An Empirical Study to Estimate the Economic Effects of the Introduction of a Periodical Technical Inspection (PTI) for Motor Vehicles in Punjab (Pakistan)

• Published in: The open transportation journal 2021, Vol.15 (1), p.182-193
• Main Authors: Schulz, Wolfgang H., Franck, Oliver
• Format: Article
• Language: English
• Subjects: Cause-effect relationships; Cost benefit analysis; Cost control; Decision making; Economic impact; Economics; Emissions testing; Fatalities; Impact analysis; Inspection; Mortality; Motor vehicles; Noise levels; Noise reduction; Public sector; Roads; Vehicles
• ISSN: 1874-4478; 1874-4478
• DOI: 10.2174/1874447802115010182

Aims: In 2016, the government of Punjab (Pakistan) established a new system for inspecting road vehicles. The inspection system tests the roadworthiness, noise level, and emissions from the vehicles. These test metrics have further economic benefits that will be analyzed throughout the study. As the main aim of this study, we provide an economic impact analysis of the introduction of a periodical technical inspection (PTI) system that acts as a basis for political decision-making. Background: We used a cost-benefit analysis (CBA) to assess the economic impact of the introduction of a periodical technical inspection (PTI) in Punjab. With the CBA, the economic benefits and costs can be empirically weighed against each other to provide a precise result for policymakers. Such results could help in decision-making regarding new policies, such as whether to introduce a new system or not. This is especially important for the region of Punjab since it has a large population and a substantial number of cars which lead to many fatal car accidents. A primary reason for the numerous fatal accidents is the poor quality of the present vehicle stock. Punjab lacks a regulatory body that systematically ensures that all vehicles on the road are safe and of good quality. Therefore, an effective approach to reducing fatalities would be the introduction of a systematic inspection body that controls vehicle quality. Objective: The objective of this study is to assess the feasibility and effectiveness of introducing a PTI in the region of Punjab. To this end, we calculate a benefit-cost ratio and determine whether the PTI would have a positive economic impact on the region. Throughout the analysis, cutting-edge empirical methodologies are used to provide a structured approach for precise assessment of the benefit-cost ratio related to the introduction of a PTI system. Methods: To weigh in on the benefits and costs, we used a CBA analysis. This method is commonly used in welfare economics to find out if certain measures are socially desirable. The overall result of the CBA is a benefit-cost ratio (BCR). Ratios greater than one prove that the system implementation is profitable for society. Such an analysis provides an empirically supported result that can be used throughout the decision-making process in the public sector. Results: According to our analysis, the implementation of a PTI together with an emission test would yield a benefit-cost ratio of 12.45. A benefit-cost ratio