Resources for Measuring Transportation Costs and Benefits

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Victoria Transport Policy Institute

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Updated 6 September 2019

This chapter describes transport costs and benefits, with information on methods for measuring them, and data sources. It includes costs related to vehicle ownership and use, travel time, road and parking facilities, traffic congestion, traffic crashes, environmental impacts, fuel externalities, land use impacts and equity impacts. This information can be used for evaluating transportation policies and programs. For more information see the Transportation Cost and Benefit Analysis Guidebook at www.vtpi.org/tca.

Index

Introduction. 1

Transportation Cost Estimates. 4

Vehicle Costs. 4

Travel Time Costs. 8

Road and Parking Facility Costs. 10

Congestion Costs. 15

Traffic Crashes. 16

Environmental Costs. 18

Fuel Externalities. 21

Impacts on Non-motorized Travel 21

Land Use Impacts. 22

Equity Impacts. 23

How Travel Changes Affect Costs. 23

Cost Summary and Comparison. 24

Cost Analysis Example. 30

Related Chapters and Resources. 31

References And Resources For More Information. 31

Introduction

Unless indicated otherwise, monetary values are in 2000 U.S. dollars. Other denominations and years are indicated. For example, CA$1997 = 1997 Canadian dollars.

Why Study Transportation Economic Impacts

Economic Impacts refer to costs and benefits. Costs (benefits) reduce (increase) scarce resources such as money, time, land, health, environmental quality, or any other item of value. Costs and benefits have a mirror image relationship: a cost can be defined as a reduction in benefits and a benefit can be defined as a reduction in costs. Transportation benefits are often measured in terms reduced transportation costs. For example, congestion reduction benefits consist of reductions in travel time and vehicle operating costs. Calculating costs is therefore the basis for calculating benefits.

Economists have developed estimates of many transportation costs for use in economic analysis, including vehicle expenses, travel time costs, road and parking facility costs, crash costs and environmental costs. This chapter summarizes these cost estimates and describes how to obtain additional information on individual costs.

This Encyclopedia evaluates TDM strategies based on effectiveness in achieving various transportation improvement objectives (i.e., benefits), including congestion reduction, road and parking facility savings, consumer savings, road safety, and environmental protection (Evaluating TDM). These benefits are usually measured in terms of cost reductions, so this chapter primarily describes transportation costs. However, focusing on costs does not ignore transportation benefits.

Costs and Benefits

Some people are uncomfortable with the idea that motorized transportation imposes “costs” on society, because it seems arbitrary and judgmental. Virtually any human activity can be considered to impose costs when viewed from some perspectives. What, they ask, is the reference case for transportation that imposes no costs? Doesn’t this focus on costs ignore the benefits of motorized transportation?

But, as this chapter shows, certain types of transportation activity impose higher costs on society than others. Although motor vehicle travel provide benefits, these benefits are largely internal, enjoyed directly by users. It is particularly important to identify external impacts (benefits and costs your neighbors have on you).

Rather than focusing on costs, some people may be more comfortable focusing on benefits. The information in this chapter can be used to identify the benefits to society of a more efficient and diverse transportation system. In some situations you would probably prefer that your neighbors reduce their automobile use and rely more on alternative forms of transportation, and all else being equal, you would prefer public policies that encourage more efficient and balanced transportation, and help reduce the transportation costs you bear.

Impact Attributes

Transportation costs can be categorized by the following attributes:

1. Distribution (Internal and External Impacts)

Internal (also called user) costs and benefits are borne or accrue directly by a good’s consumer. External costs and benefits are borne or accrue by others. Social costs are the total of both internal and external impacts. External impacts do not directly affect consumers’ decisions, and so are a form of market failure (Market Principles).

2. Variable and Fixed

Variable (also called marginal) costs increase with consumption. Fixed costs do not. For example, fuel, travel time and crash risk are variable vehicle costs because they increase directly with vehicle mileage, while depreciation, insurance, and residential parking are considered fixed, because vehicle owners pay the same, regardless of how much a vehicle is used. The distinction between fixed and variable often depends on perspective. For example, depreciation is often considered a fixed cost because car owners make the same payments no matter how many miles a year they drive, but a car’s operating life and resale value are affected by how much it is driven, so depreciation is partly variable over the long term.

3. Market or Non-Market

Market costs involve goods that are traded in a competitive market, such as vehicles, land and fuel. Non-market costs involve goods that are not regularly traded in markets such as clean air, crash injuries, and quiet. A number of techniques can be used to determine the value that consumers place on non-market goods.

4. Perceived or Actual

There is often a difference between perceived and actual automobile costs. Motorists tend to perceive immediate costs such as travel time, stress, parking fees, fuel, and transit fares, while costs that are paid infrequently, such as insurance, depreciation, maintenance, repairs and residential parking, are often underestimated.

5. Price

Price refers to what a consumer pays in exchange for a particular good, or perceived-internal-variable cost. In general, a market is most efficient if prices reflect marginal costs (Market Principles).

Evaluating Transportation Benefits

Transportation provides tremendous benefits, and various techniques can be used to measure these benefits (Goodwin and Persson, 1999). These are so large that it is difficult to calculate the total benefits of all transportation activities. However, even if such a number could be calculated it would have little practical use. In most planning situations the important factor is the marginal (incremental) benefits provided by a particular policy or project compared with a Base Case (TDM Evaluation). Marginal transportation benefits can be divided into these two major categories:

Mobility and Access Benefits

Mobility benefits result from increased travel, such as increased automobile mileage, increased transit or aviation trips, increased walking and cycling, and increased freight transport. Access benefits are similar to mobility benefits, but also include the benefits from access improvements that reduce the need for physical travel, such as more efficient land use, delivery services and telework. These reflect the incremental benefits compared with a reduced level of mobility or access, such as the benefits individuals and society gains from access to school, employment, shopping, friends and recreation activities.

Efficiency Benefits

Efficiency benefits result from more efficient travel, such as when travelers shift from driving to transit or ridesharing under urban-peak travel conditions, or when a consumer avoids a trip by telecommuting or teleshopping. These reflect the cost savings to individuals and society when transportation becomes more efficient (fewer total resources are consumed to provide a given benefit).

These different types of benefits require different approaches to evaluate. Mobility benefits are usually measured in terms off increased travel (Evaluating Transportation Choice). Efficiency benefits are often measured in terms of reduced vehicle travel. A transportation evaluation process that only considers one category of benefits may overlook significant benefits or costs, and may result in solutions to one problem that exacerbates others. For example, the benefits of a road capacity expansion program are measured in terms of mobility benefits. The analysis assumes that more vehicle traffic speed and volume is necessarily better. The benefits of a TDM program intended to reduce congestion and pollution are measured in terms of efficiency benefits. The analysis assumes that less vehicle traffic volume is better. A planning process that is only concerned with environmental protection could reduce mobility benefits, while a planning process that is only concerned with increasing mobility benefits could reduce environmental quality. Comprehensive Evaluation considers both types of benefits.

Transportation Cost Estimates

This section describes specific categories of transportation costs, with information on how they are measured and data sources. For more information see the appropriate chapters in the Transportation Cost and Benefit Analysis Guidebook at www.vtpi.org/tca.

Vehicle Costs

Vehicle costs are direct user financial expenses for vehicles. These are often divided into vehicle ownership (fixed) and vehicle operating (variable) costs (Costs of Driving).

Several organizations publish typical vehicle purchase, ownership and operating cost estimates:

· The American Automobile Association’s Your Driving Costs booklet (available through the Public Affairs office at www.aaapublicaffairs.com), provides estimates of typical annualized ownership and operating costs for several types of vehicles during their first five years of operation.

· The Canadian Automobile Association’s Driving Costs (www.caa.ca/PDF/3708-EN-2005.pdf), provides estimates of typical annualized vehicle ownership and operating costs for several types of vehicles during their first four years of operation.

· Runzheimer International (www.runzheimer.com), sells estimates of typical annualized ownership and operating costs for several types of vehicles, which is the basis for cost values published by automobile associations.

· The Black Book, National Auto Research Division of Hearst Business Media Corporation (www.blackbookusa.com and www.canadianblackbook.com), provides wholesale and retail price estimates for new and used vehicles, taking into account model, age, condition, mileage, accessories and geographic location; also available at (www.cars.com).

