Phasing Out Polluting Motorcycles in Bangkok : Policy Design by Using Contingent Valuation Surveys

Xie, Shah, Capannelli and Wang use a contingent valuation method to study the design of economic incentives to phase out polluting motorcycles in Bangkok. Like in many other cities, the government of Bangkok has been considering a series of control measures to discourage and eventually eliminate the use of heavily polluting motorcycles. Two of the possible policy instruments under consideration are charges on those polluting vehicles which are operating in the streets and compensation to those polluting vehicles which would stay off the roads. The policy research questions then include (1) what are the charges implied or compensation provided, given a policy target, and (2) what are the reactions of motorcycle owners to those charges or compensation. To answer those policy questions, the authors conducted a stochastic contingent valuation survey in Bangkok to question motorcycle owners on the likelihood they would keep or give up riding their motorcycles in the streets given certain charges or compensations. Results show that among others, about 80 percent of those motorcycles which did not pass the emission tests would be off the streets if a charge of 1,000 baht a year was levied, while under a one-time compensation of 10,000 baht, the number would be about 50 percent. The authors also estimate the average values of maximum willingness to pay (WTP) for staying on the road and minimum willingness to accept (WTA) compensation for staying off the street, and analyze the determinants of WTP and WTA. Their econometric analysis shows that, among other factors, household income, fuel costs, use of motorcycles, and/or public transit affect the value of WTP and WTA.This paper - a product of Infrastructure and Environment, Development Research Group - is part of a larger effort in the group to study environmental policy issues in developing countries