Environmental and transport policy

Road pricing for cars in Germany

The coverage of the policy: Road pricing within the transport policy

Since 2005, Germany has operated the road price policy to make traffic flows more efficient and improve environment within the country based on all other EU countries’ experience. Here I would like to introduce all three different charging models for passenger cars in Germany and analysis there economic and environmental effects.

1)      A time-based charge allows the unrestricted use of a particular road network for a specific period of time.

2)      A distance-based or pay-as-you-go charge is a charge per kilometre on the road network covered by the toll, such as the truck toll operates in Germany.

3)      An area-based charge (city centre congestion charge) collects a charge for access to or travel through city centres.

Moreover, there are also other tolls such as for tunnels and bridges. The only purpose of such toll is to maintain tunnels and bridges. Here I would like to focus on these three most important tolls

1)      Time-based toll: vignette

The time-based toll, also known as the “vignette system” in reference to the toll or vignette which is displayed on the windscreen of participating vehicles, charges vehicles a time-based fee: for instance, a certain rate of price charged for the whole period such as one year. Such rate is always calculated based on the average costs for each car on a certain road network. For each driver who purchased the vignette can use the road network without limit until the end of this period. In Germany, almost all motorways can be used by this method for a period of 12 months. The advantage of the time-based toll is obvious, that the public finance does not have to pay for the road anymore, however, that the vignette can only be used to a very limited extent to fulfil the traffic management.

The vignette system is a model which only about drivers’ decisions that if or not use the road network at all in the following period, there for, the system cannot used to reduce traffic jam or location based traffic management.

The vignette system has only limited contribution to release environmental pressures. Since as we have mentioned above, that the vignette system can only effect the drivers’ decision of if to drive or not in the first place, it will not increase the cost of driving within the certain period that the driver has already paid. Therefore, unless the price of vignette is really high that there are so many drivers decide not to drive.

2)      A distance-based: passenger car toll

A distance based toll is also call pay as you go toll, which is of cause calculated on the number of kilometres that a driver driven within a particular network. Such a distance based toll in applied in may EU countries such as France and Italy and it has been proven to be effective.

According to experience of all other countries, the time based toll is really effective, however, the successful experience in other states such as France may not be applicable into Germany since the motorway network in Germany is much more complicated and has more alternative road. Which means that the distance based toll can increase the burden of traffic dramatically.

The most important advantage of the distance based toll is that the environmental costs of traffic are paid for proportion and absolutely based on the usage of the motorway network. Therefore, the distance based toll policy provides the incentive to reduce the usage of traffic and environmental impact of vehicle.

However, the disadvantage of the distance based toll is also obvious, that such policy could not provide any incentive for vehicle improvement. As long as drivers pay for road network based on the distance that he/she drive, there is no incentive to improve their car to a less polluting vehicle.

3)      Area based toll: congestion charge

One of the most important purposes of the road price policy is for traffic management and as a solution of traffic congestion. Therefore the most direct solution is to charge for congestion itself in city center within small are or region. Thus, the rate of charge is not related to the distance of travel or time period of traffic permission that driver purchased.

The charge of congestion is only based on the location and time of traffic the introduction of a city centre congestion charge leads to a reduction in traffic volumes during peak times.

Comment on Italian water pollution and policy

This blog would focus on the water protection policy’s evolvement and reconstruction in Italy. In Italy, the water policy of Italy has a huge problem that it was highly fragmented in the last century. For different water related issue, different government department would be involved depends on the nature of the problem, such as issues of water exploitation, and water quality.

If we look back in history, the Italian water policy has three stages in different main time periods. And within different time period the Italian government has or had different porpese or different interest.

The first main period time is between 1865 to 1933 which was about land protection and population from water. However, there was a great degree of economic inefficiency for the first main time period of water policy in Italy. Since in the first main time period the government of Italy was focus on the land protection and the water pollution was somehow been ignored, thus there is a large chance of potential conflicts for all the government’s policies. Unfortunately, when the potential conflict rises, there was no regulation or rule that can deal with such problem. As the water pollution was not the focus of the government’s policy, there is a huge negative externality in the economy.

