A comparative analysis of the effects of economic policy instruments in promoting environmentally sustainable transport Rune Elvik a,b,n , Farideh Ramjerdi a a Institute of Transport Economics, Gaustadalléen 21, NO-0349 Oslo, Norway b Traffic Research Group, Department of Civil Engineering, Sohngårdsholmsvej 57C, DK-9000 Aalborg, Denmark article info Keywords: Economic policy instrument Environmentally sustainable transport Elasticity Review Meta-analysis abstract This paper presents a comparative analysis of the effects of economic policy instruments in promoting environmentally sustainable transport. Promoting environmentally sustainable transport is defined as follows: (1) Reducing the volume of motorised travel; (2) Transferring travel to modes generating less external effects, and (3) Modifying road user behaviour in a way that will reduce external effects of transport. External effects include accidents, congestion, traffic noise and emissions to air. Four economic policy instruments are compared: (1) Prices of motor fuel; (2) Congestion charges; (3) Toll schemes; (4) Reward systems giving incentives to reduce driving or change driver behaviour. The effects of these policy instruments are stated in terms of elasticities. All four economic policy instruments have negative elasticities, which means that they do promote environmentally sustainable transport. Long-term elasticities tend to be larger than short term elasticities. The long-term elasticities of reward systems are unknown. & 2014 Elsevier Ltd. All rights reserved. 1. Introduction The question of how best is to promote environmentally sustainable transport has attracted considerable attention from researchers and a large number of studies have been conducted, see the overview by Santos et al. (2010a, 2010b). It seems clear that a combination of policy instruments is needed to promote envir- onmentally sustainable transport and that economic policy instru- ments could be an important part of a policy package. There is, however, a range of economic policy instruments, and it is not clear which of these instruments is the most effective or cost-effective. The objective of this paper is to compare the effectiveness of economic policy instruments in promoting environmentally sus- tainable transport. A review is made of empirical studies of the effects of economic policy instruments. The cost-effectiveness of economic policy instruments is not discussed in this paper. Before presenting the review, some key concepts are briefly discussed. 2. Key concepts of the study The key concepts of this study are environmentally sustainable transport, economic policy instruments and effects of economic policy instruments. In this paper, promoting environmentally sustainable transport is defined as obtaining one or more of the following effects: 1. A reduction of the volume of travel performed by means of motor vehicles, in particular motor vehicles powered by fossil fuels. 2. A shift in the modal split of travel in favour of modes that consume less non-renewable energy and/or produce less external effects per person kilometre of travel. 3. Changes in travel behaviour, in particular road user behaviour, that reduce the external effects of transport. External effects of transport include accidents, congestion, traffic noise and emissions to air. Emissions include both green- house gases and local pollutants. While shifting from motorised travel to walking or cycling is sometimes held out as a paradigmatic example of the promotion of sustainable transport (see, for example, the papers collected in Greaves and Garrard (2012)), it is clear that the external effects of road transport may vary substantially within a given mode of transport. Fig. 1 shows how emissions from cars depend on speed (OECD, 2006). A minimum is reached when speed is around 70 km/h. This means that both measures that reduce congestion, when the speed of traffic is typically around 10–30 km/h, and measures that reduce Contents lists available at ScienceDirect journal homepage: www.elsevier.com/locate/tranpol Transport Policy http://dx.doi.org/10.1016/j.tranpol.2014.02.025 0967-070X/& 2014 Elsevier Ltd. All rights reserved. n Corresponding author. E-mail addresses: re@toi.no (R. Elvik), fra@toi.no (F. Ramjerdi). Transport Policy 33 (2014) 89–95