· Intellichoice (www.intellichoice.com), provides price estimates for new and used vehicles

· UK Automobile Association (www.theaa.co.uk), provides estimates of typical annualized ownership and operating costs for several types of vehicles.

· The Way To Go Seattle Car Cost Worksheet (www.cityofseattle.net/carsmart/carcostworksheet.htm) calculates your car cost and compares it to other transportation options.

Table 1 summarizes one example of this information.

Table 1 American Automobile Association Vehicle Cost Estimates (AAA, 2006)

	Small Sedan	Medium Sedan	Large Sedan	SUV	Minivan
Gas & oil	8.0¢	9.8¢	10.7¢	13.7¢	11.4¢
Maintenance	4.5¢	4.9¢	5.4¢	5.6¢	5.0¢
Tires	0.5¢	0.8¢	0.7¢	0.8¢	0.6¢
Operating costs/mile	13.3¢	15.5¢	16.8¢	20.1¢	17.0¢
Insurance	$892	$902	$982	$918	$843
License & registration	$397	$551	$658	$683	$612
Depreciation	$2,503	$3,449	$4,224	$4,254	$4,043
Financing	$511	$739	$899	$935	$830
Ownership costs/year	$4,303	$5,642	$6,763	$6,790	$6,328
*Total for 15,000 annual miles*	*$6,253*	*$7,967*	*$9,283*	*$9,805*	*$8,878*
*Average cost per mile*	*41.7¢*	*53.1¢*	*61.9¢*	*65.4¢*	*59.2¢*

This table summarizes vehicle cost estimates published by the American Automobile Association. It represents typical costs during the first five years of vehicle operation, and so tends to overestimate depreciation and financing costs and underestimate repair costs. It also ignores incidental costs, such as user paid parking and tolls.

These estimates tend to overstate depreciation and insurance, and understate maintenance and repair costs compared to the overall vehicle fleet because they assume a relatively new car (the first five years of vehicle life). Lifecycle cost analysis (Table 2) and consumer expenditure surveys (Table 3) indicate somewhat lower average costs per vehicle-year.

Table 2 Lifecycle Costs for Selected Vehicles (1991 ¢/mile)

	Sub-Compact	Intermediate	Full-size Van	Full-size Pickup
Fuel and oil	3.5	4.6	8.1	6.2
Fuel Taxes	1.3	1.7	3	2.3
Tolls and Parking	1.3	1.3	1.3	1.3
Tires	0.7	1	1.4	1.2
Total Variable Costs	6.8 (24%)	8.6 (26%)	13.8 (31%)	11 (31%)
Depreciation*	8.6	10.7	14.2	9.5
Insurance	7.1	7	8.5	7.2
Maintenance*	4	4.2	4.2	4.3
Finance Charges	1.6	2	2.9	2.2
Licensing & Registration	0.8	0.9	1.2	0.9
Total Fixed Costs	22.1 (76%)	24.8 (74%)	31 (69%)	24.1 (69%)
*Overall Total*	*28.9*	*33.4*	*44.8*	*35.1*

* Actually partly fixed as discussed above.

(From Jack Faucett Associates, The Costs of Owning and Operating Automobiles, Vans and Light Trucks, 1991, FHWA, Washington DC, 1992.)

Vehicle cost data is also available from various consumer expenditure surveys, such as summarized in table 3.

Table 3 Average Transportation Expenditures (2004 U.S. Dollars)

	Per Household	Portion of Household Total	Per Vehicle Year	Per Vehicle Mile
Vehicle Purchases	$3,397	7.8%	$1,788	$0.14
Fuel and oil	$1,598	3.7%	$841	$0.07
Financing charges	$323	0.7%	$170	$0.01
Maintenance and repairs	$652	1.5%	$343	$0.03
Insurance	$964	2.2%	$507	$0.04
Other vehicle expenses	$426	1.0%	$224	$0.02
Total vehicle expenses	$7,360	17%	$3,874	$0.31
Public transport expenses	$441	1.0%	NA	NA
*Total transportation expenses*	*$7,801*	*18.0%*	NA	NA

(2004 Consumer Expenditure Survey, Bureau of Labor Statistics, www.bls.gov. “Public Transport” includes intercity air, rail and bus transport, as well as local transit services).

Vehicle Operating Costs

Vehicle operating costs are usually defined to include short-term (or “out-of-pocket”) expenses, such as fuel and oil, tire wear, tolls and short-term parking fees. It sometimes also includes a portion of vehicle maintenance.

Fuel is usually the largest portion of vehicle operating costs. Fuel price and consumption data are available from:

· The International Energy Agency (www.iea.org).

· The American Petroleum Institute (www.api.org)

· The Canadian Petroleum Communication Foundation website (www.pcf.ab.ca)

· The Canadian Petroleum Products Institute (www.cppi.ca).

· The Transportation Energy Data Book (www.ott.doe.gov).

Many experts believe that petroleum prices are likely to increase in real terms starting early in the 21st Century (Campbell and Laherrère, 1998; Magoon, 2000). This suggests that analysis of long-term fuel costs should include a price escalator factor representing a growth trend, or a wide range of values to represent the uncertainty over future prices.

Some highway investment evaluation models calculate vehicle-operating cost (VOC), including fuel, oil and tires, and maintenance, for different vehicle classes used under various road conditions. For example, they can calculate the difference in vehicle costs between an unpaved and a paved road, congested or uncongested conditions, or between stop-and-go traffic and a grade-separated highway.

Most estimates of vehicle operating costs understate true variable vehicle costs. Many expenses generally classified as “fixed” are actually partly variable:

· Driving a vehicle increases its depreciation, reducing the vehicle’s resale value and operating life (see mileage-based depreciation factors by used-vehicle experts such as www.intellichoice.com and www.edmunds.com).

· Additional mileage increases the frequency of maintenance, repairs, failures, replacement, traffic violations and vehicle crashes (which can cause direct costs and higher insurance premiums).

· On leased vehicles, additional mileage can lead to “excess mileage” fees.

These additional mileage-related costs typically average about 5-15¢ per mile. In other words, the true variable cost of driving a vehicle is 20-30¢ per mile, twice as high as most published estimates. As a result, reducing vehicle mileage provides greater financial savings to consumers than is generally recognized (Comprehensive Evaluation).

For example, a TDM strategy that allows households to reduce their annual vehicle mileage by 3,000 miles per year (such as a transit, rideshare or cycling improvement) provides about $750 in direct annual consumer savings, based on 25¢ per mile in variable costs, not just the $300 in fuel cost savings. Improved transportation choice may allow some households to reduce their vehicle ownership or defer the replacement of existing vehicles, providing even greater consumer savings. Improved transit service may allow a two-worker household to get by with just one car, saving thousands of dollars a year compared with owning two cars used daily for commuting.

A number of factors affect per capita transportation costs, including land use patterns and transportation choice. One study (McCann, 2000) found that households in more Automobile Dependent communities devote more than 20% of household expenditures to surface transportation (more than $8,500 annually), while those in communities with more diverse transportation systems spend less than 17% (less than $5,500 annually). An international comparison by Newman and Kenworthy (1999) also found higher per capita transportation expenditures in more automobile dependent regions. Similar differences may exist between more and less automobile dependent neighborhoods within regions, for example, between a more accessible and automobile-oriented neighborhoods. This suggests that TDM strategies that create more efficient land use, such as Smart Growth and Location Efficient Development may provide overall transportation cost savings to households.

Transit Fares

Information on public transit costs and fares is available from:

· U.S. Federal Transit Administration’s National Transit Database (www.fta.dot.gov/ntl/database.html).

· The American Public Transit Association (www.apta.com).

· The Canadian Urban Transit Association (www.cutaactu.on.ca)

· Cambridge Systematics, Characteristics of Urban Transportation Systems, 1992.

Travel Time Costs

Travel time is one of the largest transport costs, and travel time savings are often the greatest potential benefit of transport improvements. Various studies have calculated travel time values relative to wage rates based on traveler behavior, and several time value schedules have been developed based on such studies (Litman 2009; Small, et al. 1999). Many specific attributes of travel, such as comfort, safety and prestige, can be reflected in travel time costs. Below are some of the main factors affecting travel costs:

· Commercial vehicle costs include drivers’ wages and overhead costs, vehicle costs; costs for the value of freight (particularly perishables), and sometimes costs for delays beyond a critical delivery time.

· The cost of personal travel is usually estimated at one-quarter to one-half of prevailing wage rates.

