. Across pollutants and specifications, we find no evidence that low-cost or free-of-charge public transportation financing schemes have improved air quality. Our results reveal that measures aimed at reducing transit prices may fail to achieve the claimed environmental benefits through a modal shift from private to collective modes of transport, which suggests that massive fare discounts may not represent an efficient allocation of public funds.

Keywords: Public transportation; Air quality; Externalities; Pollutants; Modal shift. JEL classification: L92, Q53, R41, R48. (search for similar items in EconPapers)
Pages: 34 pages
Date: 2024-02, Revised 2024-02
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Persistent link: https://EconPapers.repec.org/RePEc:ira:wpaper:202414

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