A policy evaluation is needed by goverment when they want to issue a regulation, particularly if that proposed policy will affect market prices, import duties, taxes, subsidies or other charges imposed on production and distribution process. Costs- benefits analysis as well as Cost-effectiveness analysis are needed by policy makers to evaluate policies about their policy effects on economic efficiency, contribution to the alleviation ofpoverty, and support for good governance.
This study identified policy options that are expected to give effect to the reduction ofemissions and ultimately provide economic benefits for Indonesia. Cost benefit and cost-effectiveness analysis is used to evaluate several policy options and provide recommendations the most appropriate policy options.
Many studies have shown that emissions from motor vehicles have a very significant impact to the quality of life of the people, especiallyin urban areas. A high level pollutant is harmful to public health and can be ultimately reduce people’s productivity in work and also potentially required addition cost of living for health maintenance. Jakarta case in 2010 for instance, 57.8% people were suffered by various air pollution-related illness and disease, and paid IDR 38,5 Trillion to treating its. Therefore efforts to reduce emissions from motor vehicles produce air pollution as well as green house gas (GHG) is very important action to give impact on public health and the environment, and global warming mitigation. In addition, with the high price of international crude oil and the same time the declining of oil reservesof Indonesia, the need for a reduction in fuel consumption of the vehicle must begin to do by thinking to make an efforts in developing alternative fuels. Fortunately, there effort to reduce vehicle emissions will indirectly affect to the need of fuel subsidy which is quite burden for national budget.
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