Going electric: Environmental and welfare impacts of urban ground and air transport

Abstract

• We study welfare and environmental effects of electric modes in cities. • Electric cars reduce CO 2 emissions despite increasing travel and congestion. • The resulting welfare losses may dominate the gains from reducing CO2. • Welfare effects of UAM depend on initial mode choice and the way of introduction. • Substituting gasoline (electric) cars, UAM decreases (increases) emissions. This research aims to assess the broader impact of electric mobility in urban settlements, paying attention to both electrified ground and air transport. Considering electric cars as well as electric passenger drones, often referred to as UAM (urban air mobility), we use an urban spatial computable general equilibrium model to assess the welfare and environmental impacts of a transition to electric mobility. A numerical simulation of the model shows that a transition from gasoline to electric cars yields major emission reductions, while leading to welfare losses due to tax-induced market distortions. Introducing UAM into a gasoline-car city leads to marginal overall welfare gains. Introducing UAM into a city with electric cars results in welfare losses. While introducing UAM as an alternative to gasoline cars decreases CO 2 emissions, the introduction of UAM as alternative to electric cars leads to increasing emissions.