The effect of transport policies on car use: Evidence from Latin American cities

• We study the effects of a driving restriction policy and public transport reform.
• In both cases, household responded with more cars on the road.
• The adjustment in the stock of vehicles was similarly fast, within a year.
• The effect of the policies varied widely across income groups.
• A driving restriction can still be effective in the short-run, say, first two months.

In an effort to reduce air pollution and congestion, Latin American cities have experimented with different policies to persuade drivers to give up their cars in favor of public transport. This paper looks at two of such policies: the driving restriction program introduced in Mexico City in November of 1989—Hoy-No-Circula (HNC)—and the public transport reform carried out in Santiago in February of 2007—Transantiago (TS). Based on hourly concentration records of carbon monoxide, which comes primarily from vehicles exhaust, we find that household responses to both HNC and TS have been not only ultimately unfortunate—more cars on the road and higher pollution levels—but also remarkably similar in two important aspects: on how policy responses vary widely among income groups and on how fast households adjust their stock of vehicles, when they do.