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Financial Incentives for Reducing Vehicle Miles Traveled in Wisconsin

Rather than spend $7.3 billion on highway capacity expansion over the next 20 years, the State of Wisconsin could establish a program that provides financial incentives to Wisconsin households who voluntarily limit their motor vehicle travel in a year. The source of funding for the financial incentives program would be the portion of the gas taxes and annual vehicle license fees that would have otherwise been paid for the $7.3 billion worth of new highways. Since the projected number of vehicles operating on the highway system will have been reduced by less driving, the need for building more capacity into the highway system will have been effectively eliminated, making it possible to return those funds to the public.
Following is an example of how the VMT reduction plan would work:

A family of four with two drivers8 voluntarily enrolls in the program by driving its car(s) into the local Department of Motor Vehicles office, paying $30 in administrative fees, and getting the mileage on their vehicle’s odometer(s) officially recorded. Alternatively, DOT offices could be staffed with employees or volunteers who would travel to neighborhoods to officially record the participating households’ vehicle(s) odometer mileage. [Technology also is now available, patented through the auto insurance industry, that enables vehicle mileage of many vehicles to be monitored, and recorded, from a central location. This would eliminate the need for manual checking of vehicle odometers.]
After a year goes by, (based on participant’s day of choice), the participant(s) would receive a $400 check if the participant’s odometer(s) showed less than 13,500 miles for the preceding year (Table 3). If the family participant managed to lower the household vehicle mileage traveled to 9,000 miles over the year, they would earn $1,200.
The fewer miles the family drives in a year, the more money it could earn as a reward for “driving less” for that year. Households not owning or driving personally registered cars would be eligible to receive a maximum of $2,800 for that year, as a payment, (or reward), for not contributing to the financial, social, or environmental costs of automobile driving borne by everybody.
Methodology for Calculating Financial Incentives for Reducing Total VMT
The methodology used for computing the financial incentives for low annual VMT is as follows:
Total Household Mileage Threshold/Year
= x + Dx + Px
Where x = 1,000 (1…6) household vehicle(s) miles;

D = Number of Additional Drivers (.75)9

P = Number of Persons in Household (.25)10

A 25% reduction in vehicular travel is postulated with full implementation of the plan, at a cost of $810 million a year. Using an average reward of $400 for each Wisconsin household each year: $400 X 2,026,000 HH (Wisconsin Bureau of Energy, 1999) = $810,400,000.
After 10 years of awarding the financial incentives, the program could be ended, since the behavioral change resulting in reduced driving will have become permanent, eliminating the need to continue offering the incentives11. If their was a need to continue the program after 10 years, to maintain the financial incentives program for reduced driving, a supplemental tax on the price of gasoline could be levied to continue with the funding on the program.
By offering financial incentives to households who record low annual motor vehicle miles traveled in a year, this transportation alternative would encourage people to make more informed choices about where to live relative to where they need to travel. When they do need to travel, the financial incentives would encourage them to choose more environmentally friendly means of travel (bicycling, walking, taking a bus, carpooling), over driving environmentally harmful and greenhouse gas emitting automobiles. Table 4 lists other ways to reduce vehicular travel on public highways. Table 5 provides the corresponding modal energy efficiencies relative to automobile transportation.
Increases in Air Travel
At an international aviation conference held recently in Chicago, United Airlines chief James Goodwin was reported (Associated Press, 1999) as saying the projected increases in air traffic in the U.S. are “frightening”, and that “the skies are crowded and getting more so every day”. According to the report, Goodwin warned, “the global skies are teeming with so many planes that the entire airline industry is near crisis”.
The U.S. DOT Bureau of Transportation Statistics’ data shows U.S. enplanements on scheduled domestic flights increased from 297 million emplanements, in 1980, to 634 million in 1999 (a 114 percent increase). The U.S. Census Bureau reports the U.S. population increased 21 percent from 1980-1999, from 226 million to 274 million; therefore, the effective airline emplanement increase, exclusive of population increases from 1980 to 1999, was 93%. This means the average U.S. citizen today flies twice as many times a year as the average U.S. citizen did in 1980.

