The Social Cost of Intercity
Transportation
A Comparison of Air and Highway
by David Levinson, David Gillen,
and Adib Kanafani
University of California at Berkeley
Levinson, David, David Gillen, and Adib Kanafani (1998) A Comparison of the
Social Costs of Air and Highway. Transport Reviews 18:3 215-240.
http://nexus.umn.edu/Papers/SocialCost.pdf
Motivation
To measure externalities as a function
of usage
 To enable the evaluation of the “Full
Cost” of different modes under different
circumstances
 To measure the costs consistently (in
$/pkt) to compare fairly

Overview
What are externalities
 Key Issues
 Our approach to the problem
 Cost by cost discussion
 Summary

What are Externalities
Externalities are the difference between
what parties to a transaction pay and
what society pays
 Coase: property rights problem.
Property rights are not assigned to
clean air, quiet, uncongested travel.

Key Issues
“Externalities” are Inputs to Production
System. Clean Air, Quiet, Safety,
Freeflow Time are used to produce a
trip.
 The System has boundaries: Direct
effects vs. Indirect effects
 Double Counting must be avoided

Selection of Externalities
Criteria: Direct Effects
 Not Internalized in Capital or Operating
Costs
 External to User (not necessarily to
system)
 Result: Noise, Air Pollution, Congestion,
Accidents
 Not: Water Pollution, Parking, Defense
...

Approach
Air
Highway
Noise
Air Pollution
Congestion
Accidents
Noise: Measurement
Noise: Unwanted Sound
 dB(A) = 10 log (P2/Pref)
 P: Pressure, Pref: queitest audible sound
 NEF: Noise Exposure Forecast is a
function of number (frequency) of
events and their loudness.

Noise: Generation
Amount of noise generated is a function
of traffic flow, speed, types of traffic.
 Additional vehicles have non-linear
effect: e.g. 1 truck = 80 db, 2 trucks =
83 db, but sensitivity to loudness also
rises
 Noise decays with distance

Noise: Valuation
Hedonic Models: Decline of Property
Values with Increase in Noise --> Noise
Depreciation Index (NDI).
 Average NDI from many highway and
airport studies is 0.62. For each unit
increase in dB(A), there is a 0.62%
decline in the price of a house

Noise: Integration
Noise Cost Functions ($/pkt) : f(Quantity
of Noise, House Values, Housing
Density, Interest Rates)
 Using “reasonable” assumption, this
ranges from $0.0001/vkt - $0.0060/vkt
for highway. Best guess = $0.0045/pkt.
 For air, about the same, $0.0043/pkt.

Air Pollution: Measurement
Air Pollution Problems: Smog, Acid
Rain, Ozone Depletion, Global Climate
Change.
 EPA “Criteria” Pollutants: HC (a.k.a.
VOC, ROG), NOx, CO, SOx, PM10
 Other Pollutants: CO2

Air Pollution Generation

Comparison of Modes
Mode
Pax km HC kg,
M
CO
kg,M
NOx C,Ton
kg, M
M
(gm/pkt) (gm/pkt) (gm/pkt) (gm/pkt)
12
Highways
5.4 x10
Jets
5.8 x1011
Total
Transport
Total All
Sources
5,118 32,690
(0.95) (6.053)
54
163
(0.093) (0.28)
6,409 39,972
18,536
60,863
5,945
(1.11)
72.7
(0.13)
7,918
19,890
263.2
(46)
59.2
(100)
Air Pollution: Valuation
Local Health Effects, Material and
Vegetation Effects, Global Effects
 Greatest Uncertainty in Global Effects,
Proposed “Carbon Tax” have 2 orders of
magnitude differences

Air Pollution: Integration
Pollutant Air Cost Highway Costs
($/pkt)
($/vkt)
PM10
---
$0.000085
SOx
---
$0.000315
HC
$0.0001530
$0.003850
CO
$0.0000018
$0.000049
NOx
$0.0001700
$0.001000
Carbon
$0.0005800
$0.000260
TOTAL
$0.0009048
$0.005559
Congestion: Measurement
Time: Congested, Uncongested
 Congested Time Increases as Flow
Approaches, Exceeds “Capacity”
 Uncongested Time: Freeflow Time +
Schedule Delay

Congestion: Generation

Air Transportation: Delay vs. Usage
Congestion: Valuation
Value of Time is a function of mode,
time of day, purpose, quality of service,
trip-maker.
 Wide range, typically $50/hr air, $30/hr
car. (Business Trips more valuble than
Personal Trips).
 On other hand, average hourly PCI rate
(40 hour week) gives $10/hr

Congestion: Integration
Time Cost Functions:
TC = VoT Qh ( Lf/ Vf + a (Qh / Qho)b)
 highway: a=0.32, b=10
 air: a=2.33, b=6

Accidents: Measurement
Number of Accidents by Severity
 Multiple Databases (NASS, FARS)
 Multiple Agencies (NHTSA, NTSB), +
states and insurance agencies
 Inconsistent Classification
 Non-reporting

Accidents: Generation
Accident Rates, Functions
 Highway: Accident Rate = f(urban/rural,
onramps, auxiliarly lanes, flow,
queueing)
 Air: Accident Rate = f( type of aircraft)

Accidents: Valuation
Value of Life:
 average of studies $2.9 M
 average of highway studies $2.7 M
 Cost of Non-fatal accident depends on
property damage, injury (degree of
functional life lost, police costs, etc.)

Accidents: Integration
Highway Accident Costs estimates
range from $0.002 - $0.09/pkt. Our
estimate is $0.02/pkt.
 Urban / rural tradeoff. Urban more but
less severe accidents.
 Air Accident Costs $0.0005/pkt.

Summary: $/pkt
Cost Category Air System Highway System
Noise
$0.0043
$0.0045
Air Pollution
$0.0009
$0.0037
Accidents
$0.0005
$0.0200
Congestion
$0.0017
$0.0046
TOTAL
$0.0073
$0.0328
Summary: Conceptual
High Uncertainty About Valuation
 Costs Vary with Usage
 Accounting, Difficult, but necessary to
avoid double counting.
