Milan, the second largest city in Italy (next to the capital Rome),  has an area of 181.76km² and a population of 1.35 million people^[1].  It is the top fashion city in the world as well as a major financial and business center in both EU and the world^[2].  It also has the top level of cars per capita (car concentration)  in the world, which was reported as 0.6 cars per resident^[3] in 2011, according to the study by Rotarisa et al. With that being said, it is not hard to imagine, Milan is one of the most polluted and most congested cities in the world.

 

Political Origin and Objectives of Area C Congestion Pricing Scheme

In Jan. 2008, the administration under Mayor Mrs. Letizia Moratti introduced the Ecopass pollution pricing scheme to help curb pollution in the city. It set up the 8.2km² restricted zone in the city center of Milan (the busiest area in the city) where vehicles need to pay a fee to enter between 7:30am and 7:30pm daily. Different types of vehicles pay a different charge, etc. ^[4].  According to Rotarisa et al., over the 3 years implementation of the Ecopass scheme, the air pollution had been reduced but the benefits appeared to be diminishing and came to be exhausted^[3].  On the hand, Mayor Mrs. Moratti failed to be be reelected in 2011. Mr. Giuliano Pisapia, in June. 2011, became the new Mayor of Milan and needed to decide whether to extend Ecopass, replace it or change it some way. In the referendum around the same time period, 80% votes went to support converting the Ecopass pollution scheme to a more strict congestion scheme^[5]. Thus, the congestion pricing scheme Area C came into effect in Jan. 2012 in Milan to replace Ecopass^[6].  The Area C scheme has the following  aims:

• Tackle congestion issues directly by reducing vehicle access to the city and improving public transit networks.
• Reduce pollution caused by traffic.
• Improve sustainable travel modes^[5].
• Overall, improve the life quality of those who have activities associated with the city^[7].

How does Area C work?

The Area C congestion pricing scheme is designated for the same area under Ecopass.  To enter this 8.2km² zone  of the city center of Milan on the weekdays between 7:30am – 7:30pm (Thursdays’ changed to 7:30am – 6:00pm, since Sep. 2012 )^[6]:

• Vehicles (with exceptions) are entitled for a flat fee of €5.
• Vehicles that belong to the residents inside the area have 40 free entries annually and a flat fee of €2 after that. These vehicles must be registered.
• Some types of vehicles are banned in this area, that include those with emissions at Euro level 0, gas engine, and Euro levels 0,1,2,3, diesel engine.  According the the EU emission standards, those high polluting vehicles^[8].
• Public transportation are free to enter which includes buses, emergency vehicles, taxis.
• Hybrid, bi-fueled vehicles and scooters are free to enter.

The entrance tickets can be purchased by cash, debit or credit from various locations like meters, retailers, etc. They need be purchased and activated on the same day before entry.  Upon entry, the surveillance cameras at the access point will be able to identify the classification of the vehicles and the due charges^[7].

The entire system seem pretty smart and the registration for resident vehicles is key to distinguish between the non-resident and resident vehicles. However, for residents, it might provide incentives for those who didn’t often use vehicles to drive in order to use up the free entries since they are free or use the free entries to give rides to non-residents for profits or not. On the other hand, the lower income residents who use vehicles often would be affected the most considering that they would have taken public transit which costs less, if not for a particular reason to use vehicles.

Although there’s no study publicly available to explain how the 40 free entries were decided, the government of Milan probably did research on it. A follow up study to assess the usage of the 40 free entries for resident might be worthwhile in improving the policy in the future.

Also, for allowing hybrid and bio fueled vehicles free access seems to be only on the consideration of pollution reduction. It will create incentives for people to switch to those types of exempted vehicles and at the end the number of vehicles accessing the city center will rebound.

Results after one year of implementation

According to official estimates reported by XinHua,China in Feb. 2013, the Area C scheme in the one year time “caused a reduction by more than 30 percent of vehicles inside the designated restricted zone and 7 percent outside it”^[9].  In terms of pollution reduction, “PM10 and NO_x emissions [were reduced by] 18% and CO₂ emissions [were reduced by] by 35%”, according to a recent study^[10]. The study also indicates that Area C has raised €20.3 million for the public transport  investment funds and the bike sharing system.  The funds then can be used to further improve the public transit and improve infrastructure to make biking a safer and more feasible way of transportation. Although the lower income group don’t directly benefit from the scheme, they will be benefited as the transit net work improves, since they are probably the most frequent users.

Conclusion

Overall, the Area C  through the charge to reduce the number of vehicles accessing the city center of Milan could be more effective and more lasting if the there’s no exemption on the hybrid or the bio fueled vehicles. This policy can work more effectively by focusing on one main goal which is the reduce congestion.  For pollution reduction, it should be addressed by a separated policy or scheme independent of Area C.

