Not surprising. The real question is how do we measure the opportunity cost of these measures? Is it a net gain? You could, at the extreme, ban all motor vehicles but the opportunity cost would outweigh the benefits.
Well, the market decides where the optimum is *in response to* the price set by the government. So the government can decide at least approximately where they want things to end up by setting a higher or lower price.
Right. It finds an economic optimum limited to what people are willing to pay and their perceived value from that. That optimum doesn't naturally weight more complex factors like for the trade-off for the smog generated from your travel.