The U.S. commercial airline industry burned 10.7 billion gallons of fuel in domestic and international operations in 1979 (@ $.58/gal). By 1999, the industry burned 19.6 billion gallons (@$.53/gal), an increase of 83 percent over the amount of fuel burned in 1979. The effective increase in gallons of fuel burned in airlines from 1979 to 1999 was 62 percent.
In servicing the increasing number Americans who chose to travel by airplane in 1999, American airplanes discharged 215.6 million tons of carbon dioxide to the Earth’s atmosphere12.
Methodology for Calculating Financial Incentives for Reducing AMT
The methodology used for computing the financial incentives for low annual airplane miles traveled (AMT) is as follows:
Airplane Mileage Threshold/Year/Person
= y
Where y = 100 (1…6) miles flown in an airplane
A schedule for providing financial incentives for encouraging U.S. citizens to fly less is provided in Table 6.
The reward threshold is not increased for families having more than 5 persons.
No exclusions would be allowed for business trip mileage. This would provide added incentives for business to minimize employee air travel requirements.
How the program would work:
Any person over 18 years of age who chooses to enroll in the AMT reduction rewards program would need to file a one-time application with the Federal Aviation Administration (FAA), along with a nominal administrative fee. That person would then be registered for the program for life, and therefore eligible for annual rewards each year that he or she commercially flies less than the amount of threshold miles specified in Table 6.
The FAA would require that each commercial airline document the annual mileage flown by all registered AMT participants using its service. Each airline service would be required to prepare and forward individual mileage summaries for each registered AMT participant to the FAA by the end of the calendar year. The FAA would summarize the total annual miles flown for each AMT participant and issue the incentive payments based on the amounts specified in Table 6.
Funding for AVT Reduction Incentives
Some of the money to fund the financial incentives would be available from the money saved by not having to build additional airport runways, taxiways, terminals, and to employ additional airport personal to service the otherwise projected increases in the number of flights. Environmental savings would result from reduced greenhouse gas emissions, reduced air pollution, reduced noise, less air traffic congestion, and less wildlife habitat and farmland loses from airport expansion projects.
The remainder of the funds would be provided from federal taxes levied on the price of aviation fuel, as a fixed percentage of each gallon of aviation fuel combusted, in commercial and non commercial aircraft (excluding only military aircraft). If one dollar in tax were charged for each gallon of aviation fuel used by airlines in the U.S., this would generate $20 billion to help fund the program.
Congress recently authorized nearly $10 billion for airport infrastructure development over the next 3 years (GAO, 2000). This amount, coupled with the $20 billion in fuel tax revenues over the next 3 years would be enough money to provide financial incentives of an average of $1,000 per year for 23,000,000 adults in the U.S., or more than 11% of the country’s total adult population.
Currently, aviation fuel is purchased and combusted by the airline industry to power its planes, tax-free.
Financial Incentives for Encouraging Household Energy Conservation

Just as positive incentives can be used to encourage reduced fossil fuel burning dependent automobile and airplane travel, so too can positive financial incentives encourage reduced energy use in homes. Utilities could offer financial incentives to encourage people to use less energy in heating, cooling and lighting their homes, and for minimizing uses of other forms of electricity in their daily lives. This would reduce cumulative power demands, reducing the need to build more power plants, transmission lines, fuel lines and other expenditures and environmental costs associated with increased capacity demands.
Depending on the amount of the reductions, significant cutbacks in global greenhouse gas emissions might be possible from power plants that burn fossil fuel for electricity, or from other utilities that distribute fuel and natural gas for direct burning in household furnaces.
Wisconsin’s per capita (per individual) resource energy consumption in homes in 1998 was 404 therms (Table 7). A 4-person household in Wisconsin uses, on average, 1,600 therms of energy in the home for heating and electrical conveniences (4 X 400 therms).
Financial incentives for encouraging energy conservation in homes would work similar to the systems used for encouraging people to reduce their driving and flying. That is, households using low per family size annual energy amounts could be eligible to receive monetary returns at the end of the year for conserving energy (Table 8).
Methodology for Calculating Financial Incentives for Reducing Total Energy Use
The methodology used for computing the incentives for low energy use is as follows:
Total Household Energy Use Threshold/Year
= z + Rz
Where z = 100 (1…6) therms
R = Number of Additional Residents X .25
No additional credit is provided for more than 5 person residing in the household, and the enrolled persons must occupy the home at least 90 percent of the total number of days in the proposed year of enrollment.
There are many things homeowners and renters could do to improve energy efficiencies in their homes and reduce overall fuel and electricity consumption.
Appendix B identifies some ways to reduce energy use in the home and recreation activities that burn fossil fuels that should be avoided.
The state could also subsidize consumer’s purchase of energy efficient compact flourescents. At least one consumer still uses some of the less energy efficient condescends simply because the initial purchase price of compact flourescents is several times as costly as the less energy efficient alternatives.
Funding for Low Home Energy Use Incentives
Assuming 25% of reductions in energy use could be achieved without cost to the economy (DeCanio, 1997), the amount of money that would be needed on an annual basis for this household energy conservation measure would be the same as that required for the VMT reduction incentives ($810 million, annually).
The money to fund the financial incentives would be available from the money saved by not having to build additional power plants, transmission lines and power stations in the future, money that therefore becomes available because of the reduced energy demands.
For example, Wisconsin Energy Corporation has proposed to spend $6 billion to build three new power plants in Wisconsin and upgrade other WEC power generation facilities to accommodate projected public demands for more power. The plans call for a new power plants in Port Washington (gas-fired); Oak Creek (coal-fired) and another coal-fired plant in an undetermined location in Wisconsin.