 

 

References:

1. Wikipedia. (2013, Mar.).  Milan. Retrieved from http://en.wikipedia.org/wiki/Milan

2. Wikepedia. (2013, Mar.). Economy of Milan. Retrieved from http://en.wikipedia.org/wiki/Economy_of_Milan

3. Danielisa,Romeo. Rotarisa, Lucia. Marcuccib, Edoardo. and Massianic, Jérôme. (2011, Nov.). An economic, environmental and transport evaluation of the Ecopass scheme in  Milan: three years later. Retrieved from http://www2.units.it/danielis/wp/Ecopass%20-%203%20years%20later,%20finale.pdf

4. Wikipedia. (2013,Mar.). Ecopass. Retrieved from  http://en.wikipedia.org/wiki/Ecopass

5. Di Bartolo, Caterina. (2012, Nov.). AREA C in Milan: from pollution charge to congestion charge (Italy). Retrieved from  http://www.eltis.org/index.php?id=13&study_id=3632

6. Wikipedia. (2013, Feb.).  Milan Area C. Retrieved from http://en.wikipedia.org/wiki/Milan_Area_C

7. Commu di Milano. (n.d.). Area C. Retrieved from

http://www.comune.milano.it/portale/wps/portal/CDM?WCM_GLOBAL_CONTEXT=/wps/wcm/connect/contentlibrary/elenco+siti+tematici/elenco+siti+tematici/Area+C/English/#par01

8.  Desiel Net. (2012, Sep.). EU Cars and Light Truks. Retrieved from http://www.dieselnet.com/standards/eu/ld.php

9. XinHua, China.org.cn. (2013, Feb.).Feature: The decade for Milan air pollution control. Retrieved from http://www.china.org.cn/world/Off_the_Wire/2013-02/01/content_27854057.htm

10 . CASCADE project. (2013, Mar.). Milan hosts first CASCADE study visit. Retrieved from http://www.eurocities.eu/eurocities/news/Milan-hosts-first-CASCADE-study-visit-WSPO-95RCLA

Hong Kong (HK), a city of 1,104 km² (less than half the size of Greater Vancouver) has a population of 7 million people¹ (more than triple of the population in Greater Vancouver²). HK  is one of the most densely populated areas in the world. Like other affluent economies, HK is facing the challenges of waste management, among which municipal solid waste (MSW) management is of top concern. In a formal and comprehensive study done by  GHK Ltd. (a consulting company) in March 2007, it shows that if the municipal solid waste disposal rate were not controlled,  the existing landfills in HK was expected to reach  full by 2015³.  It is only sensible for any government to take serious steps to deal with a pressing matter like this.

 

Brief of Plastic Shopping Bags (PSBs) Levy Scheme

 

Political Origin & Goals

Having sensed the crisis of MSW management as well as aligning with the world’s environmental protection initiatives, the Environmental Protection Department (EPD) of the Government of HK set out the Policy Framework for the management of MSW in 2005. The Policy Framework suggests introducing producer responsibility schemes (PRS) as a key policy tool based on the “polluter pays” principle as one of a series of initiatives to help achieve MSW objectives³. MSW objectives include the followings:

• use sustainable practices in MSW management
• reduce the amount of MSW generated
• increase recycling of MSW
• reduce the disposal of MSW at landfills

Under this Policy Framework, Plastic Shopping Bags (PSBs) Levy Scheme was proposed by EPD  in May 2007.   It aims to provide a direct economic incentive to encourage the public to reduce use of plastic shopping bags.  Although less than 2% of the waste sent to the landfills come from PSBs, the government also hope to use the opportunities through this scheme to raise awareness and educate the public to make environment-friendly choices in their daily life.

 

Pricing

The PSBs Levy Scheme was set out to charge consumers 50 cents HKD ($0.07 in CAD) per bag they ask for at the cashiers of the prescribed retailers (to be listed). This PSBs levy directly targets the pollutant itself and the polluters. It should reduce the generation of the pollutant being targeted meaning less PSBs being produced/imported and less ending up in the landfill.  For the price of the levy, it was supported and believed to be the sufficient rate to effectively reduce use of PSBs. That’s by the majority of about 1000 survey takers from the general public during the  public consultation from June to July 2007.   This 50 cents per bag pricing seems to base on the public opinion of their willingness to pay for the pollutant instead of the marginal damage of the pollutant, disposal of the PSB. This raises questions about the cost-effectiveness of the levy.

