Thursday, January 10, 2008

Add 40% more cars and...pray

Today, Tata Motors unveiled the cheapest car in the world: the Tata Nano, priced at $2,500 and in dealerships by year end. It is touted as the People’s Car, and opens up the option of personal car mobility for a huge new population segment. It was unveiled to the theme music of “2001: a Space Odyssey.”

And what does this future hold? An environmental and urban disaster.

The new Nano will add enormously to the numbers of underpriced and therefore overconsumed cars on our planet. The price of the Nano, to individuals and to society, is a heck of a lot more than $2500.

We can think of the cost of a car has having three components (and yes, for those life cycle sticklers, I'm simplifying by ignoring the horrors associated with manufacturing and disposal for this post):

THE CAR: purchase, depreciation, maintenance. In the US, that is about $8k a year. While I imagine maintenance to be significantly cheaper in India than here, I am sure it will be the same unanticipated and underappreciated cost it is here. Americans currently spend 18 percent of their household budgets on their cars, how sad it is to contemplate the effects of that percent of income being taken out of the wages of low-income Indians. And because of the size of these unplanned for maintenance needs, I can also easily imagine that many of these cars will end up very poorly maintained, much like the ubiquitous auto rickshaws that flood Asian cities and are some of the dirtiest vehicles around.

CAR STORAGE: People typically park their cars for “free,” even in dense urban areas where the value of street and sidewalk space is high. This free is dramatically undervalued to the other users of this public space. Just as we saw beautiful squares in European villages being turned into parking lots, and acres and acres of land in American suburbia being paved to accommodate the one peak day a year at the mall, so too we can anticipate that every single possible space in Indian cities, in Indian poor neighborhoods, in Indian village squares, on what few sidewalks there were, will soon be filled with beautiful shiny Nanos. I can see the crowded sidewalk clearing for the Nano that pulls in and parks. The driver walks away and the crowd of pedestrians is left with less space. Gone will be places to play, places for markets, places to walk in narrow old neighborhood streets.

CAR DRIVING: Most people think that the cost of driving is just the cost of gas. In the US, this amounts to about 7% of the total costs that we account for and actually do pay. In India, one can imagine that fuel costs will feel like a heavier burden to those driving the Nanos. But the costs of gas are just a very tiny part of the whole. As we have seen from the wave of cities exploring congestion pricing (unfortunately no Indian cities). Congested roads, jammed past capacity already, will become gridlocked. The scooter that has a family of four on it, will be replaced by the safer-for-the-family Nano that occupies four times the amount of space.

What is to be done? Is it fair to deprive lower-income people the opportunity to travel more conveniently and more safely? No. But we need to make every driver pay the real costs of using a car. Those real costs include market prices for storage; road taxes high enough to adequately maintain them once they’ve been built; congestion pricing as appropriate, and carbon taxes on emissions. More details can be found in my other posting on this subject.

Once driving personal cars becomes appropriately priced, we choose to use them == rather than other modes of travel -- when they are the best value for our need.

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