Distributional Effects of Distance-Based Road Pricing: A Behavioral Microsimulation Study for the Brussels-Capital Region
At the intersection of transport economics and public finance, this research contributes to the empirical literature on transport pricing as a policy tool for addressing the externalities of vehicle use. In line with recent technological developments and ongoing policy debates, it provides an ex-ante evaluation of a distance-based road pricing scheme that varies by time (peak and off-peak), location (congested and non-congested zones), and vehicle characteristics. While such systems are widely recognized as efficient, as they better align driving costs with externalities, their implementation in passenger transport remains limited. This absence is largely driven by concerns about distributional effects, highlighting the need for robust empirical evidence on equity implications as a key input for policy feasibility.
Read MoreIncorporating the Prebound Effect in Retrofit Policy Analysis: Distributional Results for Belgium
This paper compares the distributional incidence of three decarbonization instruments in the Belgian residential sector: EPC‑based minimum standards, carbon pricing with an equal per‑household dividend, and renovation subsidies financed by a uniform lump‑sum tax. Using Woonsurvey 2018 and a dwelling‑level microsimulation model that evaluates renovation profitability on observed energy use, we quantify household monetary impacts, renovation take‑up, and equity (across and within income groups) for budget neutral policies calibrated to common C02 targets. Three results stand out. First, EPC standards concentrate burdens on low‑income and low‑use households and generate high dispersion because they compel renovations where realized savings are small. Second, universal subsidies are costly on average and distribute benefits unevenly, with sizable transfers to infra‑marginal projects. Third, carbon pricing with revenue recycling yields the lowest and most evenly distributed household burdens, largely because it triggers heat‑pump adoption in dwellings with the highest energy consumption. We further show that combining a modest carbon price with targeted heat‑pump support can meet the same emissions target at lower cost and with a smaller variance of household impacts than under the carbon dividend. Results are robust to rebound, landlord–tenant limits, and reasonable variations in discounting, horizons, and costs.
Read More