Consumers’ desire to keep using expensive appliances that are still working is a problem for programs meant to encourage us to replace them. Refrigerators are the usual example: if you subsidize people’s purchase of new, more efficient fridges, a whole lot of them will take you up on the offer, then move their old fridges into the basement to use as long-term cold storage. After all, they still work, right?
Often, they enjoy new lives devoted to keeping beer cold. Day and night for years. In case somebody ever wants a cold one on short notice. Hence the label “beer-fridge problem,” and the bounties some jurisdictions pay to get those grumbling old monsters dragged up out of the dark basement and shot.
The Financial Post has a story on the glut of used cars on the Canadian market these days, which analysts attribute to a softening economy — people who might ordinarily buy them are sticking with the bus or their even older beaters a little longer. The beaters are less fuel-efficient than the used cars stuck on the lots, and they’re all less efficient than the new cars the federal government’s “feebate” program is hoping to encourage people to buy.
This is where a different less-discussed item in the budget is supposed to come in — the bounty on beaters. Unfortunately, there might not be enough money in that fund to do what it’s supposed to:
Lower used-car prices hurt sales of new cars because consumers have less equity when they trade in their vehicles. That in turn means they’re more likely to keep driving the vehicles they have instead of buying a new one…
Lower used-car prices increases the likelihood drivers will keep the vehicles they are already driving, meaning a great number of older, more-polluting vehicles will remain on the road.
Canadians drive six million vehicles older than 1995. Stephen Harper’s Conservative government announced $36-million in budget spending last week to help retire at least a portion of those. But the funding, which translates to $6 per vehicle, is vastly insufficient to make a significant difference, Scotiabank’s research suggests.
The $6-per-vehicle figure is a little silly, since the $36 million isn’t supposed to be for all the old cars. It’s to fund existing “scrappage” programs like B.C. Scrap-It, which’ll pay you pretty handsomely to get rid of an ancient vehicle that doesn’t meet British Columbia’s emissions standards — up to $1,000 toward the purchase of a new hybrid, in fact — or $500 toward a used car of newer vintage.
That’s an improvement, but not the great step up the Tories’ programs are supposed to encourage people to make. Unfortunately, this seems like another case where a carbon tax on gas at the pump would impose the kind of ongoing cost needed to make a difference.
Photo by Flickr user kk+,
used under a Creative Commons licence.