자원·환경경제연구 Environmental and Resource Economics Review ISSN:1229-9146(Print)

This study analyzes the financial efficiency of the early scappage support system using the benefit and cost analysis. To do so, we use comprehensive administrative data on the early scrappage of old diesel vehicles. The result shows that the benefit-cost ratio was greater than 1 before 2020, but it appeared to be less than 1 after 2020. This indicates that despite recent reforms to increase the subsidy of early scrappage of old diesel vehicles, the rate of the benefit of air quality improvement is not as fast as the increase in system operation cost of this system. The benefit of air quality improvement depends on how much the operating period is shortened due to early scrappage support system. The earlier this period is brought forward, the more likely it is that the benefits of early scrappage will exceed the costs. Upon examining the results of this study, it was found that when the scrappage timing is brought forward by 5 years, the B/C for 98% of the samples becomes 1, greatly securing financial efficiency. Therefore, it is important for the government to reform the system so that it can influence the decision of old diesel vehicle owners on the timing of scrappage.