Suggested Citation:
Delucchi, Mark A. and Donald R. McCubbin (2010) External Costs of Transport in the U.S.. Handbook of Transport Economics 2010

In this chapter we report estimates of the external costs of transport in the United States.1 Generally, we cover road, rail, air, and water transport; passenger transport and freight transport; and congestion, accident, air pollution, climate change, noise, water pollution, and energy-security costs. However, we were not able to find estimates for all cost categories; in particular, there are fewer estimates for freight transport than for passenger transport, fewer estimates for water transport than for other modes, and fewer estimates of water pollution costs than of other costs. Table 1 summarizes the quality of estimates in each category.

In our review, negative externalities are the unaccounted for or unpriced costs of an action. This means that they are the result of individual decisions or actions, such as whether to drive or take a train, or freight something by ship or plane, and are related to the explicit prices and unaccounted-for costs of those choices.

Estimates of the external costs of transport may be used for several purposes: as a guide to more economically efficient pricing (given that the optimal price is equal to the private market price plus the estimated marginal external costs); as a guide to allocating research and development funds to mitigate the largest external costs; as part of a cost-benefit analysis of optimal investment in transportation modes and infrastructure; and as part of historical or comparative analyses.

As indicated in Table 1, the available estimates do not fully characterize all costs for all modes. Moreover, the wide variations in estimation methods, data, and assumptions among even the “good” estimates confound the comparison of estimates across modes. As a result, we are able to make only general comparisons among modes and general statements about total costs of transport.

In the following sections we review recent estimates of external costs by mode in the U. S. In each section we first review methods and issues in the estimation of the cost, and then present estimates of the costs. For each cost category (e.g., congestion delay, accidents) we summarize estimates of the cost by mode and study. Presenting the estimates in this way indicates where more research and analysis is needed.