· Travel time costs tend to be higher for driving under congested conditions or passengers on crowded transit vehicles, and lower for a comfortable passenger.

· Travel time costs tend to be particularly high for unexpected delays.

· Travel time costs per minute tend to increase for longer commutes (more than about 20 minutes).

· Under pleasant conditions, walking and cycling can have positive value, but under unpleasant or unsafe conditions (for example, walking along a busy highway or waiting for a bus in an area that seems dirty and unsafe), time spent walking, cycling and waiting for transit has costs two or three times higher than time spent traveling.

· Travel time costs tend to increase with income, and tend to be lower for children and people who are retired or unemployed. (Or, to put it differently, people with full-time jobs tend to have more demands on their time, and so tend to be willing to pay more for travel time savings.)

· Personal needs and preferences vary. Some people place a relatively high cost on time spent driving in congestion, and place a low value on time spent as a transit passenger, while others have the opposite preferences.

· A certain amount of travel time has a low cost or positive value because consumers enjoy the experience. Under certain conditions, walking, cycling, driving, train travel and air travel are considered enjoyable and desirable, although under other conditions the same type of travel is considered undesirable and costly.

The box below summarizes one travel time cost schedule used to evaluate the benefits of travel time savings.

Travel Time Values (Waters 1992)

Basic Values

Traveler Category Travel Time Values

Commercial vehicle driver Wage rate plus fringe benefits

Personal vehicle driver 50% of current average wage

Adult car or bus passenger 35% of current average wage

Child passenger under 16 years 25% of current average wage

Congestion Multipliers

Congestion increases travel time costs for drivers by the following amounts:

Roadway Level of Service Rating

LOS D Multiply by 1.33

LOS E Multiply by 1.67

LOS F Multiply by 2.0

People in developed countries spend an average of about one hour a day in motor vehicle travel. Valuing travel time at $8 per hour (one-half of a $16/hr average wage) indicates an overall average per capita travel time cost of about $3,000.

It is inappropriate to evaluate TDM strategies based simply on average travel speeds. In many situations consumers prefer slower travel mode, such as walking, cycling or transit, because they enjoy the activity or value an opportunity to save money. See Evaluating TDM for information on consumer surplus methods for calculating the value of changes in travel time.

Road and Parking Facility Costs

Roads and parking are usually provided free or bundled with facility costs (for example, parking is usually included with housing purchases or rents) so most consumers have little idea of what a road or parking space costs to produce. Below are typical cost data.

Roadway Construction and Maintenance Costs

Roadway expenditure data can be obtained from government accounts (Highway Statistics, FHWA www.fhwa.dot.gov/ohim and Transportation Statistics, BTS, www.bts.gov). Also see Highway Taxes and Fees; How They Are Collected and Distributed (www.fhwa.dot.gov/ohim/hwytaxes/2001/intro.htm). Cambridge Systematics (1992) and Price Trends in Federal-Aid Highway Construction (a quarterly report published by the FHWA) provide information on highway construction costs. Roadway expenditures by all levels of U.S. government totaled $117 billion in 1999.

Highway development involves various costs, including planning and design, land acquisition, and construction costs. These costs vary significantly depending on conditions. In rural areas, planning and land costs may be modest, and construction expenses may dominate project costs. In urban areas, planning and land costs tend to be much higher. Adding capacity to existing roads can be relatively inexpensive if there is adequate right-of-way and few intersections, or very expensive if it requires land acquisition or rebuilding intersections.

Road construction costs (grading and paving, not including planning and land costs) typically range from $250,000 per lane-mile in “easy” conditions up to $2,500,000 per lane-mile in “difficult” conditions (Construction and Maintenance Branch, 1998). Intersections also add significant costs. Rural intersections typically cost $2,000,000 to $4,000,000, while a standard urban interchange typically costs $10,000,000 to $15,000,000 for construction, plus planning and land costs. Table 4 summarizes typical costs for roadway projects under various conditions.

Table 4 Highway Improvement Costs (Thousands of 2000 U.S. dollars per lane-mile)

	Freeways/ Expressways		Other Divided Highways		Undivided Highways
	Built-Up Areas	Outlying Areas	Built-Up Areas	Outlying Areas	Built-Up Areas	Outlying Areas
Right-of-Way for Additional Lanes	$632	$253	$570	$229	$514	$209
Construction for Additional Lanes	$2,541	$2,138	$2,288	$1,922	$2,057	$1,728
Total Reconstruction with More Lanes	$3,173	$2,391	$2,858	$2,152	$2,572	$1,936
Reconstruction with Wider Lanes	$2,330	$1,682	$2,099	$1,514	$1,889	$1,362
Pavement Reconstruction	$1,628	$1,466	$1,471	$1,321	$1,326	$1,190
Major Widening	$1,300	$1,043	$1,170	$940	$1,052	$845
Minor Widening	$940	$721	$845	$648	$760	$584
Resurfacing with Shoulder Improv.	$443	$388	$400	$350	$361	$314
Resurfacing	$193	$178	$175	$158	$157	$145

(From Cambridge Systematics, 1992, Table 4-16. Original Source: Jack Faucett Associates; The Highway Economic Requirements System Technical Report, Federal Highway Administration; July 1991. Based on 1989 to 2000 inflation rate of 1.39)

According to FHWA data, U.S. Interstate Highway costs average $11.0 million/mile in rural areas, $49.4 million in urban areas, and $23.1 weighted average, based on 1981 expenditures updated to reflect inflation using the FHWA Price Trends for Federal-Aid Highway Construction. Assuming an average of 4 lanes in rural areas and 6 lanes in urban areas this indicates $2.75 million per lane-mile in rural areas, $8.2 million per lane-mile in rural areas. Real costs of urban highway capacity expansion projects are likely to increase over time, due to increasing land costs and because the cheapest projects have already been implemented, leaving relatively high-cost projects to be implemented. DeCorla-Souza and Jensen-Fisher (1997) estimate that adding urban highway capacity typically costs $0.20 to $1.00 per additional peak-period automobile trip.

Roadway wear increases exponentially with vehicle weight. Heavy trucks can impose as much road wear as thousands of automobiles (FHWA 1997). The PaveSim computer program developed at the University of Iowa calculates the pavement wear for various types of vehicles under various road conditions (Bhatti, Lin, Taylor and Hart 1997).

Roadway Land Value

Land is a major resource cost of roads and other transport facilities (Litman 2000). Virtually all land has alternative uses, either for market activities such as buildings and farms, or for nonmarket activities such as greenspace. A TDM strategy that reduces road or parking requirements tends to provide economic and environmental benefits by leaving more land available for other productive uses. Except when additional right-of-way is purchased for a road project, land devoted to roads is usually considered a sunk cost and users pay no equivalent of rent or property taxes. Economic neutrality requires that land be priced and taxed at the same rate for competing uses (Market Principles). Failure to consider roadway land value in investment and pricing decisions underprices road transport relative to rail (which pays rent and taxes on right-of-way), and underprices transport relative to other goods, reducing economic efficiency.

Delucchi (1998) estimates the opportunity cost of land devoted to the U.S. road system at $218 billion in 1991, which represents an annualized value in current dollars of about $25 billion. His analysis uses a relatively low land value ($50,000 per acre for urban land and $5,000 for rural land). Lee (1995) applies the FHWA’s prototypical land acquisition cost per mile for 9 roadway classes to the entire U.S. road system to estimate total land value and calculate annual interest forgone to be $75 billion in 1992 dollars, equivalent to about $100 billion in 2000 dollars.

Roadway Cost Allocation

Roadway cost allocation refers to analysis models that assign roadway costs to various road user groups based on each groups share of costs imposed (Jones and Nix, 1995; FHWA, 1997).

Table 5 summarizes results of a recent cost allocation study showing the average roadway costs imposed by different vehicle classes on different types of roads, their user payments, and the residual external costs. Federal, state and provincial highway expenses are largely funded by special user charges (fuel taxes, registration fees and road tolls) and so can be considered internal costs. Local roads and municipal traffic services (traffic police, street lighting, planning, and emergency services) are largely funded by local taxes, indicating that roadway costs not funded through user fees average 2-4¢ per vehicle-mile (Delucchi 1998).

