Environmental policy impact analysis – the “Junk” program in
Romania
Florian Marcel Nuțǎ, Lecturer PhD, Danubius University of Galați
Ștefan Gheorghe, Lecturer PhD, Danubius University of Galați
Abstract: The global issues related to greenhouse emissions put the pressure on decision makers to include the
environment in their priorities. The governments must find methods to achieve the national targets and improve
the environment quality. European countries have experienced different programs including subsidies and other
fiscal incentives for personal or professional car acquisition. Our study assesses the Romanian experience in
encouraging the national car inventory renewal. The “Junk” Program offers a financial support for new car
acquisition. The principle is to put for cassation an old junk and the government offers a subsidy for the new car
acquisition. The buyer may be given up to three subsidies for a new car acquisition.
Introduction
The public policy is dedicated to cover needs and products that are not the object of private
enterprise (Ramos & All., 2007).
We investigate the two correlation models. One includes the older than ten years cars and the
number of cassations. The second connects the number of cassation and the carbon dioxide
emissions. The analysis seeks to evaluate either the “Junk” program has a positive impact or
not upon the national car inventory renewal and the greenhouse emissions. We consider that
the ten or more older cars are highly polluting mainly being equipped with non-euro or
ancient EU1 or EU2 standard engines.
Number of used for cars older than 10 years (those discussed as having a negative impact
upon the environment) is influenced from many directions. One factor is the fleet natural
process of aging. Then importing used cars from foreign markets, referring to those older than
10 years. On the other hand are the national programs for phasing out of these machines,
stimulated by public funds. It is also considered that the natural process of running off service
of such machinery is negligible for the assessment.
Being funded from the public environment fund, the JUNK program aims primarily to
eliminate the local fleet of heavily polluting vehicles and thus ultimately reducing greenhouse
gases emissions. Doubled at a time of measures of fiscal nature, such as the first registration
tax for old cars brought into the country, may have given the desired effect of stimulating part
of the retirement of junks and the purchase of new cars on the subsidy and on the other hand
inhibition of buying imported heavily polluted second-hand cars. Due to the inconsistency of
the fiscal measure, contested and modified during the years, the import of old cars continued.
The “first registration tax” was mainly poorly managed by the fiscal authorities and its
methodology did not consecrated it as an environmental tax, but only as another way of
“getting money” for the public budget (Nuțǎ, 2011). And so the taxing of “bads” (the
pollution) was developed as taxing of “goods” (Ekins & All., 2011) (the poor people who
cannot afford a new car). The failure of the fiscal measures is possible to have canceled the
positive effects of removal from the national fleet of the junks.
From the Romanian evidence we can affirm that the environmental public policy was only a
partial not fully developed and not enough explained to the people program. We could
consider the measures as an environmental economic instrument (Bocher, 2012) if the both
parts of the program (incentives and environmental taxation) were fully successful.
Data selection
We identified as relevant for our assessment indicators related to the national private
transportation fleet – older than 10 years cars, the volume of cassation and indicators
describing the environment quality – the carbon dioxide emissions.
The data set used for the two correlation models contain figures spread over 7 years
conditioned by the JUNK Program time.
The data are relevant over time and ant preliminary treatment of it was not needed. We
encountered some difficulties finding some of the data so we followed different sources, all
official (INSSE, EuroStat, Romanian Ministry for Administration and Internal Affairs) and
containing identical data treatment and presenting methodology.
Data set ends in 2011 for the reports for the 2012 JUNK program are not available yet and
only partial figures are available.
The model 1
For the first model of our assessment we choose to describe the correlation model between the
cassation volume as an independent variable and the number of older than 10 years cars in
total national fleet (the dependent variable). As the R Square shows the model explains
approximately 20% of the dependent variable evolution.
Model Summaryb
Std. Error of the
R
R Square
,437a
,191
Adjusted R Square
,029
Estimate
3,78799E5
a. Predictors: (Constant), vol_casari
b. Dependent Variable: cars_over_10y
The correlation coefficient (R) shows a connection between the two variables. Given the
value of Sig the assumption that there is no relation between the two variables we can
evaluate that the evolution of junks cassation as a result of the JUNK governmental program
does not explains the trend of older than 10 years cars in Romania given the influence of other
decisive factors as the incoherence of the fiscal instruments and in this context the growing
imports of old cars.
Coefficientsa
Standardized
Unstandardized Coefficients
Model
1
B
Std. Error
(Constant)
1389088,752
192446,367
vol_casari
2,642
2,431
Coefficients
Beta
t
,437
Sig.
7,218
,001
1,087
,327
a. Dependent Variable: cars_over_10y
The correlation model is as follows:
Y = 2,642X + 1389088,752
The model 2
The second model describes the correlation between the volume of cassation (independent
variable) and the carbon dioxide emissions (independent variable). Again even the two
variables would seem very connected we find that because of the limits of the public policy
(failure of taxation for affecting activities – imports of old cars), the model shows the
connection is insignificant.
Model Summaryb
Std. Error of the
Model
R
R Square
Adjusted R Square
Estimate
,221a
1
,349
-,142
992,06870
a. Predictors: (Constant), vol_casari
b. Dependent Variable: co2_emission
Coefficientsa
Standardized
Unstandardized Coefficients
Model
1
B
Std. Error
(Constant)
12942,904
504,014
vol_casari
,003
,006
Coefficients
Beta
t
,221
Sig.
25,680
,000
,506
,634
a. Dependent Variable: co2_emission
The correlation model is as follows:
Y = 0,003X + 12942,904
Conclusion
The incoherence and impossibility of imposing an additional fiscal tool for regulating the
second hand cars market is a critical factor that has an negative impact upon the results of the
public environmental policy in Romania.
The government has a good initiative offering subsidies for the new car acquisition but fail to
empower this active measure with taxing the “bad” behavior (importing old and polluting
cars).
This failure to connect the two measures – encouraging the renewal of the national
transportation fleet with penalizing the bad behavior of importing “junks” – levels the benefits
of the JUNK Program. It is an example of how the public policy can fail if the methodology is
not accordance with the market realities and the real needs of the people. Also shows that
when decision makers fail to explain and popularize a good measure this measure turns
against the government and instead of benefits can bring losses for all the actors.
Acknowledgement
This work was cofinanced from the European Social Fund through Sectoral Operational
Programme
Human
Resources
Development
2007-2013,
project
number
POSDRU/1.5/S/59184 „Performance and excellence in postdoctoral research in Romanian
economics science domain”.
References
Ramos, T., B., Alves, I., Subtil, R., de Melo, J., J., Environmental performance policy
indicators for the public sector: The case of the defence sector, Journal of Environmental
Management 82 (2007) 410-432
Ekins, P., Summerton, P., Thoung, C., Lee, D., A major environmental tax reform for the UK:
results for the economy, employment and the environment, Environ Resource Econ (2011)
50:447-474, DOI 10.1007/s10640-011-9484-8
Bocher, M., A theoretical framework for explaining the choice of instruments in
environmental policy, Forest Policy and Economics 16 (2012) 14-22
Nuțǎ, A.,C., A theoretical approach of fiscal and budgetary policies, Acta Universitatis
Danubius. OEconomica, Vol. 7, No. 6 (2011) 91-98
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