CARS and Cash for Clunkers: Environmental Success or Failure?

With the “Cash for Clunkers” program ending today, our writing staff happened across a great article from Charles Herman, a member of the Business Unit over at ABC News.

Herman wrote a piece today, available online, that questions the environmental impact of the “Cash for Clunkers” program. The program, widely known to most Americans because of the rebate systems established by the government, has sparked little attention for it’s primary purpose – to serve the environment by putting more fuel efficient vehicles on the road.

As Charles Herman writes…

“Cash for Clunkers” has generated a surge in car and truck sales, as well as a comparable increase in complaints about the program. But whether or not the program — which is due to end at the end of the day today — meets environmental goals of reducing gasoline consumption and greenhouse gas emissions has received less attention.

“As an environmental program, Cash for Clunkers is basically overpaying for the environmental benefits,” said Christopher Knittle, an economics professor at the University of California at Davis who analyzed the Cash for Clunkers impact on the environment.

It is yet another concern about a program that, despite its popularity and success, has been criticized from the beginning.

The analysis that Charles Herman references is also available online (in the form of a PDF) from Christopher Knittle, an economics professor at the University of California at Davis.

In his report , he provides this abstract:

The Cash for Clunker program aims to stimulate the economy, provide relief for automobile manufacturers and reduce greenhouse gas emissions. In this research note, I present estimates of the implied cost of carbon dioxide reductions under the Cash for Clunker program. The estimates suggest that the program is an expensive way to reduce greenhouse gases. This is true under a wide range of assumptions regarding the increase in fuel economy of new vehicles purchased under the program, how long the clunkers would have been on the road if not for the program, and whether we account for reductions in criteria pollutants. Conservative estimates of the implied carbon cost exceed $365 per ton; best case scenario parameter values suggest a cost of carbon of $237 per ton.


In this note I discuss and show how expanding on this simple example changes the cost estimates. For example, the car may have survived for a longer, or shorter, time period. The new vehicle might be driven more than the clunker. Or, we may want to account for reductions in other pollutants. I do not discuss the merits of the program in terms of stimulus. While the program is an expensive way to reduce greenhouse gases, it is certainly possible that the stimulus bene ts outweigh the added environmental costs. I leave this question for a broader analysis of the program, but note that key legislators have suggested that the environmental gains from the program are large.

In short, most environmentalists feel that the campaign has been unsuccessful at best. Many, more politically charged, have voiced their opinions saying that the program not only provides no benefit to the environment, but, actually put more consumers at risk in a troubled economy because of their requirements to secure financing on vehicles purchased under the program.

What do you think? Was the CARS and “Cash for Clunkers” program a success? Did you take advantage of the program? We want to hear your thoughts, so speak up and voice your opinion using the comments area below!

Categorized | Cars, Transportation
One Response to “CARS and Cash for Clunkers: Environmental Success or Failure?”
  1. Cash for clunkers may have been a short term success for the new car industry. Unfortunately, it did it on the backs of used car dealers, auto repair shops, auto parts stores and car donation charities.


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