Calculating External Costs of Transportation in Norway

Principles and Results

Abstract

Transport activities are known to have substantial negative external effects. One of the reasons for trying to value these effects is that the cost to society of using a specific transport mode should be reflected in the price that is paid by the transport user and thus form the basis for a transport tax policy. Previous calculations of marginal external costs of transport at the Institute of Transport Economics (TØI) as well as the methods employed are in many cases outdated and need revision. Therefore it has been decided to update the methods as well as the estimates. External effects included in this analysis are: a) emissions to air, b) noise, c) traffic accidents, d) wear of infrastructure and e) congestion. External costs are seen as related to transport volume, intensity of the effect, degree of harm of the effect and unit cost of harm. The assumptions of these relations will be discussed. One problem with the shape of the cost function is whether the effect (e.g. noise) can be said to be proportional to the transport volume. In estimating the unit costs mainly willingness-to-pay (WTP) methods will be applied. The marginal external costs of each mode or vehicle type is compared to what is actually paid at the margin by these modes in taxes and charges that are related to transport volume. Small vans and passenger cars internalise approximately their external cost in the form of traffic charges. Airplanes pay a lot more than their external cost because they cover the total cost of the CAA (Central Aviation Administration). Buses, passenger trains and cargo vessels pay a very small part of external costs in the form of traffic related charges.