Table 5 Roadway Cost Responsibility Per Mile (Year 2000) (FHWA, 1997a)

Vehicle Class	Federal Costs	State Costs	Local Costs	Total Costs	User Payments	External Costs
Automobiles	$0.007	$0.020	$0.009	$0.035	$0.026	$0.009
Pickups and Vans	$0.007	$0.020	$0.009	$0.037	$0.034	$0.003
Single Unit Trucks	$0.038	$0.067	$0.041	$0.146	$0.112	$0.034
Combination Trucks	$0.071	$0.095	$0.035	$0.202	$0.157	$0.044
Buses	$0.030	$0.052	$0.036	$0.118	$0.046	$0.072
All Vehicles	$0.011	$0.025	$0.011	$0.047	$0.036	$0.010

Reduced vehicle travel reduces maintenance and traffic service costs (e.g., such as policing and emergency response). Reducing urban-peak traffic also reduces the need to add roadway capacity. Shifts from automobile to bus transport may increase some road maintenance costs (heavy vehicles tend to cause high levels of road wear).

Not all roadway costs need to be assigned to motor vehicle users since roads also provide access for non-motorized modes and public services. A portion of roadway costs can be assigned to Basic Access and motorists charged only additional costs associated with their vehicle use. But since basic access can be provided by a cheaper road system (a single land of lightly-paved road), most current roadway expenditures can be assigned to motor vehicle use (Land Use Evaluation).

Traffic Services

In addition to facility costs, road use requires a number of traffic services that include policing, emergency response, planning, courts and street lighting. Delucchi (1997, report #7) identifies a number of motor vehicle costs borne by municipal governments, including off-street parking ($11.9-19.8 billion), policing ($8.2-12.2 billion), fire protection ($0.7-2.8 billion), and judicial and jail system expenses ($8.7-12.4 billion) in 1997 U.S. dollars. Expenditures on “City and County Services” (which excludes roadway facility construction and maintenance costs) averaged $98 per capita in the Puget Sound region, or about 1¢ per mile, in 1995 (PSRC 1996). This compares with $315 spent per capita on total highway, road and street construction and maintenance. Other researchers estimate that urban traffic service costs average 2.8¢ per vehicle mile in 1992 dollars (Small 1992).

Parking Costs

Table 6 summarizes typical costs of various types of parking facilities. Actual costs depend on real estate prices, facility design, and conditions (Parking Evaluation). Annualized costs vary from about $250 per stall if otherwise un-used land is available and construction and operating costs are minimal, to more than $2,000 for structured parking with attendants (Dorsett, 1998; Litman, 2001). This only includes direct financial costs for facilities, and does not include indirect and environmental costs, or additional costs associated with collecting parking fees, which typically add $50-400 annually per stall, depending on Pricing Method.

Table 6 Typical Parking Facility Costs (Parking Evaluation)

Type of Facility	Land Costs	Land Costs	Construction Costs	O & M Costs	Total Cost	Monthly Cost
	Per Acre	Per Space	Per Space	Annual, Per Space	Annual, Per Space	Per Space
Suburban, Surface, Free Land	$0	$0	$1,500	$100	$242	$20
Suburban, Surface	$50,000	$455	$1,500	$100	$284	$24
Suburban, 2-Level Structure	$50,000	$227	$6,000	$200	$788	$66
Urban, Surface	$250,000	$2,083	$2,000	$150	$535	$45
Urban, 3-Level Structure	$250,000	$694	$8,000	$250	$1,071	$89
Urban, Underground	$250,000	$0	$20,000	$350	$2,238	$186
CBD, Surface	$1,000,000	$7,692	$2,500	$200	$1,162	$97
CBC, 4-Level Structure	$1,000,000	$1,923	$10,000	$300	$1,425	$119
CBD, Underground	$1,000,000	$0	$22,000	$400	$2,288	$191

This table illustrates the financial costs of providing parking facilities under various conditions. CBC = Central Business District.

In a detailed analysis, Delucchi (1998) estimates the cost of off-street residential parking to be $15.4 to $41 billion (taking into account that residential garages often have other uses), and the cost of unpriced, off-street, non-residential parking to total $148 to $288 billion (in 1991 U.S. dollars). This indicates that residential parking represents a cost of $22 to $60 billion, and unpriced, off-street, non-residential parking represents a cost of $215 to $420 billion annually in 2000 dollars (assuming 30% inflation and 12% growth in parking supply between 1991 and 2000). This represents a total annualized cost of about $1,500 per vehicle.

Reductions in automobile trips may provide little short-term parking cost savings if there is abundant parking supply, since unused parking spaces could simply be unused. However, over the long term, the excess parking spaces can have value if they are leased or the land is used for other purposes. Parking Management can help capture these benefits.

Incremental (Marginal) Costs of Accommodating Urban-Peak Automobile Trips

As described above, adding urban highway capacity typically costs $2-4 million per lane-mile, and more if land costs are high or intersections need reconstruction to accommodate additional lanes. This represents an annualized cost of $100,000-250,000 per lane-mile (assuming a 7% interest rate over 20 years), and more in many situations. Dividing this by 2,000 to 4,000 additional peak-period vehicles for 250 annual commute days indicates a cost of 10-50¢ or more per additional vehicle-mile of travel, plus 5-10¢ per vehicle-mile for road maintenance and traffic services, indicating roadway costs of $3-10 for a commute trip that involves 10-miles of travel under congested urban-peak roadway conditions (if roadway projects also improve safety or provide other benefits to off-peak travelers they can be assigned an appropriate portion of costs). In addition, employee parking costs typically average $2-10 per day, indicating total facility cost borne by governments and businesses averaging $5-20 per day for a typical urban-peak automobile commute trip.

Congestion Costs

Congestion costs consist of the incremental delay, stress, vehicle operating costs and pollution that results from each additional vehicle added to the traffic stream. It is an externality in terms of economic efficiency, and to some degree in terms of equity due to differences in the cost per passenger-mile imposed by different modes.

Several approaches are used to calculate congestion costs (TRB 1997). The Texas Transportation Institute developed an index for comparing congestion in different areas, which is used to calculate total congestion costs in major U.S. cities, estimated to total $78 billion in 1999 (TTI, 2001). Delucchi (1997) estimates U.S. traffic congestion external costs, including travel time delay and increased fuel consumption, totaled $34 to $146 billion in 1991. These estimates indicate that total U.S. annual congestion costs, probably average about $100 billion.

Different types of vehicles cause different amounts of congestion, which is measured in units called “passenger car equivalents” or PCEs. Table 7 illustrates estimated congestion costs for various vehicles and conditions.

Table 7 Estimated Highway Congestion Costs (Cents Per Vehicle Mile) (FHWA, 1997a)

	Rural Highways			Urban Highways			All Highways
	High	Med.	Low	High	Med.	Low		High	Med.	Low
Automobile	3.76	1.28	0.34	18.27	6.21	1.64		13.17	4.48	1.19
Pickup & Van	3.80	1.29	0.34	17.78	6.04	1.60		11.75	4.00	1.06
Buses	6.96	2.37	0.63	37.59	12.78	3.38		24.79	8.43	2.23
Single Unit Trucks	7.43	2.53	0.67	42.65	14.50	3.84		26.81	9.11	2.41
Combination Trucks	10.87	3.70	0.98	49.34	16.78	4.44		25.81	8.78	2.32
All Vehicles	4.40	1.50	0.40	19.72	6.71	1.78		13.81	4.70	1.24

Most congestion studies only consider costs imposed on motor vehicle users. The delay and accident risk costs that vehicle traffic and highways impose on non-motorized travel is called the “barrier effect” or “severance.” Some studies have quantified this cost in terms of travel delay and non-motorized trips foregone (Evaluating Nonmotorized Transport). Such costs can be significant, particularly in urban areas.

Most TDM strategies can help reduce congestion costs. Strategies that reduce urban-peak vehicle trips tend to provide the greatest benefits. The analysis of congestion reduction benefits can be complicated by the Rebound Effect, which refers to the tendency of traffic congestion to maintain a self-limiting equilibrium. As a result, roadway capacity expansion and TDM strategies that simply reduce some peak-period vehicle trips may provide little reduction in congestion delays (instead they provide increased mobility benefits). Strategies that change the point of congestion equilibrium (such as Road Pricing, HOV Priority and grade separated Transit), and land use strategies that reduce travel distances, can reduce total congestion costs.

Traffic Crashes

Traffic crash costs include deaths, injuries, pain, disabilities, lost productivity, grief, material damage, and crash prevention expenses (Safety Impacts of TDM). (Many road safety experts prefer the term “crash” to “accident” because “accident” implies that the event was random, without cause or responsibility.)

