ABSTRACT

The marginal external costs associated with road transport are listed i n the boxes below. These estimates show the aggregate marginal external costs to be £45.9bn-£52.9bn (Box 8.1). These costs outweigh the taxes paid by road transport by a factor of three (Box 8.2). It is important to understand that these figures (£45.9bn-£52.9bn) are not to be interpreted as the total external costs imposed by road users on the rest of society. If this amount were transferred from road users to non-road-users the latter w o u l d certainly be overcompensated for any i l l effects that they suffered as a result of road transportation. N o r is it the amount which ought to be extracted from road users (the revenue raised by the optimal tax) since if such taxes were ever raised the number of journeys and the marginal external costs associated w i t h them w o u l d certainly fall (Boxes 8.3 and 8.4). A n y interpretation of these figures as a suggestion on the part of the authors that taxes on road transport should rise by 200 per cent is therefore wrong. The proper interpretation of these figures is merely that, on average, the marginal road user pays only about one-third of the marginal external costs of his or her journey whereas an efficient allocation of resources w o u l d demand that they pay all of it. There must accordingly be many journeys for which the private benefits are outweighed by the wider costs to society. Either some contraction of road transport is merited or alternatively some attempt must be made to reduce the environmental impact of these journeys.