Network for Transport Measures

17. Estimations of external costs from transport

Methods and manuals > Wikis > 17. Estimations of external costs from transport
Methods and manuals > Wikis > 17. Estimations of external costs from transport


NTM is presently developing the ability to include external costs related to transport generated emissions to air within the application Corridorcalc for the European commission. The long term aim is to enable assessment of totals costs from transport, including direct and external costs. Furthermore is the aim to expand the scope and also include the impact from traffic infrastructure. This development is much dependent on access to relevant methods and reliable data. Thus we foresee a need for gradual improvements of this area in order to embrace the objective of assessing transport total cost in a more comparable scope.

Our source for evaluation of transport social costs, Ricardo-AEA states:

“Transport contributes significantly to economic growth and enables a global market. Unfortunately, most forms of transport do not only affect society in a positive way but also give rise to side effects. Road vehicles, for example, contribute to congestion, trains and aircraft to ambient noise levels and ships to air pollution. Such side effects give rise to various resource costs that can be expressed in monetary terms: time costs of delays, health costs caused by air pollution, productivity losses due to lives lost in traffic accidents, abatement costs due to climate impacts of transport, etc.

When side effects of a certain activity impose a cost upon society, economists speak of such a cost as an external cost. In contrast to the benefits, the external costs of transport are generally not borne by transport users and hence not taken into account when they make a transport decision.

The internalisation of these costs means making such effects part of the decision making process of transport users. This can be done directly through regulation, i.e. command and control measures, or indirectly through providing the right incentives to transport users, namely with market-based instruments (e.g. taxes, charges, emission trading, etc.). Combinations of these basic types are possible: for example, existing taxes and charges may be differentiated, e.g. by the EURO emission classes of vehicles.

Internalisation of external costs through the use of market-based instruments is generally regarded as an efficient way to limit the negative side effects of transport. It requires detailed and reliable estimation of external costs, which is the subject of this Handbook.

In order to define external costs properly it is important to distinguish between:

Social costs reflecting all costs occurring due to the provision and use of transport infrastructure, such as wear and tear costs of infrastructure, capital costs, congestion costs, accident costs, environmental costs.

Private (or internal costs), directly borne by the transport user, such as wear and tear and energy cost of vehicle use, own time costs, transport fares and transport taxes and charges.

External costs refer to the difference between social costs and private costs. But in order to produce quantitative values, the definition has to be more precise.”


In a long term perspective we aim to:

  1. Assess emissions to air from transport operation well to wheel and transform that into social costs
  2. Assess emissions to air from traffic infrastructure and transform that into social costs
  3. Assess emissions to air from different nodes (terminals, ports etc.) operation and transform that into social costs
  4. Assess social costs from fatal and severe traffic incidents based on general data for various traffic situations
  5. Assess general direct (internal) costs from transport operation based on general data for various modes of traffic and types of transport operation

This first version of Corridorcalc 1.0, includes development step 1 and 2, where environmental data on traffic infrastructure still need development.


During the work we came across other sources of external costs. One was the Swedish model ASEK that is commonly used in calculations prior to investments in traffic infrastructure or when implementing various marked based incentives or regulations. Other similar national models exist. Since this is a European based project we decided to use external cost data only from the handbook on external costs of transport from Ricardo-AEA. .  This also made evaluation only linked to the currency Euro which eliminated some exchange rate uncertainty.

Methodology and data of Corridorcalc 1.0

The general model and data sources for Corridorcalc 1.0 can be described as below:

external costs

General description of the methodology

  1. Specification of transport operation is carried out by the user and determines the essential settings for the performance calculation. In this version most settings are default values.
  2. Performance calculations are based on different credible models for each mode of traffic. Description of these models are available at: Establishment of amount of PM2.5 is based on the national reporting obligation for: Air emission annual data reporting (CLRTAP/EMEP) in Europe, For PM2.5 we analyzed the data from CLRTAP/EMEP and realized that tail pipe emissions from combustion which is our data source underestimate total PM emissions. Tire, brake wear and road abrasion is not included in these PM. Therefore we came to the conclusion that all tail pipe emissions of PM can be considered as PM2.5, and still this will underestimate the total emissions of PM2.5 from road traffic.
  3. The evaluation of the external costs from emissions are based on: Ricardo –AEA, Update of the handbook on External Costs of Transport, 8th January 2014
  4. Presentation of external costs is provided through Corridorcalc, available at

Distribution of emissions from various geographical situations is based on NTMCalc 4.0 assumptions deriving from Handbook for emission factors, HBEFA, related to various types of road as:

Road type distribution





* Urban – population density of 1500 inhabitants/km2; suburban – population density of 300 inhabitants/km2; rural – population density below 150 inhabitants/km2