Traffic crash Statistics are available from the following sources:

· The Bureau of Transportation Statistics (www.bts.gov). The BTS publication, North American Transportation in Figures, provides crash data for Canada, Mexico and the U.S.

· The National Highway Traffic Safety Administration (www.nhtsa.dot.gov) provides comprehensive information on traffic crashes and safety programs in the U.S.

· National Center for Statistics and Analysis (www.nhtsa.dot.gov/people/ncsa) collects and analyzes traffic crash data.

· Transport Canada (www.tc.gc.ca/roadsafety) provides traffic crash data for Canada.

· Eurostat (www.europa.eu.int) provides transportation and crash data for European countries.

· European Conference of Ministers of Transport (www.oecd.org/cem/stat) provides traffic crash data for European countries.

· G-7 Transportation Highlights (www.bts.gov/itt/G7HighlightsNov99/G-7book.pdf) provides transportation data for European countries, the U.S., Canada and Japan.

· International Road Traffic and Accident Database, (www.bast.de/htdocs/fachthemen/irtad//english/we2.html) provides international crash data.

A number of studies have developed monetized estimates of traffic crash costs. The National Highway Traffic Safety Administration estimates traffic crash monetary costs (excluding pain and lost quality of life) at $150 billion, which averages about 6.5¢ per vehicle mile (Blincoe, 1995). Another major study estimated that motor vehicle accidents costs totaled $358 billion in 1988 ($520 billion, or 22¢ per vehicle mile in 2000 dollars), a major component of which are nonmarket costs such as pain and lost quality of life (Miller, 1991). Table 8 indicates the cost values assigned to various types of crashes by the FHWA.

Table 8.a KABC Crash Severity Scale (FHWA, 1994)

KABC Scale
Severity	Descriptor	Cost (1994)
K	Fatal	$2,600,000
A	Incapacitating	$180,000
B	Injury Evident	$36,000
C	Injury Possible	$19,000
PDO	Property Damage Only	$2,000

Table 8.b Abbreviated Injury Scale (AIS) Crash Severity Scale (FHWA, 1994)

Abbreviated Injury Scale (AIS)
Severity	Descriptor	Cost (1994)
AIS 6	Fatal	$2,600,000
AIS 5	Critical	$1,980,000
AIS 4	Severe	$490,000
AIS 3	Serious	$150,000
AIS 2	Moderate	$40,000
AIS 1	Minor	$5,000

These tables show two commonly used crash severity indices.

Wang, Knipling and Blincoe (1999) provide comprehensive information on U.S. crashes and crash costs, as summarized in Table 9. They estimate U.S. crash costs to total $432 billion annually in 1997 dollars (about $500 billion in 2000 dollars).

Table 9 U.S. Crash Data and Estimated Crash Costs (1997) (Wang, Knipling and Blincoe, 1999)

	All Vehicles	Passenger Cars	Light Trucks/Vans	Combination Trucks	Single Unit Trucks	Motor-cycles
Police Reported Crashes	6,261,000	5,307,000	2,209,000	214,000	154,000	89,000
Minor-Moderate Injuries	3,433,000	3,020,000	1,183,000	85,000	65,000	78,000
Serious-Fatal Injuries	194,000	146,000	65,000	9,000	5,000	15,000
Crashes Per 100 M VMT	500	556	416	226	289	928
Crashes Per 1000 Veh.	59	65	48	135	36	22
Avg. Cost Per Crash	$52,610	$50,190	$50,750	$89,400	$66,370	$206,460
Avg. Cost Per VMT	$0.197	$0.248	$0.247	$0.226	$0.215	$2.331
Avg. Cost Per Veh. Year	$2,340	$2,900	$2,850	$13,520	$2,720	$5,410

This summarizes crash data. Additional information is provided in the original table. Cost values include non-market pain and grief costs.

Of these costs, roughly two-thirds are considered internal (borne directly by the individual motorist) and one-third are external (borne by other road users or society overall). A portion of internal crash costs (about $100 billion, or about 20% of total crash costs) consist of insurance payments, which are a fixed cost, while the rest are uncompensated losses borne directly by motorists, which can be considered an internal-variable cost. Table 10 indicates an estimate of external crash costs (costs imposed on pedestrians, expenses not paid by drivers, and the incremental crash risk associated with increased traffic volumes) for various vehicles by an FHWA study.

Table 10 Estimated Highway External Crash Costs (Cents Per Vehicle Mile) (FHWA, 1997a)

	Rural Highways			Urban Highways			All Highways
	High	Med.	Low	High	Med.	Low		High	Med.	Low
Automobile	9.68	3.15	1.76	4.03	1.28	0.78		6.02	1.94	1.13
Pickup & Van	10.21	3.31	1.75	4.05	1.27	0.74		6.70	2.15	1.17
Buses	14.15	4.40	2.36	6.25	1.89	1.08		9.55	2.94	1.62
Single Unit Trucks	5.97	2.00	0.97	2.21	0.71	0.40		3.90	1.29	0.65
Combination Trucks	6.90	2.20	1.02	3.67	1.16	0.56		5.65	1.79	0.84
All Vehicles	9.52	3.09	1.68	3.98	1.26	0.76		6.12	1.97	1.11

Increased traffic safety and personal security are among the greatest potential benefits of TDM (TDM Safety Impacts). These benefits vary depending on the type of travel impacts and other factors. TDM strategies that reduce total vehicle travel due to changes in mode, destination or trip frequency tend to provide safety benefits. Each 1% reduction in motor vehicle travel appears to reduce total crashes and casualties by about 1.6%. Some strategies can provide even greater safety benefits.

Environmental Costs

Information on vehicle emissions is available from:

· The USEPA Transportation Air Quality Center (www.epa.gov/otaq).

· Environmental Valuation Reference Inventory (www.evri.ca).

· The Transportation Energy Data Book (ORNL, 2000, available at www.ott.doe.gov).

· The European Environment Agency (www.eea.eu.int).

· Energy Conservation and Emission Reduction Strategies.

Several studies provide monetized estimates of the environmental costs of transportation (USEPA 1999; Delucchi 2000; Litman 2001). These include air, noise and water pollution, waste disposal and the environmental impacts associated with transportation facilities, such as loss of wildlife habitat. The TRL Strategic Environmental Assessment Newsletter provides information on efforts to monetize environmental costs for application in transportation planning. Delucchi (2000) estimates that U.S. motor vehicle environmental costs total approximately $100 billion annually.

Air Pollution

Air pollution is one of the most obvious environmental costs of motor vehicle use. Per mile emissions for many pollutants have declined over time due to emission control strategies. It is common to hear claims that automobile emissions have declined by 90% or more over the last few decades, but this is an exaggeration. Engine and fuel improvements have significantly reduced tailpipe emission rates under design conditions, but a significant portion of driving occurs under non-design conditions and non-tailpipe emissions are not controlled by these technologies.

Small and Kazimi (1995) estimated Southern California motor vehicle air pollution costs of human morbidity and mortality from tailpipe particulate and ozone emissions. Their middle estimate for gasoline cars is 3.3¢ per mile for automobiles and 53¢ per mile for heavy diesel trucks. They estimate that emission costs are about 1/3 this value in regions with less serious air pollution problems. These costs are expected to decline 50% by the year 2000 due to improved emission controls. The authors emphasize that this is only a partial analysis. Their study does not account for CO and non-tailpipe particulate emissions, both of which recent research indicate cause significant medical problems. It omits impacts on people without acute medical symptoms although residents of polluted cities suffer reduced lung capacity and are regularly instructed to limit their physical activities. It also omits ecological and aesthetic impacts, including global warming, ozone depletion, crops and wildlife damages, and reduced visibility. They state that road dust may add 4.3¢ per VMT, and global warming costs may be significant. Total automobile air pollution costs are therefore likely to be much higher than this study’s estimates.

Motor vehicles produce several potentially harmful air pollutants, including carbon monoxide (CO), particulates (PM), nitrogen oxides (NOx), volatile organic compound (VOCs, also called hydrocarbons [HC] or reactive organic compounds [ROG]), sulfur oxides (SOx), carbon dioxide (CO2), methane (CH4), road dust, and toxic gases such as benzene. Most air pollution cost studies focus on just a few impacts and so give an incomplete estimate of total pollution costs. Table 11 summarizes a relatively comprehensive estimate of local vehicle air pollution costs, excluding climate change emission costs (these are included in the Fuel Externalities cost estimate, later in this chapter).

