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Transports and externalities
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Transports and externalities

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  • 1. TRANSPORTS NEGATIVE EXTERNALITIES VS. POSITIVE EXTERNALITY
  • 2. NEGATIVE EXTERNALITY VS. POSITIVE EXTERNALITY
    • Externalities or ‘spillovers’ are difficult to define in a non-technical way. But the concept is a familiar one.
    • In essence, a negative externality occurs
    • when one individual engages in na activity that imposes costs on another, and the victim cannot normally be
    • compensated for them through the
    • market mechanism. The classic example
    • of such a ‘bad’ is a smoky factory that
    • harms a laundry next door to it Positive
    • externalities , on the other handp,r ovide
    • benefits to those affected by them.
  • 3. GOODS AND BADS IN TRANSPORT
    • Transport services themselves are a ‘good’.
    • They are an essential input into the production process and personal consumption. [...] By
    • convention, however, national-income
    • accounts do not include non-traded
    • items .
  • 4. GOODS AND BADS IN TRANSPORT
    • The cost to the community of
    • externalities associated with productive
    • activities such as transport is therefore
    • not deducted from GDP figures.
  • 5. BADS IN TRANSPORT
    • Exhaust emissions, the additional delay
    • imposed on other road usebrsy an extra
    • vehicle entering a busy street, noise, and
    • accidents are commonly cited examples
    • of ‘bads’ generated by the transport
    • sector. But traffic congestion or noise
    • can also occur on railway lines, cycle
    • paths, or at airports.
  • 6. COMMAND AND CONTROL APPROACH
    • A regulatory, ‘command and control’ approach is one means of reducing externalities.
    • R e g u l a t i o n justified when ‘ e c o n o m i c ’
    • i n s t r u m e n t s feasible, as was the case until recently with e l e c t r o n i c charging for road use.
  • 7. COMMAND AND CONTROL APPROACH ORTODOXA VS. HETEODOXA
  • 8. ECONOMIC APPROACHS
    • PIGOU VS COASE
    • WELFARE ECONOMICS VS NEO-INSTITUTIONAL ECONOMICS
  • 9. PIGOVIAN TAXES
    • A ‘polluter’ can be required to ‘internalise’ a
    • pollution externalityb y paying a tax or charge
    • to reflect the additional costs to society from
    • the externality. Imposition of such ‘Pigovian’
    • taxes, named in recognition of their first
    • proponent, A.C. Pigou (1920), results in a
    • socially optimal level of pollution. Apart from
    • any administrative costs involved, a major
    • drawback of Pigovian taxes is the difficulty ofestimating the value, and hence the cost, of an -
    • externality at the socially optimal level.
  • 10. PIRGOVIAN TAXES
    • This problem is currently almost intractablein the
    • case of ‘carbon’ taxes to reduce greenhouse emissions because there is no scientific consensus on the effect on the likely damage in local areas.
  • 11. PIGOVIAN TAXES
    • Pigovian or ‘green’ taxes have attracted
    • considerable attention in Europe in recent
    • years because they offer a ‘double-dividend’.
    • Not only do they correct market failure by
    • reducing externalities to optimalel vels, but the
    • revenue raised offers governments scope to
    • reduce income, payroll and other taxes. All
    • taxes reduce the community’sw elfare (the socalled
    • ‘ deadweight loss’) because they
    • discourage the economic activity being taxed.
  • 12. PIGOVIAN TAXES
    • Where action is taken, it is important that all
    • externalities, in all modes of transport
    • (including public transport), are addressed.
    • Otherwise, patterns of production and
    • consumption will continue to be distorted, and
    • there can be no guarantee that social welfare
    • will be increased.
  • 13. COSEAN RIGHTS
  • 14.  
  • 15.  
  • 16. The Social Costs of Transport: Evaluation and Links with Internalisation Policies by Emile Quinet Professor and Head, Economics and Social Sciences Department, Ecole nationale des ponts et chaussées, Paris, Franc
  • 17.
    • With the increasing concern for the environment, the rising demand for transport and the development of economic understanding in these fields, a great deal of research is now being done on evaluating the social costs of transport, a situation which justifies a general revie