This project has been conducted as a literature survey describing different elements
concerning the external costs of transport. The survey can contribute to a wider
understanding of which elements are interesting and necessary in relation to
internalisation of external costs when, for example, the pricing structure should reflect
the total social costs of transport.
The survey includes a theoretical description of external costs of transport, how they
can be measured and priced even though external effects or "products" are not
traded in an actual market. Finally the survey has described several Danish and
international projects on pricing of external costs of transport.
There are many uncertainties in the measuring of external effects. The uncertainties
are both methodological and practical. They stem from many different areas: the
determination of which effects that result from the transport sector, and which of these
that are to be included; what are the consequences of these effects; are they important
alone, and/or in connection with other effects (also from other sectors); how can they be
measured; how can they be priced; how can they be internalised in for example a tax
system.
An illustration of the many difficulties of quantifying the external costs of transport
is given through an example of a causal chain used to calculate the effects of air
pollution. The six elements in this chain are: traffic-emission-exposure-dose-impact-costs.
In each link of this chain there are several causes of uncertainties and problems. Not
only difficulties concerning the measurement in each of the elements but also in the
linkage from one element to another. So far it has not been possible to go into detail
with all these difficulties. It is left for future studies to investigate these issues
further.
The survey has described the most commonly described and priced external effects: These
are environmental air pollution effects, noise, congestion and accidents. In
existing literature these effect are considered the most important ones, but they are
certainly not the only external effects from transport, that should be taken into account.
In the report it is suggested that barrier effects, land-use, aesthetic and visual
effects, the impacts on the diversity of species etc., aggregated could be very important
effects. In many studies these effects are described verbally, and they are often
mentioned as important external effects, even though they are not actually measured. In
this sense it is striking that so little effort has been put into evaluating and measuring
the monetary consequences of these effects. In the few studies where they have been
priced, it is found that the effects are small compared to the primary effects mentioned
above. This could be due to the lack of attention to these effects, especially in research
developing methods for measuring external effects, and also in projects aiming at
measuring these effects. There is an evident need for development of new methods for
measurements of these, so far, secondary external effects.
It is recommended that the focus in future research is directed towards external
effects like land-use, aesthetic and visual effects, the impacts on diversity of species
etc. as the aggregate impact from these effects very well can be of a considerable size.
When looking at these external effects (and on the primary effects) it is even more
important to differentiate at the geographical level. The impacts on every single
geographical area are very different. It is therefore very important to have a clear
definition and understanding of who is affected by the external effects from transport. In
some cases it is not only the people who are directly influenced that are important. The
knowledge of a negative impact on nature can have a very high value to people not directly
affected, namely the people who highly value minimising the effects on nature and species.
In existing literature there are many project aiming at practical pricing of different
external effects. The literature survey has shown many, especially international studies,
suggesting prices of different external effects. Most of these studies have been aimed at
measuring the total external costs. Very few studies have tried to measure the marginal
external costs, which are of primary interest in relation to putting forward an optimal
theoretical pricing scheme. The literature survey covers four/five Danish attempts to
measure the marginal external effects. Cowiconsult has conducted three of these attempts,
one is made by the Economic Council (and the last is made by the Road Directorate in Unit
prices in Transport Economics).
In the table below a comparison of six different surveyed studies suggesting marginal
prices of the external effect is made. There is obviously a wide range of studies that are
not covered in this survey. However, it has not been possible to find and include these
within the timeframe for this survey.
Of the studies in the table it is worth mentioning the study in Litman (1999) and the
large EU financed project Getting the prices right, where it has been attempted to
measure the barrier effects and the impact on wild animals of road transport.
Marginal unit prises from some of the studies described in this survey. Prices are kept
at the level used in the original literature.
Look here!
There are several differences between the North American study (Litman, 1999) and the
European counterparts. The North American figures are larger especially on air pollution.
However, the Danish Cowi (1999) study has figures comparable to the Litman figures on air
pollution.
The noise effects are valued much lower in North America. It is suggested that this is
due to a lesser population density in North America combined with a generally larger
attention towards the problem in Europe.
One thing to be noted is that marginal external costs of air pollution in Cowi (1999)
are much higher than all the other European studies. This is remarkable because the method
used in the study is considered the most theoretically accurate. This points to the
conclusion that there has been a tendency to underestimate the impact from air pollution.
The numbers in Cowi (1999) are supported by the American study (Litman, 1999). However
there are still a huge number of uncertainties connected with this method, and the numbers
should be used with caution.
The general recommendation in this report is that it is not possible to determine one
figure for each specific external cost. It should be considered in every case what methods
and numbers should be used. It is also highlighted that there are a number of effects that
should not be overlooked when the total external effects are measured, namely the above
mentioned effects that have rarely been measured in monetary terms. It is suggested that
these effects could be much more important than presumed so far.
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