Predicting the local economic effects of proposed trip-reduction rules: the case of San Diego

The United States 1990 Clean Air Act Amendments set aggressive goals for state-level compliance and mandates for the use of employer trip-reduction (ETR) programs for certain regions. San Diego County, California, has responded to this mandate with its own trip-reduction regulation. The direct effects of the trip-reduction regulation fall into three categories, as follows: changes in spending, changes in costs, and changes in consumer amenities. The total effects on the local economy due to each of these categories are estimated using a Regional Economic Models, Inc. (REMI) forecasting and simulation model for San Diego County. This study is the first to use such a comprehensive methodology for an analysis of an ETR program. The study results show that spending effects on employment were positive, as local transit use replaced automotive-related expenditures and employees received cash incentive payments. The net increase in costs on business were modest with respect to the overall size of San Diego's economy. Consequently, the negative effects on business location due to these direct effects were also modest. There were significant effects from the program due to consumer utility reductions because subsidies and charges distorted consumer choices.