Table 11 Air Pollution Health Costs by Motor Vehicle Class ($1990/VMT) (Delucchi, 1996, Table 11.7-6)

Vehicle Class	Low Estimate	Middle Value	High Estimate
Light Gasoline Vehicle	0.008	0.069	0.129
Light Gasoline Truck	0.012	0.100	0.188
Heavy Gasoline Vehicle	0.024	0.260	0.495
Light Diesel Vehicle	0.016	0.121	0.225
Light Diesel Truck	0.006	0.061	0.116
Heavy Diesel Truck	0.054	0.644	1.233
Weighted Fleet Average	0.011	0.112	0.213

There is particular uncertainty about climate change emission costs. An increasing body of scientific evidence indicates that climate change is a significant risk. For example, the American Geophysical Union concluded that, “the present level of scientific uncertainty does not justify inaction in the mitigation of human-induced climate change” (AGU, 1998). Table 12 summarizes one estimate of greenhouse emission costs. This indicates a greenhouse gas cost of 18¢ to 56¢ U.S. per gallon of gasoline, or about 0.9¢ to 2.8¢ per mile.

Table 12 Greenhouse Gas Damage Costs (ExternE 1998)

Emission	Units	Low	Mid Point	High
Carbon Dioxide	ECU/tonne carbon	74	152	230
Carbon Dioxide	ECU/tonne CO₂	20	42	63
Methane	ECU/tonne CH₄	370	540	710
Nitrous Oxide	ECU/tonne N₂O	6,800	21,400	36,000

Noise Pollution

Motor vehicle traffic imposes noise pollution. Traffic noise tends to increase with traffic speed, accelerations, the portion of heavy vehicles and motorcycles, and development density. Noise costs tend to be much higher on local urban roads, where traffic tends to be closer to residences. Information on noise costs is available from FHWA (1997b) and the Noise Pollution Clearinghouse (www.nonoise.org).

Water Pollution and Hydrologic Impacts

Roads and motor vehicles use also contribute to water pollution, hydrologic impacts and waste disposal (such as used tires) which impose a variety of costs on society (USEPA, 1999). Information on hydrologic impacts is available at the NEMO Foundation (www.canr.uconn.edu/ces/nemo) and the Center for Watershed Protection (www.pipeline.com/~mrrunoff).

Waste Disposal

Motor vehicles produce a number of harmful waste products that can impose externalities, including used tires, batteries, junked cars, oil and other semi-hazardous materials resulting from motor vehicle production and maintenance. These wastes impose a variety of environmental, human health, aesthetic, and financial costs, through improper disposal, residual impact even when proper disposal is observed, and because some disposal efforts are subsidized by general taxes. Some new laws and policies are intended to internalize these costs. Crankcase oil recycling is encouraged, vendors are required to recycle used car batteries, and in some states a tire tax is dedicated to tire disposal.

Fuel Externalities

Fuel production and consumption can impose various external costs, including national security risks and macroeconomic impacts on individual economies that import fuel, depletion of non-renewable resources, various financial subsidies, and environmental damages (including greenhouse gas emissions). Put another way, there may be benefits to society from increased energy efficiency and conservation.

The International Energy Agency (www.iea.org), the American Petroleum Institute (www.api.org), the Canadian Petroleum Communication Foundation (www.pcf.ab.ca) and the Canadian Petroleum Products Institute (www.cppi.ca) provide fuel price and consumption data. The Transportation Energy Data Book (ORNL, 2000, available at www.ott.doe.gov) also provides useful information on transportation energy costs and consumption by transportation activities.

Greene and Tishchishyna (2000) estimate that oil market upheavals of the last 30 years have cost the U.S. economy $7 trillion (net present value) in reduced output, with a range of $3.5 to $14.6 trillion. These estimates do not include military, strategic or political costs associated with U.S. and world dependence on oil imports. They point out that each of the major price shocks during this time period has preceded a major economic recession, and that higher petroleum import prices reduce national GDP.

An extensive review of economic and political issues concludes that, “if U.S. motor vehicles did not use petroleum, the U.S. would reduce its defense expenditures in the long run by roughly $1 to 10 billion per year.” (Delucchi and Murphy, 1996). A major study by the National Research Council (NRC, 2001) estimates that these externalities average about 30¢ per gallon of gasoline.

Impacts on Non-motorized Travel

Changes in the design of roads and parking facilities, vehicle traffic volumes and speeds, and the quality of the pedestrian environment can affect the convenience, safety and comfort of walking and cycling (Evaluating Nonmotorized Transport). The Barrier Effect (also called Severance) refers to the tendency of roads and traffic to create a barrier to nonmotorized travel. It represents a degradation of the pedestrian and bicyclist environment that reduces the viability of these modes, often leading to increased driving. Traffic Calming, Vehicle Restrictions, Pedestrian and Cycling Improvements and various Land Use Factors can all have significant impacts on non-motorized transportation.

Land Use Impacts

A number of studies indicate that lower-density, urban periphery, automobile oriented development patterns (commonly called “sprawl”) impose a number of economic, social and environmental costs (Evaluating Land Use Impacts). Table 13 summarizes information on these costs.

Table 13 Sprawl Costs and Benefits (based on Burchell, 1998 and others)

	Alleged Costs	Rating	Alleged Benefits	Rating
	Higher infrastructure costs	High	Lower public operating costs	Medium
Public Services	Higher public operating costs	Medium	Efficient long-term growth	Low
	Increased vehicle use	High	Shorter commute times	Low
	Increased travel times	Low	Less congestion	Uncertain
Transportation costs	Higher household transportation spending	Uncertain	Lower government transportation costs	Low
	Less efficient transit/ fewer travel choices	High
	Higher transport social costs	Medium
	Loss of agricultural land	High	Increased access to open space	Low
Environmental	Loss of greenspace, habitat	High
	Increased energy use	Medium
	Increased air pollution	Uncertain
	Aesthetically displeasing	Low	Lower crime rate	Low
Quality of life	Reduced sense of community	Medium	Cheaper retail goods	Medium
	Less historic preservation	Medium	Fosters economic well-being	Medium
	Fosters segregation/exclusion	Uncertain	Fosters local land-use decisions	Medium
Social issues	Worsens inner-city deterioration	Medium	Enhances municipal diversity and choice.	Medium
	Fosters spatial mismatch	Medium
Economic	Reduced agglomeration efficiencies.	High

Ratings indicate whether there is agreement this condition exists and is linked to sprawl. See Litman, 2004 for discussion.

Some researchers argue that a more balanced transportation system can increase community cohesion, reduce crime and increased employment opportunities for disadvantaged populations. Untermann and Vernez Moudon (1989) studied traffic impacts on neighborhoods and conclude,

“A deeper issue than the functional problems caused by road widening and traffic buildup is the loss of sense of community in many districts. Sense of community traditionally evolves through easy foot access--people meet and talk on foot, which helps them develop contacts, friendships, trust, and commitment to their community. When everyone is in cars there can be no social contact between neighbors, and social contact is essential to developing commitment to neighborhood.”

Although they are difficult to measure, these indicate that there are likely to be benefits from reducing traffic impacts in neighborhoods, reducing the amount of land paved for roads and parking facilities, and the preserving greenspace.

Equity Impacts

Transportation policies can have a variety of Equity impacts. Some people argue that transportation policies that favor automobile travel are inequitable because they favor motorists over people who use alternative forms of transportation, who are often economically, socially and physically disadvantaged. To the degree that automobile use makes motorists relatively better off compared with non-drivers, it can be considered to impose equity costs.

Some TDM strategies increase fairness (horizontal equity) by making users pay directly for use of roads and parking facilities; by internalizing external costs associated with congestion, crash risk and pollution emissions; and by removing market distortions that favor automobile travel over other modes. Other strategies rely on subsidies. Some TDM strategies benefit disadvantaged groups by improving transportation choices.

How Travel Changes Affect Costs

The magnitude of benefits provided by TDM varies depending on the type of travel changes they produce, location, and other factors.

· Strategies that shift travel from peak to off-peak reduce congestion, and therefore per-mile vehicle cost and emission rates, although these benefits may be partly offset by Rebound Effects. Shifting to less congested travel conditions tends to reduce the number of crashes, but the crashes that do occur tend to cause more damage, so crash costs do not necessarily decline.

