The Studded Tire Regulation Law of 1990 prohibits the use of studded tires in the environs of Sapporo, Japan. Prior to 1990, the tires were popular with travelers in this cold and snowy region. However, environmental concerns regarding increased dust pollution caused lawmakers to pass a prohibition against them. The following analysis compares the benefits and costs resulting from implementation of the law over the last ten years.
Starting in the early 1960's, motorists began using studded tires for safer travel under snowy conditions. The tires were an important safety element in the transportation system in this region. However, after about 20 years dust pollution caused by these studded tires became an environmental problem. The Studded Tire Regulation Law of 1990, enacted to eliminate dust pollution caused by studded tires in this area, primarily benefits residents living in this region.
The benefit-cost analysis of this policy decision can both assess the effects of this law in this region as well as help determine whether to enact similar laws in other regions.
The Studded Tire Regulation Law of 1990 was enacted by the government for the purpose of reducing pollution. However, the agency is interested in learning what additional effects the regulation might have.
The base case used in this analysis is a time period before the law was passed, when studded tires were still used by motorists in Sapporo.
The alternative in this case is a time period after the law was passed.
For this analysis the (b-c) benefit costs analysis method was used.
This study covers six cities, one town, and three villages, including Sapporo, in the Ishikari area where the law was enacted.
The time period for the analysis of the base case (before the law) is from 1989 to 1991. The time period for the alternative case is from 1992 to 1998.
Travel times increased on roads in this region during the period after the law's enactment, because vehicles traveled more slowly on the slippery roads. Speeds reduced from 39.0 km/h to 32.8 km/h. The cost of lost travel time was calculated at $92,773,690 a year. Fuel costs for motorists also increased by $669,439 a year. The cost of tires increased for motorists as well. Studded tires cost about $108 and have a lifetime of about 50,000 km, while studless tires cost about $83—but the lifetime is only about 20,000 km. The annual increase in the cost of tires was calculated at $46,803,791.
Banning studded tires increased the danger of traveling on slippery roads around Sapporo. Collisions increased after the law, with rear-end accidents increasing most. This led to an estimated cost of collisions of $5,725,364 per year.
NOx emissions were expected to increase on slippery, congested roads due to slower travel speeds, and they did, by $401,438.
Noise reduction was a benefit of the law. Vehicles using studded tires on exposed asphalt create a significant amount of noise. The value of noise reduction was estimated to be $3,718,282.
The primary reason for passing the law was to decrease the amount of dust pollution in the area. Researchers distributed questionnaires to households located in three Sapporo neighborhoods. The contingent valuation method was applied to establish an estimated willingness to pay (WTP) for environmental improvements due to dust reduction. The report considered only the environmental impacts of the decrease in dust, excluding affects on human health. Researchers then multiplied the estimated WTP ($2.70 per household) by the number of households in Ishikari. Through this method, an estimated benefit of $12,175,000 was calculated.
Changes in road maintenance costs were the primary cost factors considered in this study. Studded tires cause more damage to roadways, so the cost to resurface roads decreased after the law was enacted. However, spending on anti-icing measures increased at the same time. The benefit from resurfacing was calculated to be $1,258,000. The cost of anti-icing measures was calculated to be $8,183,000.
The ban on studded tires both reduced benefits and increased costs.
B-C = -$130.2 – $6.9 = -$137.1 Million/year
No sensitivity analysis was performed.
This report provides a thorough benefit-cost analysis of a policy decision. Because the policy was instituted in the past, this analysis considers observed outcome, rather than anticipated outcome. This information could be valuable for decision makers faced with a similar issue in a different region. Also, it provides an assessment of the outcomes of the regulation in this region. A sensitivity analysis could have been used to determine how the results would have differed with a different value of time, different accident values, different pollution values, and different noise pollution values.
The report only conidered the environmental benefits of reducing dust pollution and excluded the health benefits. However, if reducing dust did bring about real health benefits, an attempt should be made to quantify this affect. In addition, the report assumed dust pollution to be a local problem with little or no affect on air quality elsewhere. If this is not the case, the benefits to those living outside the study area should also be estimated.
Researchers found the net benefits attributed to the law to be negative and the costs to be positive, leading to a negative benefit-cost figure. This does not mean that the regulation should be abandoned. Instead, the calculations simply outline the estimated benefits and costs attributed to the regulation; one possible conclusion to make could be that future maintenance and/or transportation policies need improvement. In reality, the distribution of benefits and costs may carry greater importance politically than the net benefits and costs to society.
Asano, M., S. Tanabe, F. Hara, and S. Yokoyama. "Economic Evaluation of Banning Studded Tires Because of Environmental Impact." Transportation Research Record: Journal of the Transportation Research Board, No. 1794, TRB, National Research Council, Washington D.C., 2002, pp. 84-93.
Case Studies >