The Environmental Cost of Global Fuel Subsidies

Lucas Davis

No 22105, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Despite increasing calls for reform many countries continue to provide subsidies for gasoline and diesel. This paper quantifies the external costs of global fuel subsidies using the latest available data and estimates from the World Bank and International Monetary Fund. Under preferred assumptions about supply and demand elasticities, current subsidies cause $44 billion in external costs annually. This includes $8 billion from carbon dioxide emissions, $7 billion from local pollutants, $12 billion from traffic congestion, and $17 billion from accidents. Government incentives for alternative fuel vehicles are unlikely to cost-effectively reduce these externalities as they do little to address traffic congestion or accidents, and only indirectly address carbon dioxide and local pollutants.

JEL-codes: H23 Q31 Q41 Q48 Q52 Q53 Q54 Q58 R41 (search for similar items in EconPapers)
Date: 2016-03
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env, nep-reg and nep-tre
Note: EEE
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Citations: View citations in EconPapers (2)

Published as Lucas W. Davis, 2017. "The Environmental Cost of Global Fuel Subsidies," The Energy Journal, International Association for Energy Economics, vol. 0(KAPSARC S).

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Journal Article: The Environmental Cost of Global Fuel Subsidies (2017)
Journal Article: The Environmental Cost of Global Fuel Subsidies (2017)
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