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

Schulz, Wolfgang H.; Franck, Oliver · 2021 · OpenAlex-citations

DOI: 10.2174/1874447802115010182

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Summary

This study evaluates the economic feasibility and impact of introducing a Periodical Technical Inspection (PTI) system for motor vehicles in Punjab, Pakistan. The research was motivated by the region’s high rate of fatal road accidents, largely attributed to poor vehicle quality and the absence of a systematic regulatory body to ensure roadworthiness. In 2016, the Punjab government launched the Vehicle Inspection and Certification System (VICS), a public-private partnership designed to test vehicles for safety, noise, and emissions. The primary objective was to determine whether the PTI system yields a positive economic impact by calculating a benefit-cost ratio (BCR) to inform political decision-making. The authors employed a cost-benefit analysis (CBA) to weigh the economic benefits against the costs of implementation. Due to the recent introduction of the PTI in 2016, time-series regression analysis was not feasible. Instead, the study utilized empirical causality models derived from previous studies in Turkey and Costa Rica to estimate the safety benefits. Specifically, the authors assumed that the reduction in accidents resulting from failed PTI inspections in Punjab would mirror the 0.7% reduction observed in the Turkish study. Data on vehicle stock, accident statistics, and fatalities were sourced from the Pakistan Bureau of Statistics and provincial police reports. The analysis focused on quantifying physical effects—such as avoided fatalities, injuries, and emission reductions—and transforming them into monetary values. The results indicate that the implementation of the PTI system is highly economically viable, yielding a benefit-cost ratio of 12.45. This ratio signifies that every dollar invested in the PTI generates $12.45 in economic benefits for Punjab. The total estimated annual benefits amount to approximately US$ 15.83 million, derived from avoiding an estimated 198 fatalities (saving US$ 11.62 million) and 382 injuries (saving US$ 1.57 million), alongside emission savings of US$ 2.65 million. These benefits are weighed against inspection fees totaling US$ 1.27 million for 179,977 inspected vehicles. The findings demonstrate a high degree of statistical significance (p = 0.001), confirming that the coefficients of the cause-effect relationships are unambiguous. The study concludes that the PTI system has a significant, measurable, and positive effect on road safety and economic welfare in Punjab. Despite the exclusion of certain benefits like noise reduction due to data limitations, the high BCR strongly supports the continuation and expansion of the inspection regime. The findings provide empirical evidence that systematic vehicle inspections are socially desirable and effective in reducing the financial burden of accidents on the state. This analysis offers a structured framework for policymakers to assess the economic viability of similar regulatory measures in regions lacking robust vehicle inspection infrastructure.

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• regulatory evaluation