The second main time period was even more inefficient because of the complexity of the policy all over the state.  The second main time period was from 1933 to 1976, and the very main part of the policy was about the regulation of alternative uses of water, such as navigation, irrigation, productive or civil uses. The economic inefficiency here can rise because of the following reason:

1)      For navigation and irrigation, the requirement of water quantity was too low. As there is still some water, it can be applied for navigation and irrigation. Therefore, there must be a lot of action or emission which was source of the water pollution were not consider as water pollution the second main period of time.

2)      For the civil use of water, the coverage of water regulation was too anural, the large regime in Italy was not covered in the regulation, we can easily conclude that the policy was not economic efficient since the small coverage of regime. Another problem of the regulation of civil use of water is that as long as the regime as a efficient water purification system, any control or regulation of civil water usage was meaningless since no meter what the water was used for if can be purified after the usage.

3)      During the second main time period, there was a reconstruction happened for the Italian government, which is decentralization for each level of government, which was also effect the water protection and regulation.  As more level of governments are involved, the more inefficiency there will be for the Italian economy.

As the result of previous economic inefficient policy and government’s regulation, the Italian government, from 1976 to present time, developed a new system of water protection and regulation all over the country.  The new policy system was much more efficient economically for my point of view because it is not only focuses on the protection of water resources, but also for qualitative and a quantitative perspective.

1)      For water resources: as the new policy was focus on the water resources rather than the water usage, we can conclude that the coverage of such policy in the new time period should be much more higher than all other main time period in the post. For all others main time period in the Italian history last century, the focus of the water policy was always on the water usage, For instance, as we have mentioned above, in the second time period which is from 1933 to 1976, all government’s policies was on the civil water usage, and in such case the inefficiency comes from the low level of policy and regulation coverage. However, in the present main time period, we can see that the policy was focus on the water resource rather than water usage. Obviously, as the government put regulation and policy on the water resources within the country, all water in the country are under government’s regulation, as long as there was no water trade between Italy and other EU countries.

2)      The second reason that the new policy and regulation system can be considered as more economic efficient than others is that the new system focus on water quality and water quantity. Compare to the second main time period policy that we have mentioned above, that the government was focus on the alternative usage of water in the country, such as navigation, irrigation and production. However, it was not economic efficient to put too much attention on the alternative usage of water such as irrigation, since it will ignore the quality of water or, maybe a relatively low standard to the water inside the country. For the other part of the regulation, with is quantity, the government of Italy increase the economic efficiency since the previous policy and regulation on the water, such as regulation on production, did not considered the quantity of the water.

However, there are still some imperfect parts of the new policy, such as the complexity. The degree  of complexity is still very high for the new main time period which increased the economic inefficient

Commodity Classic in Florida Filling Up Fast

http://www.hoosieragtoday.com/index.php/2012/11/25/commodity-classic-in-florida-filling-up-fast/

Northern Ag Expo ready to launch its 42nd annual show

http://www.farmandranchguide.com/news/regional/northern-ag-expo-ready-to-launch-its-nd-annual-show/article_4c0e546e-3713-11e2-9537-0019bb2963f4.html

US drought worsens after weeks of improvement

http://trib.com/business/us-drought-worsens-after-weeks-of-improvement/article_23a09d5b-3bd4-5bad-8903-0862ead0a68d.html

The road ahead ( the 10th week)
I did not find too much interesting information for next week’s trade game, therefore, I would trade based on technical analysis, which means that I will analyze that market totally based on previses data until more information is released.
After the great drop, the soybean future market was increasing constantly. However, it may be just another “shoulder” before the “head”. In other words, there may be another drop in the short future. I wait until it shows, and long on soybean when it hit the bottom.
If there is any new information, I may also change my decision.

