Valuing Environmental and Other Externalities

Abstract

Transport benefits society, but also imposes costs, notably through environmental damage and crashes. In addition to the effects on the environment and human health, current scientific attention is directed to the social impacts of transportation in urban areas. The valuation of the external costs of transport, in particular environmental externalities, is a complex and challenging area. Recent and current research around the world is progressing the state-of-the-art, which will enable environmental and social externality costs to be incorporated within an expanded project evaluation approach. A set of unit values for a broad range of externality costs (including noise, air pollution, climate change, nature and landscape, and additional costs from upstream and downstream processes) for road transport is provided in this document. The average total air pollution unit costs for cars estimated in this document are of the order of 2 cents per vehicle km, while the average estimated total environmental externality unit costs for cars are approaching 7 cents per vehicle km. Similarly, those average estimated total unit costs for heavy vehicles are of the order of 4 cents per tonne km, as opposed to light duty commercial vehicles for which average estimated total unit costs are 27 cents per tonne km. The ranges of unit values (and the qualifying assumptions) presented in this document are a useful starting point for information and debate on this topic. However, additional local research including sensitivity analyses is recommended to obtain values applicable to local areas and conditions for the unit cost categories that are of interest.

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