Recent progress in the measurement of external costs and implications for transport pricing reforms

The external cost of transport has been discussed in the European transport policy since the 60s. However, it was not until the mid-90s that the European Commission decided on a pricing policy for the transport sector. This policy has stimulated a wide array of new research on the external cost of transport. A survey of some of the most recent studies in the area displays a clear picture; the latest studies are clearly focused on the marginal external cost and based on detailed bottom-up methods. The paper summarises the methods used to estimate some of the components of the marginal cost of transport – marginal infrastructure cost, congestion and scarcity cost, accident and environmental cost. The survey displays the huge variation in the estimates that follows from the use of more detailed databases. While this may be perceived as a problem for blunt pricing policies the paper suggests that it highlights the need for a more refined pricing policy in the transport sector.