Driving is associated with a series of costs to society, or externalities. These include road damages, traffic congestion, and vehicle emissions (of both local pollutants and greenhouse gases). A fuel tax has been used in the United States to account for some of these costs, particularly road damage. However, other methods of pricing may be more effective and able to cover a variety of externalities. While several successful programs have been implemented in other countries, very few have been attempted in the United States.
To inform the optimal design of programs to price road use/damage, emissions, and congestion, researchers at UC Davis reviewed published studies, examined existing programs, and investigated potential design choices for such programs. This policy brief summarizes the findings from that study.