The environmental cost and the accident externality of driving: Evidence from the Swiss franc's appreciation

This study investigates the effects of driving on air quality and road safety by exploiting exogenous variation in traffic flows associated with the Swiss franc's appreciation. It shows that the higher mobility along the border increased the nitrogen oxides concentration during peak hours on working days and the risk of car accidents during the late morning on nonworking days. The elasticity of both variables of interest with respect to the number of cars turns out to be larger than one. This suggests the need for programs that treat traffic congestion, air quality, and road safety jointly and has implications for optimal road use pricing.