Hybrid Cars and HOV Lanes

From 2005 to early 2007, California issued 85,000 Clean Air stickers that allowed three models of hybrid cars to avoid congestion by driving on High Occupancy Vehicle (HOV or ‘carpool’) lanes with a single occupant. From data on used car prices, the authors estimate the willingness-to-pay for one of these Clean Air stickers is around $1,460 per sticker per year, or $442 million for all 85,000 stickers. The high value of a Clean Air sticker, and the comparatively small public benefits of the program suggest that the program was not economically justified once opportunity costs were taken into account. Instead the program amounted to an inefficient giveaway to a limited number of hybrid car enthusiasts. A program where HOV lane space is sold or auctioned to raise funds for transportation improvements and air pollution mitigation problems would increase efficiency and equity in comparison to the provision of HOV rights to hybrid vehicles.