Transport, Welfare and Externalities
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Transport, Welfare and Externalities

Replacing the Polluter Pays Principle with the Cheapest Cost Avoider Principle

  • New Horizons in Law and Economics series

Dieter Schmidtchen, Christian Koboldt, Jenny Helstroffer, Birgit Will, Georg Haas and Stefan Witte

This book discusses a paradigm shift for dealing with the internalization of external costs in transport. Crucial to the analysis is the insight that the polluters are not the only cost drivers; both pollutees and the state can also contribute to reducing social costs. The authors show that applying the Cheapest Cost Avoider Principle (CCAP) instead of the Polluter Pays Principle (PPP) can lead to substantial welfare improvements.
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Chapter 7: Case Studies

Dieter Schmidtchen, Christian Koboldt, Jenny Helstroffer, Birgit Will, Georg Haas and Stefan Witte

Extract

7. Case studies In this chapter we will apply the CCAP to two real world cases: the question of the construction of the missing part of the highway A44 near Kassel in Germany, and the problem of the sectoral limiting of the use of the Inn Valley highway in Austria. These case studies, although sketchy, show that it is possible to apply the CCAP to such real world cases, that a clear answer can be obtained and that judicial decisions are based on the same methodology. In the first of these case studies, which we will call the A44 case, there exist plans for the highway A44 connecting Dortmund to Kassel to be extended in the direction Erfurt, Chemnitz and Dresden, via Eisenach. However, except for a small section, these plans have never been realized. Instead, there is a direct road B7 between Kassel and Eisenach along the route of the planned highway. This route is closed to trucks, who are obliged to drive a detour of 42 kilometers via the highways A7 and A4. In what follows we will sketch a regulatory impact assessment in order to determine whether this is efficient, or whether it would be better for trucks to use the B7 or to build the missing highway link between Kassel and Eisenach. The second case concerns the prohibition of a 46 kilometer long section of the Inn Valley highway for trucks transporting goods belonging to a number of sectors. Following the decision of the European Court...

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