Reinventing Transport

Here is an entertaining video explanation and exhortation on Pay-As-You-Drive (PAYD) insurance. Does your country, state or province have PAYD insurance yet? It was made by Cliff Caprani of British Columbia, Canada. See more context at the original site where there is a link to a petition for residents of BC. Hat tip: VTPI Newsletter, Summer 2010, by Todd Litman, one of the key experts on PAYD Insurance .

The US has started trials for distance-based charging mechanisms aimed at ultimately replacing the gasoline tax. Motorists in several US cities are being recruited to try out a new mileage-based road user charge system . The Public Policy Center of the University of Iowa is leading the trial. This is very good news (although I realise this trial is only the first step in a very long process with no gurantee of political success). Smart folks like Bern Grush and Robin Chase have been calling for usage-based pricing for a long time and pointing out that motor fuel taxes are gradually failing us. The Netherlands, Singapore and the UK apparently have plans for distance-based charging too. Germany and Switzerland already charge heavy vehicles based on distance and weight. There are spin-off opportunities here. I hope they don't get missed! It would be natural for people to be suspicious about having 'extras' that piggy-back on a new user charging system. But I think it would b...

The Freakonomics guys have just given Pay As You Drive (or PAYD) insurance some much-needed publicity. Also called 'distance-based insurance', this turns motor insurance payments, which are usually a fixed cost, into a variable cost. This makes it possible to save money by driving less. They write in their April 20 column in the New York Times Magazine . Imagine that Arthur and Zelda live in the same city and occupy the same insurance risk pool but that Arthur drives 30,000 miles a year while Zelda drives just 3,000. Under the current system, Zelda probably pays the same amount for insurance as Arthur. While some insurance companies do offer a small discount for driving less — usually based on self-reporting, which has an obvious shortcoming — U.S. auto insurance is generally an all-you-can-eat affair. Which means that the 27,000 more miles than Zelda that Arthur drives don’t cost him a penny, even as each mile produces externalities for everyone. It also means that low-mileage...