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Ground-level ozone remains a serious problem in the United States. Because ozone nonattainment is a summer problem, episodic rather than continuous controls of ozone precursors are possible. We evaluate the costs and effectiveness of an episodic scheme that requires people to buy permits to drive on high-ozone days. We estimate the demand function for permits based on a survey of 1,300 households in the Washington, DC, metropolitan area. Assuming that all vehicle owners comply with the scheme, the permit program would reduce volatile organic compounds (VOCs) by 50 tons and nitrogen oxides (NOx) by 42 tons per Code Red day at a permit price of $75. Allowing for noncompliance by 15 percent of respondents reduces the effectiveness of the scheme to 39 tons of VOCs and 33 tons of NOx per day. The cost per ozone season of achieving these reductions is approximately $9million (2008 USD). This compares favorably with permanent methods of reducing VOCs that cost $645 per ton per year.

In the United States, 322 of the 675 counties that monitor ozone are currently in violation of the ground-level ozone standard. Nonattainment poses a serious public health problem because ozone has significant adverse effects on the respiratory system.

In “Getting Cars Off the Road: The Cost-Effectiveness of an Episodic Pollution Control Program,” authors Maureen L. Cropper, Yi Jiang, Anna Alberini, and Patrick Baur examine the cost and feasibility of a program requiring permits to drive on high-ozone days.  They find that this program is likely cheaper than programs to control ozone precursors year round.

Ozone is formed when oxides of nitrogen (NOx) and volatile organic compounds (VOCs) react in the atmosphere. High temperature and sunlight facilitate the process. As a result, peak ozone levels typically occur on hot, sunny days from May to September. Using the Washington Metropolitan Area as a model, the authors examine the feasibility and cost of issuing permits to drive on high-ozone days as a means of reducing NOx and VOCs.

The study suggests that a permit price of $75 per season would remove 34-44 percent of cars and light-duty trucks from the roads on high-ozone days, depending on compliance levels. Such a program would cost approximately $9 million per year, reducing VOCs by 38.6 tons each high-ozone day. To compare, EPA’s 2008 regulatory impact analysis of the ozone standard capped the cost of reducing VOCs at $5000 per ton.  This is equivalent to $70 million per year to reduce 38.6 tons of the pollutant year-round.

The study also finds that the episodic program is not regressive and could be progressive to the extent that poorer residents without cars will benefit from air-quality improvements while bearing no costs.