The Monetary Valuation of the Environmental Impacts of Road Transport: a Stated Preference Approach



The Monetary Valuation of the Environmental Impacts of Road Transport: a Stated Preference Approach

Authors

NELSON P S, Booz Allen and Hamilton and TOWRISS, J G, Cranfield School of Management, UK

Description

Transport conveys many benefits to mankind but also has negative side effects such as road casualties, and environmental impacts such as noise, vibration, air pollution, etc. "Transport is necessary for people and firms, it is important for the economy as

Abstract

Transport conveys many benefits to mankind but also has negative side effects such as road casualties, and environmental impacts such as noise, vibration, air pollution, etc. "Transport is necessary for people and firms, it is important for the economy as a whole, but it produces a certain number of undesirable effects such as pollution, congestion, accidents and consumption of scarce resources", (Alexandre, 1995).

Economists argue that at present many of the environmental costs of transport are being externalised (i.e. not included in the market). Many goods and services have prices that can be observed in the market place, for example the costs of road construction and maintenance. Environmental goods and services are not invariably bought and sold in the market place (e.g. air quality), and are therefore external to it. It is argued that the effect of these external costs is an imbalance in the market, so that the environment is under valued or not valued at all. The environment is therefore seen as a free commodity that can be over utilised. "Excessive depletion of environmental resources occurs when their utilisation is external to the cost functions of those supplying or using transport services" (Button, 1990).

In an attempt to internalise these costs, monetary values are increasingly called for, so that the true cost of man's impact on the environment is considered. Roads have a long lifetime, therefore in terms of long-term environmental protection the correct decisions need to be made and a 111 life cost-benefit assessment is required. Environmental factors are often via a series of quite sophisticated and ingenious procedures, examined in a quantitative manner, but are rarely reduced to the common denominator ofmoney which is the currency of the standard cost-benefit jamework used for hansport injastructure appraisal" (Bannister and Button, 1993).

In the United Kingdom the evaluation bework for the appraisal of trunk road infrastructure considers both the environmental and economic impacts of a trunk road scheme with the economic and environmental impacts being separated. The results are presented in tabular form showing both quantified and unquantified impacts on a number of different population groups. The decision-maker is therefore presented with a balance sheet of a large number of disparate elements, from which he/she has to base a decision.

SACTRA, the Standing Advisory Committee on Trunk Road Assessment, in the UK, published its report on the "Assessment of Environmental Impacts of Road Schemes" in 1992. The report suggests that a common unit of measurement of economic and environmental factors would make the decision process simpler and more consistent.

That is that the environmental factors should be incorporated into a cost-benefit appraisal process, where monetary values are used as relative weights on the different impacts of transport infrastructure. Support for the use of economic tools to value environmental impacts is not solely from SACTRA. The following quotation typifies the support for economic appraisal of the impacts of transport infrastructure on the environment:

Òwhen deciding upon transportpolicy initiatives it is important that environmental considerations are placed on the same footing as other potential impacts (such as those relating to mobiliiy, vehicle operating costs, regional development, industrial growth, etc.). This can be achieved by adopting a common unit of evaluationÓ (OECD, cited in Alexandre, 1995).

This paper reports upon reasearch undertaken by the authorÕs on the use of Stated Preference techniques to place monetary values on the environmental impacts of new road schemes.

Publisher

Association for European Transport