Development does not necessarily mean “Greener”: A reflection from an emergent country’s experience

This essay refers to The Economist’s blog about reducing carbon emissions titled “Can fuel-economy standards save the climate”.

I would point out that before taking serious steps towards an adoption of either a tax on fuel or continuing with fuel-economy standards, countries attempting to implement them should look at the experiences of some other countries which have already a tax on fuel policy. For instance, Colombia has set up a formula to estimating the right fuel price every month. The prices are adjusted, among other factors, to international market prices fluctuations and two taxes corresponding to territorial and national contributions. All of these impositive instruments perform a social role by which public infrastructure, healthcare and education needs are met.

Nonetheless, current transportation patterns in the country under these circumstances do not show any indicative towards greener consumption. The latter happens because the policy works for a different incentive. The gasoline price in Colombia is one of the highest in America for a productor – adjusted PPP prices -. However the tax is regressive, the occasional strikes, the bargaining power of unions and the legislative push at Congress for more realistic solutions, every person that owns a car pays the regular price. The government controls the price setting, thus leading to a normalization of this policy. As a result, the incentives for people to get more electric or low fuel-consumption cars are negated by this distortive loophole.

There are several another reasons as to determine why people would be reluctant to cut down on their fuel consumption.

The first one is that most emerging economies do not have fuel-economy standards framework to be based on, that is why people owning a car, are unaware of and pretty much why they do not care about. Likewise, lower amount of people owns a car related to per capita terms in developed economies. Right here, although the interest rates to buy a car are lower than past times, the gasoline price keeps people away from buying a car as the burden is quite high if they are not well-to-do people or have a good job. Currently the price, which should have been much lower than what it is, has not generated more cars sales, though.

On the other hand, undetermined quantities of the car stock available in Colombia either are used cars or constitute old models that use a combination of polluted agents (byproducts). Whereas, having a car in Colombia is still perceived as an upper-media class dream that grants status, in developed economies is a normal regulated good into the familiar basket, as the industry’s surpluses and used cars rotation, overcome the individual demands. Colombia is merely an autopart outsourcer for relative lower demand targets.

The second reason is tied to the latter one. Given this situation, the majority of people owning a car overestimate the fact of, actually, having a car to commute (drive) to their workplaces over the prevailing thought of choosing a greener car. To top it off, purchasing a greener car is not properly cheaper than middle-income models.

Altogether, the main takeaway it can be drawn from is that in some places, development doesn’t necessarily mean greener or sustainability when it comes to speaking of transportation. It means subjectively “well-being” regardless whether they pollute or not. Neither needless to get down into the particular dynamics of inter-regional commerce that moves through our roads to know that there is a shortage of fuel-saving vehicles for heavy cargo. Also, the tolls charged on them in the roads have increased above the limits the business sector can afford.

Emerging economies are made of many and unknown of these contradictions, curbing the impact of well-intentioned public policy aiming to tackling all-kind failures. Yet, government interventions regarding decarbonisation instruments have a long way to go through. If government were to levy a fuel tax, it’d certainly enhance the tax revenue so it can invest more in infrastructure, however, in a country where the first priority is not the environment, social unrest would prevail.

Instead of imposing an onerous tax on households (cars), should the government think how to shorten the gaps making accessible for the majority of population acquiring greener vehicles, raising awareness of other pollutants such the Nitrous Oxide (NO2), while desincentivizing the fuel guzzlers cars production, strengthening fuel economy regulations over heavier cars and stimulating the bike use to work.

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