· TDM strategies that reduce average vehicle trip distances provide modest benefits, including reductions in vehicle operating costs, traffic congestion, roadway costs, crashes, and energy consumption, but pollution emission benefits are small due to cold starts.

· Strategies that reduce per capita vehicle trips provide greater benefits, including reductions in parking costs. Strategies that shift travel to alternative modes, such as public transit, have mixed impacts based on the difference in costs between the modes. For example, Ridesharing (using a motor vehicle seat that would otherwise travel empty) imposes minimal incremental costs, while shifting to public transit may impose significant incremental costs if doing so requires additional transit service.

· Strategies that reduce per capita vehicle ownership provide additional benefits, including reductions in vehicle ownership and residential parking costs.

· Strategies that result in more efficient land use patterns can provide a wide range of benefits, including reductions in vehicle ownership and use, and reductions in the amount of land paved for roads and parking.

Table 14 summarizes these impacts.

Table 14 Cost Reductions Benefits by Travel Change

Costs	Time Shift	Shorter Veh. Trips	Reduced Veh. Trips	Reduced Veh. Ownership	Land Use Management
Traffic Services		1	2	3	3
Fuel Externalities	1	2	3	3	3
Residential Parking				3	3
Roadway Land Value		1	2	3	3
Traffic Congestion	3	2	3	3	3
Environmental Costs		1	3	3	3
Vehicle Fuel	1	2	3	3	3
Roadway Costs		2	3	3	3
Non-residential Parking			3	3	3
Crash Damages		2	3	3	3
Vehicle Ownership			1	3	3
Land Use Impacts		1	2	3	3
Equity Impacts			2	3	3

Rating from 1 (small benefit) to 3 (large benefit).

Cost Summary and Comparison

Transportation activities have a wide range of economic impacts. Numerous studies have investigated these benefits and costs. This information can help calculate the net benefits of a particular TDM strategy or program.

The table below summarizes estimates of motor vehicle costs. These are aggregate values and so do not necessarily represent the cost of a particular vehicle trip. Actual costs will vary depending on vehicle type, time, location, road conditions, and other factors. These costs are categorized into:

· Internal-Fixed - Users bear a direct cost that does not vary significantly with vehicle mileage.

· Internal-Variable (Int.-Var.) - Users bear a direct cost that increases with vehicle mileage.

· External - Users do not directly bear the cost.

Table 15 Motor Vehicle Annualized Cost Summary (2000 U.S. dollars)

Costs	Distribution	Totals (millions)	Per Capita	Per Vehicle	Per Veh-mile
Travel Time	Int.-Var.	$840,000	$3,000	$3,818	$0.336	28%
Vehicle Ownership	Internal-Fixed	$600,000	$2,143	$2,727	$0.240	20%
Crash Damages	66% Int.-Var.	$500,000	$1,786	$2,273	$0.200	17%
Non-residential Off-street Parking	90% External	$300,000	$1,071	$1,364	$0.120	10%
Vehicle Operation	Int.-Var.	$250,000	$893	$1,136	$0.100	8%
Roadway Costs	66% Int.-Var.	$120,000	$429	$545	$0.048	4%
Traffic Congestion	External	$100,000	$357	$455	$0.040	3%
Environmental Costs	External	$100,000	$357	$455	$0.040	3%
Roadway Land Value	External	$65,000	$232	$295	$0.026	2%
Residential Parking	Internal-Fixed	$50,000	$179	$227	$0.020	2%
Fuel Externalities	External	$40,000	$143	$182	$0.016	1%
Traffic Services	External	$30,000	$107	$136	$0.012	1%
Land Use Impacts	External	?	?	?	?
Equity Impacts	External	?	?	?	?
Totals		$2,995,000	$10,697	$13,613	$1.198	100%

This table summarizes estimates of various motor vehicle costs.

Table 16 shows the distribution of these estimated costs, measured per vehicle-year.

Table 16 Cost Distribution (2000 U.S. dollars Per Vehicle-Year)

	Internal Variable	Internal Fixed	External	Totals
Travel Time	$3,818			$3,818
Vehicle Ownership		$2,727		$2,727
Crash Damages	1045	455	773	$2,273
Non-residential. Off-street Parking	68	68	$1,228	$1,364
Vehicle Operation	$1,136			$1,136
Roadway Costs	360		$185	$545
Traffic Congestion			$455	$455
Environmental Costs			$455	$455
Roadway Land Value			$295	$295
Residential Parking		$227		$227
Fuel Externalities			$182	$182
Traffic Services			$136	$136
Totals	$6,427	$3,477	$3,709	$13,613

This table summarizes the estimated distribution of various motor vehicle costs.

Figure 1 illustrates these costs. Although the largest categories of costs are internal (vehicle ownership, the majority of crash costs and vehicle operation), external costs are numerous. Traffic congestion and air pollution, the costs which tend to receive the greatest consideration in transportation planning, are relatively small overall. A policy or program that reduces congestion or pollution but result in even modest increases in other costs, such as vehicle ownership, road and parking facility costs or crashes, are likely to harm society overall. On the other hand, a congestion or pollution reduction strategy becomes far more valuable to society if it also reduces these other costs. This emphasizes the importance of finding solutions that provide multiple benefits.

Figure 1 Annual Costs of Automobile Use

This figure illustrates the estimated annual costs of motor vehicle ownership and use.

Figure 2 presents these costs measured per vehicle mile. This allows the costs of various different vehicles, travel modes and travel activities to be compared.

Figure 2 Per-Mile Costs of Automobile Use

This figure illustrates the estimated costs of motor vehicle ownership and use, averaged per vehicle-mile.

Figure 3 summarizes the total of these costs, indicating that approximately a quarter of all automobile costs are external, and another quarter are external-fixed (users must pay them regardless of how much they drive). Only about half of total costs affect vehicle travel decisions. This price structure violates Market Principles, resulting in far greater vehicle travel than what would occur with direct pricing. In a more efficient market, consumers would choose to drive significantly less than they do now, and be better off overall as a result.

Figure 3 Average Distribution of Automobile Costs

Less than half of the total costs of automobile use are internal-variable.

Modeling Benefits of Travel Changes

In order to evaluate these impacts it is necessary to model the relationships between mileage and various costs. This is measured using elasticity values, which indicate the percentage change in a cost that results from a percentage change in vehicle mileage. For example, an elasticity of 1.5 means that each 1.0% reduction in mileage reduces a particular cost by 1.5%. The elasticities of various costs with respect to mileage are discussed briefly below.

· Traffic Services. All else being equal, a change in vehicle mileage probably causes a proportional change in traffic services, so the elasticity is 1.0.

· Fuel Externalities. All else being equal, a change in vehicle mileage causes a proportional change in fuel consumption and related externalities, so the elasticity is 1.0. A change in congested mileage may cause a greater change in fuel consumption and externalities, so TDM strategies that target congestion, such as Commute Trip Reduction programs and congestion pricing, tend to have an elasticity of greater than 1.0.

· Residential Parking. Changes in per-vehicle mileage do not affect residential parking costs, and so have an elasticity of 0.0. Reductions in vehicle ownership, and management strategies that result in more efficient use of existing parking facilities can reduce this cost. For example, Location Efficient Development, carsharing, transit improvements and parking management can reduce residential parking costs. As a result, the elasticity of residential parking costs with respect to TDM mileage reductions is estimated to average 0.5.

· Roadway Land Value. Changes in per-vehicle annual mileage may cause a small change in the amount of land that is devoted to roads. Such impacts tend to occur in urban areas where land values are high. The elasticity is estimated to be about 0.1 (A 10% change in mileage changes roadway land costs by 1%). Some TDM strategies directly reduce roadway land requirements, including Smart Growth, New Urbanism and parking management.

· Traffic Congestion. Traffic congestion is a non-linear function, so under some circumstances even a small increase in traffic volumes can cause a large reduction in congestion delay. Modeling reported in USEPA (1998) found that 4% change in total vehicle mileage in California urban areas would reduce traffic congestion by 7.5-10.5%. This suggests that the elasticity of congestion costs to vehicle travel is about 2.0 in urban areas. An elasticity of 1.0 is used for this analysis. Some TDM strategies are particularly effective at reducing congestion, including Commute Trip Reduction programs, road pricing and parking management.

