Edited by Chris Nash
Transport activities produce several by-products which may have unintended consequences. These externalities tend to contribute negatively to our quality of life so they need to be restricted somehow. Examples of these are congestion, accidents, air pollution, noise and spatial segregation. This chapter is mainly concerned with the valuation of these negative external effects in a way that makes economic sense, such that those valuations can be used as inputs in designing more sustainable environmental policies. This chapter comprises three sections. The first explains the basic theory of environmental externalities, showing that if these are not adequately priced, transport negative by-products will be overproduced. This section also describes the most relevant transport externalities. The second section is concerned with data collection methods and a few techniques designed to estimate the marginal external costs of externalities. Data collection can be of revealed preference (RP) or stated preference (SP) in nature. In the former, the data registers actual behaviour of respondents, while in the latter individual responses to hypothetical choices is recorded. The methodological techniques that will be described – discrete choice models and hedonic pricing – are based on the idea of describing a good according to its hedonic attributes. Finally, the third section contains some case studies illustrating applications of data collection methods and estimation techniques.
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