Flex fees are like a floating congestion charge for the environment

Traffic congestion charges have been hailed as a success in many cities. For the people who appreciate having less cars around, they work well, and for the people with cars who want to get around in the city, the fee is worth it as travel times are reduced. These charges are already flexible, as they are higher at peak periods and zero at night and weekends. And the revenue can be used to stimulate the economy further.

But what about congestion of things in our society and in nature? Surely the same principles can apply, putting these economic measures to work to balance congestion – like situations including:

  • more CO2 than nature can take up accumulating in the atmosphere
  • release of more phosphor into the oceans than they can handle
  • build-up of metals in scrap-yards and  waste dumps
  • toxic chemicals used in manufacture

The concept can even be applied to other kinds of congestion

  • an unacceptable number of people appearing in the jobseeker pool
  • too many people homeless

In each case, a flexible fee solution can be applied, as congestion increases the fee, as far upstream as possible is applied and increased until the system, the market, starts to change behavior.

To learn more about flexible fees in practice, see our white paper. You may also  refer to the recent report from the investigation by the Nordic Council of Ministers.

The report, “Flexible emission fees: an incentive for driving pollution reduction and sustainable production and consumption” soon to be released, investigates the possibilities of increasing emissions fees until market forces respond with non-polluting alternatives.

The report concludes that the Foundation’s concept of increasing fees until the market responds, and of redistributing some or all of the fees levied back to consumers, may well stimulate market forces to respond by seizing the opportunity to supply relatively cheaper, non-polluting goods and services whilst older, more polluting services retain financial stability in the phase-out period.

The report states:
On reviewing the workshop and literature material, the project group concludes that there is sufficient interest to move forward with Flexible Emissions Fees, deepening academic knowledge and gaining more understanding from further discussions and prototyping.

BENEFITS

The fee system exerts a controlling influence but no a prescriptive influence, i.e. it responds to when the economy is not performing to serve its purpose but does not dictate how the problem should be solved.

In the flex fee concept promoted by TSSEF, revenues are channeled back into the economy. This has the advantage of stimulating consumption and econimic growth whilst encouraging the market to perform sustainably and effectively.

Flexible emission fees