What went wrong in the 10th week.
After the great drop, the future commodity market was supported by news form India last week.
India’s 2012/13 soymeal exports are likely to remain almost unchanged from year-ago levels, despite a bigger crop, as farmers hold on to stocks hoping strong domestic demand will bring them better prices, industry officials said on Thursday. Despite a slow start to annual monsoon rains, India harvested a record 12.6 million tonnes of soybean in 2012, up 8.6 percent from 11.6 million a year ago.

Farmers in India, the world’s biggest vegetable oil importer and Asia’s leading oilmeal exporter, plant soybean in the rainy months of July and August. The harvest starts from October. Soybean prices are at about 3,300 rupees ($59.87) per 100 kg and many farmers believe rates will scale up to the previous year’s level of about 4,500 rupees

I have long on soybean for three contracts, and fortunately, my total balance increased to more than fifty thousand dollars by the end of this week.

European wheat edges up on export outlook

http://www.reuters.com/article/2012/11/19/markets-grain-europe-idUSL5E8MJB8O20121119

Grains futures higher – soy, wheat rebound from multi-month low

shttp://www.forexpros.com/news/commodities-news/grains-futures-higher—soy,-wheat-rebound-from-multi-month-lows-240877

Harvesting impact  of season’s drought

http://beaconnews.suntimes.com/news/16053434-418/harvesting-impact-of-seasons-drought.html

The road ahead (9th week)

To my prediction, that the soybean market will be supported by the strong fundamentals, with export demand sustained by limited competition. Moreover, after a big soybean-driven reduction, the low price market will be attractive for speculators again.

According to a French futures dealer, the market is in a bit of a wait-and-see mood, Last week was painful and people are waiting for the Chicago session this afternoon to see if the rise is confirmed

This week, I will use “technical analysis” that Andrew introduced to us to analyse the market, and I will pay more attention to the system. I find if I order a contract, it is possible that the pending contract will not go through the system and CAN be cancelled even after 30mints. I will confirm each order after 30mints (actually I start to do this last week).
I am holding short contract of soybean, I will offset them and I will hold a long position this week.

What went right in the 9th week

Last week, data suggesting that implied oil demand in China, the world’s second-largest oil consumer, grew 6.5 percent in October from a year earlier, which push up the price at November 13th However, commodity prices dropped even more pressure moving forward, with expectations for near-record supplies from South America by March.
Friday’s USDA report indicated that “the worst is over” for crop losses, said Tim Hannagan, a grain specialist for Alpari. He added that soy prices could resume their slide due to easing concerns about tight supplies, particularly if favorable weather promotes crop production in South America.
Few weeks ago farmers did not want to release their storage to hold the soybean price at a higher level, but when they start to sell their commodity, price will drop. I holed a short position last weekend and earned $8847

Argentina soy, corn sowing resumes under sunny skies

http://www.reuters.com/article/2012/11/05/argentina-grains-idUSL1E8M54B520121105

COMMODITIES-Thin trade on US election eve; oil up, copper down

http://www.reuters.com/article/2012/11/05/markets-commodities-idUSL1E8M5BL520121105

The road ahead (8th week)
Again, according to the USDA’s report, weekly export sales of soybeans were at their lowest point in 16 months. Net soybean export sales of 191,900 tonnes were well below forecasts for 600,000 to 800,000 tonnes and included a cancellation of 545,600 tonnes from an unknown country.

On the other hand, for wheat future, expectations of crops in places like Argentina and Australia is smaller. Australia’s wheat exports may shrink to 16.85 million tonnes, the lowest in three years. On the other hand, Asia’s top buyers, China, who rely on Australia for the bulk of their milling wheat supplies has to import from other suppliers.
Therefore, I will still hold a short passion for soybean. Since the wheat future market is not clear for next week ( it may be driven be the soybean and corn price) I will not hold any wheat contract.