Month: March 2013

For this week’s blog I’m to discuss a traffic minimization policy of my choosing. I think I’ll take an opportunity discuss the legislation in my home state of Washington. The I-5 corridor, in particular the bustling metropolis of Seattle, is well known to have some of the worst traffic in the United States with an annual loss of 48hrs and 22 gallons (83.3L) of gas. The Weather Channel estimates the per driver cost of congestion to be $1,050. The state legislature has taken modest measures in an attempt to decrease congestion. One policy in particular, the 1991 Commute Trip Reduction Law (CRT), will be the focus of this blog.

RCW 70.94.521 defined and publicly acknowledged the social, economic, and environmental cost of freeway congestion for Washington State and outlined the general protocol for local implementation of congestion reduction policies. Essentially the report dictated the primary focus of any future policy would be to reduce single occupancy vehicles, and to mandate that all areas of high congestion implement traffic reduction policies. The report dictates that the local jurisdictions should be able to choose and implement the mechanisms they deem most useful, but that they must do something.  In 2006 the policy was refined in the CRT Efficiency Act explicitly designed to reduce single occupant commuting. As of 2009, the State DOT claims that “week day morning trips were reduced by 30,000, delays were decreased by 8% and the average rush hour commuter saved $59 per year.” With a net result of 154 million miles reduced and over 69,000 tonnes of greenhouse gas emissions prevented.

The policy primarily targets large business in highly congested areas. The DOT claims “More than 1,050 worksites and 530,000 commuters statewide participate in the CTR program.” Practices differ between regions and individual companies, but the primary strategies seem to be corporate carpooling and company support transit passes. An example would be my brother who works for a major financial institution in the heart of downtown Seattle. In conjunction with this policy his employer is required to encourage all employees to take advantage of Seattle metro, as such all employees receive transit passes. But this begs the question, where does the funding come from? The answer, it comes in part from my brothers pay check, and in part is subsidized by the corporation. The result being that the price paid directly by my brother for his transit pass is heavily subsidized by his employer, but it could be observed that the rest of the cost is implicitly paid through a reduction of his pay. See, by requiring that these corporations provide transportation options for their employees, the policy implements an implicit tax on the labor market. Depending on the elasticity of demand and supply for a given position, an employee would bear a variable percentage of the total cost. In layman’s terms, positions with many qualified candidates would likely bear a greater burden implicitly within their wage than positions with few qualified candidates. Essentially the tax burden is determined by the bargaining leverage of the employee/employer relationship.

This policy only applies to commuters who work with in congested areas, and only those commuters who work for large businesses. The tax dollars generated are levied on the employers and go toward the funding of traffic reduction research, investment in infrastructure, and other DOT general costs. In addition the CTR highly encourage the use of mass transit. This would likely result in an increase in ridership and as result revenue, however, I was unable to find any concrete assessment of the impact on ridership or transit revenue.

This policy has without a doubt made an impact on congestion within major urban areas. It does so in a moderate way by encouraging the use of existing infrastructure and allowing flexibility on a jurisdictional basis. Of course this flexibility comes at a cost. The more flexible the policy the more loop holes, but 530,000 commuters is a solid start. I find this policy to be economically positive as it does not hinder the states shipping infrastructure nor does it hurt daily retail traffic in the targeted urban areas. If anything, by reducing daily traffic loads, it expedites shipping and encourages retail activity. All in all the CTR is an interesting and innovative mechanism for congestion reduction in the Pacific North West.

To find out more see,

CRT Overview

1991 http://apps.leg.wa.gov/rcw/default.aspx?cite=47.50.010

2006 http://apps.leg.wa.gov/WAC/default.aspx?cite=468-63&full=true

“Reduce, reuse, recycle,” The motto of the resource conservation crowd, and a mantra for the environmentally conscious. The fact is that resources are scarce by their very definition. The sources of some can be renewed via natural means, but the availability of others is fixed.  Each time we consume a nonrenewable resource, we are decreasing the availability of that resource for all future generations. It has been asserted that it is duty of all conscious consumers to reduce their waste, reuse what they can, and whenever possible recycle their waste so that the raw materials of their products can be reused in future products. The concept being if we can’t make more, we must make do.

However, reclaiming the raw materials from the products we consume is not without costs. Energy is required to ship, process, and distribute the reclaimed materials and labor is required to collect the materials, run the machines, and market the products. And while these resources hold a certain market value, that value rarely considers demand of future generations. The result is an under valuation of the market value of recycling.

BC’s Eco fee attempts to fund reclamation of the raw materials by charging the cost of the reclamation in the price of the product. Each time a consumer purchases a product with recyclable potential, a small fee is added at the retail level that is then reallocated to the recycling firms to subsidize the cost of the recycling process. Of course not all products are recycled equally, the cost to benefit ratio varies across products and forms. To address this inconsistency, the assignment of tax rate has been deferred to a specific steward associated with the recycling for each of eight product sets (for the complete list of products and their associated stewards see link). These stewards assess a product and attempt levy a fee associated with reclamation cost for all of the recyclable materials within the products. In example, a box of cereal might have a fee for the box and a separate fee for the bag within, a drill would have separate fees for the internal wiring and the outer case. This allows the price each product to accurately represent the holistic cost of reclaiming its raw materials at the end of its useful life. The fee ranges from as little as a fraction of a cent on paper products and aluminum cans to $10 for certain household appliances. The goal is to keep the cost feasibly low and generate revenue on a not for profit basis with the stewardship groups responsible to annual reports, financial statements and third party audits.

This policy is not without its opposition. The nature of this tax is recessive. With the increase in the price of a wide range of products, the poor stand to bear a greater income proportional burden then the wealthy. Moreover, the revenue generate will not be distributed to the low income in a way to reduce this burden. The entire fee goes to the stewardship agency to pay for the cost of recycling, whether the product is recycled or not.

The program is also seen by some as overly complex with excessive administrative costs and redundancies between the various stewardship groups. There is no regulation as to how the fees are reported on the retail front. As it stands the fee is listed at the manufacturer’s discretion, causing transparency issues for consumers. However the intricacy of the policy does encourage recycle friendly products and innovations. By allowing the fee to be so product specific, recycle minded firms gain a competitive advantage. Read more about public perception of BC’s Eco Fees here.

This policy is still in its infancy, so it difficult to pass judgment on its merits. It will most certainly decrease the marginal cost of the recycling process, allowing firms to feasibly recycle materials with an intrinsically higher marginal cost of reclamation, increasing the amount of material that can be recycled economically. The goal of this policy is to encourage recycling rates in BC, and by all measures it most likely will. The question to address is at what cost?  There are uncertainties as to the full cost to households and firms today and into the future, and what potential benefits they stand to gain. The success of this policy will take decades before it can be justly measured.

Still have questions? Check Consumer Protection BC for more information. Look here for more resources.