2016/11/29 by Lucas W. Davis
Energy · Engineering · Environmental Science · #Energy, Environment, and Transportation Policies #Environmental Impact and Sustainability #Vehicle emissions and performance
paper · doi:10.5547/01956574.38.si1.ldav
openalex publication_date 2016/11/29 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/30
ABSTRACT Despite increasing calls for reform many countries continue to provide subsidies for gasoline and diesel. This paper quantifies the external costs from global fuel subsidies using the latest available data and estimates from the World Bank and International Monetary Fund. Under preferred assumptions about supply and demand elasticities, current subsidies cause 44 billion in external costs annually. This includes 8 billion from carbon dioxide emissions, 7 billion from local pollutants, 12 billion from traffic congestion, and 17 billion from accidents. These external costs are in addition to conventional deadweight loss, estimated to be 26 billion annually. Government incentives for alternative fuel vehicles are unlikely to cost-effectively reduce these externalities as they do little to address traffic congestion or accidents and only indirectly address carbon dioxide and local pollutants.