As to the nation as a whole, USA TODAY (article by Fred Bayles, 9/11/00), following their review of utility industry projections, suggests the cost of building new power facilities to meet growing demands will approach $80 billion during the next two decades. That amount would fund an annual average financial incentive of $155 per year for 25% per cent of U.S. households13, who might be expected to apply for the low energy use financial incentives (by such measures listed in Appendix B.)
Additional non-monetary environmental savings would result from reduced greenhouse gas emissions, reduced air pollution, less wildlife habitat and farmland loss from building more power plants and transmission lines in those areas, and reduced discharges of excess cooling water, since less cooling water would be needed for reduced energy generation.
An additional method of funding financial incentives for environmental conservation, which would itself help reduce greenhouse gas emissions, would be the adoption of a “transportation tax” on raw materials and products requiring transportation over a certain distance. This would lead to reductions in the amount of energy used in transporting products.
The U.S. Department of Transportation (U.S. DOT) should be given the authority to collect a "transportation tax" on all raw materials and products sold in the United States, that are transported over 50 miles, whether the transportation is via land, water or air. The tax would be applicable to all raw materials, intermediary and final goods commercially transported over 50 miles, at a cost of 10 cents per item, 10 cents per pound weight, or 10 cents per cubic foot, whichever unit amount is higher. The total transportation tax for a shipment would thus be the sum of the applicable per unit tax of the products that are shipped, multiplied by the number of miles the products are shipped (from origin to destination).
The USDOT would collect the money in this program and place it into a "transportation tax fund" (TTF). The money that accumulates into the TTF would be used to provide financial incentives to the public to reduce driving, flying and energy consumed in homes.
Other sources federal surpluses available should be used for this purpose as well, since the beneficiary of conserving energy and reducing greenhouse gas and other emissions will spread to all U. S. citizens, and the U.S. economic system should provide higher rewards for environmentally conscientious decisions than is now provided14.
Major new highway, airport and power plant investments require billions of public dollars to build, their construction causes major and significant environmental disruption, and their end uses create significant air pollution, greenhouse gas emissions and other adverse environmental consequences. Government has the responsibility to protect and uphold the general welfare of its citizenry. Ensuring positive financial incentives are provided to the public, to discourage overuse of highways, air space and energy resources, and thereby to reduce the need to build new highways, airports and power generating infrastructure, is an appropriate and worthwhile function of government.
Continuing to burn vast quantities of fossil fuels (coal, oil, gasoline) on Earth for energy is increasing average global temperatures due to the greenhouse effect. Studies show Earth’s air, land and water temperatures are rising, at rates some scientists say are alarming, greatly exceeding the more conservative predictions made only a few years ago.
Many scientists throughout the world are saying it is urgent that worldwide actions be undertaken, immediately, to curb, and reduce (some say by 80%!), the increasing quantities of greenhouse gas emissions. Moreover, many scientists concede the potential for worldwide cataclysmic calamity related to global warming is possible, not just in eons, but in centuries and perhaps even decades!
To this call for urgency, the global warming “skeptics” continue to demand proof. Before the skeptics (who’s numbers are dwindling rapidly) agree fossil fuel burning should be cut, they want to see proof global warming is occurring, that fossil fuel burning is the main cause of it, and that the costs of increasing global warming exceed the costs of slowing it down.
Scientists claim the buffering characteristics of Earth’s natural resources (cool oceans and permafrost store carbon), which have historically kept Earth’s atmospheric gases in check, could ultimately become unbalanced by global warming15, increasing the potential for a “runaway greenhouse effect” to occur on Earth.

