Dean Baker in Harper’s Magazine:
The world must reduce its consumption of fossil fuels in order to avoid the worst effects of global warming. This will require many long-term and expensive measures to promote alternative fuels and conservation—and consequently, many major political battles.
But there is one thing we could do now that would change how people consume gasoline. We could switch from the current way in which people pay for auto insurance to a pay-by-the-mile system. Such a switch might reduce annual gasoline consumption by as much as 10 percent, without raising the cost of insurance for an average driver. The key is to change the way that people view the cost of driving their car.
Currently, auto insurance is viewed as a fixed expense. People pay the same amount for their insurance no matter how much they drive.