Who pays for excessive driving?

It's Bike Walk Bus Week here in Missoula once again, and it looks like we may finally be getting enough of a break from the snow to encourage folks to get outside. As usual, I plan my week around a strategy to acquire as much free goodies from local businesses as possible. Stop by Great Harvest Bakery tomorrow morning, sans the car, and I'll give you a cinnamon roll on the house.

Sunday's Green issue of the NY Times Magazine included an eye-opening article by the writers of Freakonomics on why driving is such a socially damaging thing to do, and how the economic incentives of driving are so screwy. Here are the costs they find for three major externalities of driving (externalities are costs of a certain action that are not payed by the individuals performing the action, and thus tend to not figure into the rational market decision):

1. Congestion: $78 billion a year
2. Carbon Emissions: $20 billion a year
3. Accidents: $220 billion a year

And I would add the major externality of land use adjustments, which are quite a bit harder to quantify. Think not only of all the space needed for roads and parking, but for the setbacks we require to remove ourselves from automobiles. And there are other forms of pollution such as noise and air that do not figure in.

Anyway, their final tally,

"So, with roughly three trillion miles driven each year producing more than $300 billion in externality costs, drivers should probably be taxed at least an extra 10 cents per mile if we want them to pay the full societal cost of their driving."

Yikes! We thought gas prices we getting bad as it is. We really should be paying $2 more per gallon at the pump!

The writers highlight one economic reform that wouldn't be a political mess. Auto insurance policies currently charge, more or less, the same price regardless of how many miles you drive. That's entirely unfair. Why should someone who uses the car once a week for groceries have to pay the same amount as a person who commutes two hours a day, when she is much less of a risk to the insurance company? Not pricing for amount of vehicle miles traveled amounts to a subsidy for heavy drivers and ultimately encourages bad behavior.

It turns out that Progressive is unleashing a new policy this month that tracks your car usage and charges you accordingly. Those who feel that their time in the car should be an entirely private matter may balk at this intrusion, but those of us who would rather spend our money elsewhere could greatly benefit from being offered a fair price for driving less. I hope this works.