· Environmental Damages. In general, a percentage change in vehicle mileage can be expected to cause a proportional change in environmental damages, so the elasticity of environmental costs to mileage is assumed to be 1.0.

· Roadway Costs. In general, a percentage change in vehicle mileage can be expected to cause a proportional change in road damages, and a proportional or larger change in roadway capacity expansion requirements. The elasticity of roadway costs to mileage is assumed to be 1.0, but may be larger in growing urban areas.

· Vehicle Fuel. A change in mileage provides a proportional change in fuel consumption, so the elasticity is 1.0. TDM strategies that target congestion reductions may provide a somewhat greater reductions in fuel costs for a given reduction in mileage.

· Non-residential Off-street Parking. Changes in average trip distance have no affect on parking costs, but changes in vehicle trips or ownership do. Assuming that half of the additional per-vehicle annual mileage resulting from increased fuel efficiency consists of longer trips and half consists of increased trip making, the elasticity of parking costs with respect to mileage is 0.5. Many TDM strategies directly reduce parking costs, including those that reduce per capita vehicle ownership, encourage use of alternative transportation modes, and that encourage more efficient use of existing parking capacity.

· Crash Costs. Changes in total vehicle mileage tend to cause an approximately proportional change in crashes, but a significantly larger change in total crash costs, because most serious crashes involve multiple vehicles. One study found the elasticity of vehicle crash costs with respect to vehicle mileage is between 1.4 and 1.8, meaning that a 10% reduction in vehicle mileage reduces crash costs and casualties between 14% and 18%. A value of 1.4 is used in this analysis. Some TDM strategies provide extra traffic safety impacts, such as traffic calming, which reduces vehicle speeds, and Distance-based Vehicle Insurance, which gives the higher risk drivers an extra incentive to reduce their mileage, and therefore crash risk.

· Vehicle Ownership. Most vehicle ownership expenses are considered fixed and not affected by a change in annual per-vehicle. However, many of these costs are actually partly variable. For example, increased vehicle mileage tends to increase vehicle maintenance and repair costs, reduce vehicle operating life, reduce resale value, and increase the chances of an insurance claim. These additional (besides fuel and oil) mileage-based charges typically average 10-15¢ per vehicle mile, or about 40% of total vehicle ownership costs. As a result, the elasticity of vehicle ownership costs with respect to mileage is estimated to be 0.4, meaning that a 10% increase in mileage increases vehicle ownership costs by 4%.

· Land Use Impacts. Reductions in average vehicle trip length help reduce urban sprawl. Reductions in vehicle trips, shifts to alternative modes, reduced vehicle ownership and land use management strategies are most effective at reducing costs associated with inefficient land use.

· Equity Impacts. Strategies that reduce unjustified underpricing and subsidies for automobile travel, and improvements to transportation and housing choices available to people who are transportation disadvantaged tend to increase equity.

Cost Analysis Example

This analysis compares the effects of three emission reduction strategies on total costs. The strategies include CAFE standards, a TDM program (such as Pay-As-You-Drive vehicle insurance), and a fuel tax increase, each of which reduces vehicle fuel consumption by 10% (Litman, 2002). Table 17 summarizes their impacts on fuel consumption and vehicle mileage.

Table 17 Fuel and Mileage Impacts

	CAFE	TDM	Fuel Tax
Fuel Consumption	-10%	-10%	-10%
Mileage	2%	-10%	-3%

All three strategies reduce fuel consumption by 10%, but CAFE standards increase total mileage, while TDM and Fuel Tax strategies reduce total mileage.

Table 18 summarizes the results of the analysis. It shows the elasticity values that were used to calculate cost changes relative to the base costs. These elasticity values were applied to changes in fuel consumption for Fuel Externalities and Fuel Costs, and to changes in mileage for all other costs. For example, the 1.0 elasticity of traffic congestion with respect to mileage means that a 2% increase in mileage causes a 2% increase in congestion costs.

Table 18 Cost Impacts

Cost Category	Base Costs	CAFE		TDM		Fuel Tax
	Per Vehicle	Elasticity	Cost	Elasticity	Cost	Elasticity	Cost
Fuel Externalities	$182	1.0	$164	1.0	$164	1.0	$164
Residential Parking	$182	0.0	$182	0.5	$173	0.0	$182
Roadway Land Value	$295	0.1	$296	0.1	$293	0.1	$295
Traffic Congestion	$455	1.0	$464	1.0	$409	1.0	$441
Environmental Costs	$455	1.0	$464	1.0	$409	1.0	$441
Fuel Costs	$523	1.0	$470	1.0	$470	1.0	$470
Roadway Costs	$545	1.0	$556	1.0	$491	1.0	$529
Non-res. Parking	$1,364	0.5	$1,377	0.5	$1,295	0.5	$1,343
Crash Damages	$2,273	1.4	$2,336	1.4	$1,955	1.4	$2,177
Vehicle Ownership	$3,182	0.4	$3,207	0.4	$3,055	0.4	$3,144
Totals	$6,273		$6,309		$5,658		$6,042

This table summarizes how three strategies affect various motor vehicle costs. Elasticity values indicate how a change in fuel consumption or mileage affects a cost. Elasticities are applied to changes in fuel consumption for Fuel Externalities and Fuel Costs, while other costs apply elasticities to mileage.

The results show how these three different fuel conservation strategies affect total costs. All are equally effective at reducing fuel consumption, but because CAFE standards increase total mileage they increase total social costs, including congestion, crashes and facility costs. The fuel conservation related benefits are smaller than the total increased costs. TDM strategies that reduce fuel consumption by reducing vehicle mileage provide much greater benefits because they reduce other external costs. Increased fuel taxes provide a relatively small reduction in mileage and so provide smaller reduction in total costs.

Wit and Humor

A high-school boy loves cars and so applies for a job at a repair shop that specializes in exotic imports. He gets the job and eagerly arrives for his first day. “Gee,” he gushes, grabbing a wrench, “I can’t wait to learn how to fix these babies!”

The service manager tells him to put down the tools and listen up. “The first thing ya gotta learn how to do,” he explains, “is to open the hood, stand back, and shake your head very, very sadly.”

Related Chapters and Resources

For more information on transportation costs see Costs of Driving, Transportation Statistics, Evaluating TDM, Measuring Transportation, Market Principles, TDM Planning, Comprehensive TDM Evaluation, Evaluating TDM Equity, Evaluating Criticism of TDM, Evaluating Pricing Strategies and Evaluating Transportation Choice.

References And Resources For More Information

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Jing-Shiarn Wang, Ronald R. Knipling and Lawrence J. Blincoe (1999), “The Dimensions of Motor Vehicle Crash Risk, Journal of Transportation and Statistics (www.bts.gov), Vol. 2, No. 1, May 1999, pp. 19-43.

Rui Wang (2011), “Autos, Transit and Bicycles: Comparing The Costs In Large Chinese Cities,” Transport Policy, Vol. 18, Issue 1, January, Pages 139-146; summary at www.sciencedirect.com/science/article/pii/S0967070X10000910.

William Waters (1993), The Value of Time Savings for The Economic Evaluation of Highway Investments in British Columbia, BC Ministry of Transportation and Highways.

Glen Weisbrod, Teresa Lynch and Michael Meyer (2007), Monetary Valuation Per Dollar Of Investment In Different Performance Measures, American Association of State Highway and Transportation Officials, NCHRP Project 08-36, Task 61, National Cooperative Highway Research Program, Transportation Research Board (www.trb.org); at http://onlinepubs.trb.org/onlinepubs/nchrp/docs/NCHRP08-36(61)_FR.pdf.

Christopher Zegras with Todd Litman (1997), An Analysis of the Full Costs and Impacts of Transportation in Santiago de Chile, IIEC (www.iiec.org); at http://web.mit.edu/czegras/www/Santiago%20Full%20Cost%20Study.pdf.

Anming Zhang, Anthony E. Boardman, David Gillen and W.G. Waters II (2005), Towards Estimating the Social and Environmental Costs of Transportation in Canada, Centre for Transportation Studies, University of British Columbia (www.sauder.ubc.ca/cts ), for Transport Canada; at http://s3.amazonaws.com/zanran_storage/www.tc.gc.ca/ContentPages/7673334.pdf.

This Encyclopedia is produced by the Victoria Transport Policy Institute to help improve understanding of Transportation Demand Management. It is an ongoing project. Please send us your comments and suggestions for improvement.

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