Diabetes, dementia, depression: Adapting fuel taxes could benefit people’s health

10/13/2023 - The health benefits from walking and cycling are so significant that they should be included in fuel tax design, shows of a new study published in the journal Economica. Optimal fuel tax rates would increase by 44% in the US and by 38% in the UK if the costs for the health system that arise from too little exercise were taken into account. The revenue could be used for low-carbon transport or to compensate affected households to build support for sustainable transport.
Diabetes, dementia, depression: Adapting fuel taxes could benefit people’s health
Photo: David Marcu/Unsplash

“The significant health benefits from active travel such as walking and cycling imply that economic transport policy needs to be reassessed,” explains Linus Mattauch from the Potsdam Institute of Climate Impact Research (PIK) and co-author of the study. “We provide a novel argument for balancing the benefits of car use with its cost to society. While our economics model allows us to quantify fuel prices specifically, our argument also applies to other elements of sustainable transport such as urban redesign.”

For the first time, the researchers were able to translate public health costs into economic evaluations of transport policy design. “While it is obvious to many that cycling and walking is good for your health, we were surprised that the connection has not been made before in transport economics. The interactions of health and transport policy are larger than we expected,” explains Inge van den Bijgaart from Utrecht University and also an author of the study.

Costly decisions: The health system could greatly benefit from increased fuel taxes

Fuel taxes are only of modest relevance for individual decisions to walk or cycle. The advantages of adapted fuel taxes could however, address all the social costs of car use together, including pollution and congestion. The revenue could be used either for low-carbon transport infrastructure or for compensating households that are especially affected by the tax.

In both the UK and the US, physical inactivity is a leading risk factor for 6 of the 10 largest causes of death worldwide as a sedentary lifestyle is very common. Yet, 2.5 hours of walking per week can greatly reduce the risk of diabetes, heart diseases, dementia and depression. Adequate walking pathways, bicycle lane networks or even car-free city centres as well as improvements in public transport could help to increase a more active travel and commute style while fostering daily exercise.

“Some citizens would see the argument of using transport policy to make them fitter as impinging on very personal choices,” says Inge van den Bijgaart. However, especially in urban areas, daily commuting routines offer a uniquely low-cost opportunity to incentivise doing a little bit more exercise regularly, simply because many people have to commute anyway. “The health system is suffering from the high costs of the diseases that walking and cycling can help reduce. If nothing is done to increase the fitness of the general population, societies have to bear the increased financial burden of a sedentary lifestyle by higher health insurance premiums or increased taxes to fund the healthcare system,” explains van den Bijgaart. 

“It is a costly decision for societies not to reap the health benefits from choosing travel modes that lead to more physical activity. Our study highlights the major potential of adapted fuel taxes. Implemented in combination with other policies aimed at increasing active travel this could greatly benefit people’s health,” Mattauch concludes.


Inge van den Bijgaart, David Klenert, Linus Mattauch, Simona Sulikova (2023): Healthy climate, healthy bodies: Optimal fuel taxation and physical activity. Economica [DOI: 10.1111/ecca.12497]


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