 

Enforcement

In late 2008, the Plastic Shopping Bags Levy Scheme was made into a Regulation/ Ordinance⁴). In July 2009, the scheme was put in effect and guarded by legislation. The prescribed retailers would be penalized if they failed to follow the scheme.  This is important to ensure the effectiveness of the levy in terms of enforcement, compared to a voluntary scheme.

Use of Levy Revenue

The retailers return all the levy collected to the government on a quarterly basis.  The levy will go to the environmental fund to support environmental projects⁵).

 

In general, the proposal received considerable public support despite the opposition from the plastic bag Manufacturers and retailers⁵). However,  the levy would inevitably increase the consumption of the substitutes / alternatives. This was anticipated but the effect was underestimated.

• For the plastic bags inside the supermarkets used for produces and bakery goods, for hygiene purpose, consumers don’t need to pay for them. This would encourage the consumers to use more of these bags.
• For paper bags or laminated bags, they  simply are not plastic bags and they aren’t levied. If possible, the retailers, for better competitiveness, would probably switch to those bags so that their customers won’t bear the cost of the bags .
• Likewise, the consumption of plastic bags for non-shopping purpose such as plastic garbage bags is believably to be increased, as people will have to use some kinda of carrier for their household garbage if not the used-to-be-free PSBs. In fact, it’s shown that the use of garbage bags went up by 63% since the beginning of the scheme to 2011⁶).

The lower income group under this scheme is believed to be most negatively impacted with the charge imposed. They probably used more free PSBs since they probably never had money for garbage bags and so forth.

 

Sector Coverage

When the scheme was introduced and in the first 2 years of implementation from 2009 to 2011,  it targeted only the retailers which are the major supermarkets and shops⁷):

• offer all of the following categories of goods for sale:
  • any food or drink
  • any medicine or first-aid item
  • any personal hygiene or beauty product
• have 5 or more retail outlets;
• or at least one retail outlet that has a retail floor area of not less than 200 square meters

In 2012, the government decided to extend the coverage to all retailers⁸). Thus, the small medium enterprises/businesses would be affected as well.

 

 

Conclusion:

There are quite a bit of loopholes in this PSBs Levy Scheme in HK.   It does reduce the use of PSBs; the goal at this is reached.  However, it encourages use of other types of bags by a lot which are more polluting in terms of size and weight.  Therefore, the overall effectiveness of reducing MSW is minimal or could result in negative effect.  Also, the pricing and the coverage of the levy makes it less cost-effective. The marginal cost of damage from the pollutant PSBs is still unknown. Even though the levy is in place for all retailers, it’s not in place for all bags. It would lack of cost-effectiveness considering the waste of other types of bags would be (further) increased.

 

References:

1.Wikipedia. (Mar 7,2013). Hong Kong. Retrieved from http://en.wikipedia.org/wiki/Hong_Kong

2.Wikipedia. (Mar 6,2013). Greater Vancouver. Retrieved from http://en.wikipedia.org/wiki/Greater_Vancouver

3. GHK Ltd. (Mar, 2007).“Assessment of Benefits and Effects of the Plastic Shopping Bag Charging Scheme” by GHK (Hong Kong) Ltd.  Retrieved from http://www.epd.gov.hk/epd/english/environmentinhk/waste/prob_solutions/files/GHK_study.pdf

4. EPD of Government of Hong Kong. (Dec, 2008). PRODUCT ECO-RESPONSIBILITY (PLASTIC SHOPPING BAGS) REGULATION. Retrieved from http://www.epd.gov.hk/epd/english/news_events/legco/files/LegCo_Brief_Environmental_Levy_Scheme_eng.pdf

5. EPD of Government of Hong Kong. (Aug, 2007). Public Consultation Report on the Proposal on An Environmental Levy on Plastic Shopping Bags. Retrieved from  http://www.epd.gov.hk/epd/english/environmentinhk/waste/prob_solutions/files/Consultation_Report_Levy_Eng.pdf

6.Toloken, Steve. (Aug, 2011). Consumers buy heavier bags; plastics use rises after Hong Kong taxes bags. Retrieved from http://www.plasticsnews.com/article/20110805/NEWS/308059988/consumers-buy-heavier-bags-plastics-use-rises-after-hong-kong-taxes-bags#

7. EPD of Government of Hong Kong. (Feb, 2010). The Environmental Levy Scheme for Plastic Shopping Bags – Latest Levy Income. Retrieved from http://www.epd.gov.hk/epd/english/boards/advisory_council/files/wmsc0210.pdf

8. Tam, Stephanie. (Oct, 2012). Hong Kong Plastic Bag Levy. Retrieved from http://rso.cornell.edu/rooseveltinstitute/hong-kong-plastic-bag-levy.html