1. 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.A Comparison of the Social Costs of Air and Highway http://nexus.umn.edu/Papers/SocialCost.pdf

2. 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

3. Overview What are externalities Key Issues Our approach to the problem Cost by cost discussion Summary

4. 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.

5. 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

6. 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...

7. Approach Air HighwayNoise Air Pollution Congestion Accidents Measurement Generation Valuation Integration

8. Noise: Measurement Noise: Unwanted Sound dB(A) = 10 log (P 2 /P ref ) P: Pressure, P ref : queitest audible sound NEF: Noise Exposure Forecast is a function of number (frequency) of events and their loudness.

9. 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

10. 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

11. 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.

12. 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: CO 2

13. Air Pollution Generation Comparison of Modes

14. 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

15. Air Pollution: Integration

16. Congestion: Measurement Time: Congested, Uncongested Congested Time Increases as Flow Approaches, Exceeds “Capacity” Uncongested Time: Freeflow Time + Schedule Delay

17. Congestion: Generation Air Transportation: Delay vs. Usage

18. 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

19. 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

20. Accidents: Measurement Number of Accidents by Severity Multiple Databases (NASS, FARS) Multiple Agencies (NHTSA, NTSB), + states and insurance agencies Inconsistent Classification Non-reporting

21. Accidents: Generation Accident Rates, Functions Highway: Accident Rate = f(urban/rural, onramps, auxiliarly lanes, flow, queueing) Air: Accident Rate = f( type of aircraft)

22. 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.)

23. 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.

24. Summary: $/pkt

25. Summary: Conceptual High Uncertainty About Valuation Costs Vary with Usage Accounting, Difficult, but necessary to avoid double counting.