If a runaway greenhouse effect got started on Earth, Earth’s surface temperatures could increase dramatically. Grinspoon (1997) speculates this could have been what happened to Earth’s twin planet, Venus, which now has an average surface temperature of 864 degrees, Fahrenheit (water boils at 212 degrees F.; steak broils at 550 degrees F.).
Grinspoon claims the temperature on Venus is much higher than it should be, relative to the planet’s mass and distance from the Sun, and that the reason for the hotness is that Venus experienced a runaway greenhouse effect early in its existence16:
“That brings us to the question of water. Evolutionary models suggest that if Venus started out with an ocean of water, it could have been lost early in the planet’s history by a “runaway greenhouse effect”. Water vapor is a powerful infrared absorber. A little water in the air can heat things up a lot. But in the presence of liquid water, if the air gets hotter, more water will evaporate. This creates the possibility of a powerful positive feedback loop: evaporating water increases the greenhouse effect17, making the atmosphere so hot that more water evaporates, and so on. Any physical system like that, dominated by positive feedback, is inherently unstable. Once it gets going, there is no stopping it. Venus may have had oceans that simply boiled away, leaving large amounts of water vapor high in the atmosphere where solar ultraviolet radiation split up the molecules, allowing the hydrogen to escape into space” (pg. 149)18.
A Call for Action
When it comes to the long-term sustainability of our planet, it’s much better to be conservatively safe, than deeply sorry. Being “deeply sorry”, when Earth’s populous might have done something to change a final negative outcome is not only being insincere, but even worse: unconcerned and callous.
Necessity now demands everyone accept responsibility for making energy conserving sacrifices, right away. Greenhouse gases accumulate in the Earth’s atmosphere, over time. Therefore, they remain in the Earth’s atmosphere long after the time of their release, warming the planet for those who had nothing to do with their release.
Due to recent (since mid 19th century) and an ever increasing reliance on fossil fuel burning by humans, the Earth’s atmosphere has become more saturated with carbon dioxide and other greenhouse gases. The concentration of CO2 in the Earth’s atmosphere has gone from a preindustrial level of 280 parts per million (ppm) to a present day level of 365 ppm+ (and increase of 30%+ over preindustrial levels). The current concentration level of CO2 in the atmosphere is already outside the bounds of natural variability seen in the climate record of the last 160,000 years. “If the world proceeds on a “business as usual” path, atmospheric CO2 concentrations will likely become more than 700 PPM (an increase of 150% over preindustrial levels) by 2100, and they will still be rising.” (Executive Office of the President, 1997).
The balance between the Earth’s greenhouse and non-greenhouse gas concentrations has clearly been thrown out of kilter in the last 150 years. This imbalance is likely to grow significantly larger over time. Even in the very unlikely event that increases in greenhouse gas emissions from human activity cease, the concentration levels of greenhouse gases in the atmosphere will continue to increase, since there remains no other place for them to go.
And, now, with the world’s population having doubled since 1960, and expected to increase to 9 billion (by 2054 - Table 14), the potential for reducing - let alone slowing - annual global greenhouse gas emissions, and therefore global warming, has become exceedingly difficult.
Scientists the world over are now claiming, with increasingly serious overtones, that major and significant worldwide action must be initiated, now, to reduce the volumes of greenhouse gases being injected into the Earth’s atmosphere. To do so will require a dramatic and abrupt change in humankind reliance on fossil fuel burning.
To be unresponsive to the now almost unanimous scientific community call for immediate (not 15 years from now), and drastic (not just slowing the rate of increase) is not prudent. For the world’s population to dramatically increase fossil fuel burning and greenhouse gas emissions, with minimal attempts being made to conserve energy in travel, recreational and home energy use, is tantamount to global genocide.

In conclusion, the time is now already overripe to drastically cut energy use in homes, cars, planes, trains and trucks. This paper offers an approach to accomplishing that, devoid of instituting regulatory controls over people’s everyday lives.
Governmental officials should, without delay, create programs that offer financial incentives to the public to encourage environmental conservation and minimize greenhouse gas emissions. Nonessential and all recreational uses of energy derived from the combustion of fossil fuels should be greatly reduced, starting immediately, so that the Earth’s environment continues to remain habitable, indefinitely, by all forms of life.

I wish to credit my brother, Patrick J. Neuman, for his careful review of this paper throughout its many iterations of development, and to thank him for his personal support as well, without of which this paper would not have been completed.
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