Dash for clunkers

You can motivate people to drive less through various means. Gas taxes come to mind. Or a tax on vehicles miles traveled, or a congestion fee. Whether you call it a "tax" or a "fee," charging money is always part of the equation.

The alternative to a tax is a ban, and that's almost always a bad idea.

Case in point is Mexico City, which in 1989 decided to ban car use on one workday a week, randomly determined by license plate number. The week after the policy came into effect, pollution went down. No surprise there: restrict driving randomly to four of five workdays a week and every given day should see a 20% decrease in driving.

But people still needed to get to work. It didn't take long before drivers got another car only to be used on that one workday, when their primary car had to stay at home. Those second cars tended to be older than the primary ones, and thus were also more polluting.

The result: overall pollution in Mexico City went up, to say nothing of the inefficiencies of having extra cars sit around to be used just one day a week.

If you want to decrease total pollution, make pollution costly—even if doing so involves one of the two four-letter words: t-a-x or f-e-e. Taxes on clunkers beat artificial bans any day of the week.