Estimating Whether Transport Users Pay Their Way: The State of the Art

Abstract

Studies of whether transport users pay enough special taxes and fees to offset the costs they impose on society at large have proliferated in North America and Europe since 1990, largely because environmental groups have argued that pollution and other social costs should be considered more systematically in transport planning. Before 1990, most studies of whether transport users paid their way focused exclusively on whether they pay the costs of constructing and maintaining highways and other infrastructure and services provided by government. The studies ignored other costs economists call “externalities,” which are defined as costs that the producer or user of a good or service imposes on others through mechanisms other than the market. In the case of transport, typical externalities are the health damage caused by motor vehicle air pollution or the delays a road user causes other motorists because his use of the highway increases traffic congestion.²

Many ofthe ideas in this paper were developed while the author served as a member of the National Research Council’s Surface Freight Transportation Study Committee; the author would like to thank his fellow members and committee staff for clarifying his thoughts while absolving them of blame for the remaining confusion. The work reported here was also supported by a grant from the U.S. Department of Transportation through the Region One University Transportation Center. The author would like to thank Stephanie Abundo, Jose Carbajo, Alissa Gardenhire, Douglass Lee, David Luberoff, John R. Meyer, Todd Olmstead, and Kenneth Small for helpful comments on earlier drafts.