Life Cycle Environmental and Economic Impacts of ‘Cash for Clunkers’

CSS Publication Number: 
CSS11-03
Abstract: 

Through the $3 billion US Consumer Assistance to Recycle and Save (CARS) Act of 2009, or “Cash for Clunkers” program, nearly 700,000 consumers scrapped fuel-inefficient vehicles in exchange for rebates of $3,500 or $4,500 toward the purchase of a new, more fuel-efficient vehicle. This research aims to provide a more comprehensive, life cycle accounting of environmental and economic benefits associated with CARS. Environmental benefits included reduction in both greenhouse gas and criteria pollutant emissions. A life cycle accounting suggests that CARS prevented 4.4 million metric tons of CO2-equivalent greenhouse gas emissions. This is substantially lower than estimates in previous studies, which failed to include the life cycle effect of additional emissions produced during new vehicle production and overestimated vehicle-miles remaining in the life of ‘clunkers’. Using previously estimated damage costs of $21 per metric ton of CO2, this benefit is worth $93 million. About 20,000 metric tons of criteria pollutant emissions were also avoided. Damage costs from criteria pollutants vary by geographic location and source height, which previous studies do not account for. Incorporating these factors suggests the benefits from avoided criteria pollutants were worth $17 million (two to six times greater than estimates using simple average or median damage costs). CARS also provided economic stimulus on a macroeconomic level and for participants. The economic literature suggests the program induced sales of up to 450,000 new vehicles; provided up to 62,000 job-years; and contributed up to $4 billion in gross domestic product. Comparing the market value of scrapped vehicles to the rebate from CARS, the consumer surplus or “gift” to participants is calculated to be up to $2 billion (about $2,000 to $3,000 per vehicle). This is significantly more than offered in previous vehicle scrappage programs, and suggests opportunities to get more environmental and economic “bang for the buck” with lower rebates, an alternate mechanism for setting rebate values, and/or more specific targeting of vehicles for participation.

Research Areas: 
Keyword: 
greenhouse gases
vehicle life cycle
accelerated vehicle retirement
Publication Type: 
Master's Thesis
Date Published: 
April 20, 2011
Persistent URL: 
http://hdl.handle.net/2027.42/83513
Full Citation: 
Lenski, Shoshannah. (2011) “Life Cycle Environmental and Economic Impacts of ‘Cash for Clunkers’.” Master's Thesis, University of Michigan: Ann Arbor. 1-39.
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Publication Status: 
Published